Borrowing Smart for College

I started going to college in September of 2005. I first went to the University of Maine and with the amount of scholarships and grants I received my freshmen year, I actually got paid to go to school. It was a great feeling, and I definitely could have used that money more wisely then I did when all was said and done. I lived with my parents to save money, but I also didn't have a job throughout the first year because I wanted to focus on my studies. Believe it or not, I actually did better in college when I was working full time rather than having no job and only focusing on work. Aside from all that, my second year I ended up having to take out loans so I could continue my education. I didn't particularly enjoy the idea of taking out loans, but I knew many other people were in the same boat as I was. I now have somewhere around 20 thousand dollars of college loans to repay. If you are in the same boat, and have to take out loans, consider some of these tips to help ensure that you will not be in debt up to your eyeballs once you graduate.

Look for Scholarships and Grants

Look and see what kind of scholarships and grants from the government or other places you can receive before taking out loans. You'd be surprised at how many scholarships and grants there are out there that people don't take advantage of. My father works at a company that allowed me to receive six thousand dollars a year towards my college tuition. Many different companies offer scholarship programs if you work for them, or if one of your family members works for them as well. There are also many essay based scholarships that are out there if you look for them. Many of the scholarship rewards are somewhere between $500-$1000. Fastweb has a good selection of scholarships that are available out there for college students. While it may not seem like a lot of money, even if you get one of these scholarships, it can help pay for books for a semester. 

Borrow Smaller Amounts From a Credit Union and pay as you go

There did come a time in my college career where I lost some of my scholarships due to academics. Don't worry, I smartened up and got them back shortly thereafter. I was forced to find an alternative method of getting money to go to college for a semester. Because I had started to work my second year of college, I made the decision to take out a loan that would cover just enough to pay my college bill for that semester. Granted, I had some college loans, but they didn't cover the entire cost of tuition. I ended up taking out a loan for $900 and paid it off within the year. If you're going to a college and don't need a ton of money to cover tuition, I would consider either saving up your own money and paying it off, or taking a small loan out and paying it as you go. For me, it was a smart decision because I ended up not having to take a semester off, and could pay off the loan with a relatively small interest rate.

If you pay for Something With Loan Money, Double the Cost

Yahoo Finance addressed this issue by saying that doubling the cost of your purchases with loan money is important because that's what you'll probably end up paying once all the interest has kicked in. So that $4 latte is actually $8 after interest throughout the years. The $20 dinner turns out to be $40, and so on. It can also mean that expensive spring break trips that you've paid for with loan money is actually double that price. All in all, be careful what you spend your money on.

Loans can be a big setback in the post graduation era of your life, but they don't have to be as big of a nuisance if you borrow wisely. Look at different ways to avoid loans if at all possible, but when you do have to take them out, be smart about it. For more tips on how to borrow smart, click on the Yahoo Finance link above.

How do/have you borrow(ed) smart for college?

Seth P.

PS - Fellow Bangorians, Don't forget to check out Kah Bang this whole week! Movies and great bands are playing in Downtown Bangor all week, with a rockin' two day music fest coming this Friday and Saturday