How To Budget Responsibly As A College Student

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How To Budget Responsibly As A College Student

Last year, according to US News, 70% of new college graduates left school with debt. The average amount of debt recent college graduates owe is over $37,000 according to the same report. As the cost of college increases, it is becoming harder for students to leave school debt-free. But by budgeting responsibly, college students can reduce the amount of debt they must carry. In some cases, studious college students can even budget so responsibly that they graduate college debt free.

This article by Credit Repair is designed to serve as a guide for current and prospective college students hoping to budget responsibly to avoid student loan debt.

Know the Difference between Federal and Private Student Loans

For college students who need to take out some kind of loan in order to pay for tuition or college expenses, it’s important to understand the differences between federal and private loans.

There are three types of federal loans currently available, subsidized, unsubsidized and PLUS loans.

Subsidized loans are based on financial need. Your university will determine the amount of direct subsidized loans you can borrow. While you are in school and six-months after graduating the Federal government will pay the loan interest. After which point it will be up to you to pay back the loan including any interest that accrues after the six-month grace period.

Unsubsidized loans are not based on financial need, though your university will still determine the amount you can borrow. Unlike subsidized loans, you must pay the loan back immediately or interest will accrue until the loan is paid in full.

PLUS loans are specifically for graduate and professional students according to Student . In order to qualify for PLUS loans, the student must have a good credit score and most show clear financial need.

Private loans typically have worse terms than federal loans. There are two types of private student loans to be aware of, as detailed by Sallie Mae. Student loans are loans that the student takes out him or herself, the student is directly responsible for paying the loan back until it is paid in full.

Parent loans are loans that a student’s parent or guardian takes out, meaning that the parent is responsible for paying the loan back instead of the student.

It’s important for students to understand the pluses and minuses of each loan type before making a commitment. Understanding what loans are owed when will help to budget responsibly.

Use a Micro Saving Tool

Micro saving has become a popular way for young people to save for the future, even with little cash on hand. Apps like Acorns take the spare change from everyday transactions and invests the money for you. Acorns connects with your credit card and rounds up to the nearest dollar for each transaction you make. The platform takes the extra change and puts it in pre-selected ETFs (a collection of stocks passively managed through algorithms). Over time, the platform helps college students earn interest on the money saved.

Educate Yourself About Investing

One of the most powerful ways to stretch every dollar is to learn how to make money through smart investments. Students interested in learning how to invest wisely should consider reading Peter Lynch’s book, One Up On Wall Street. Lynch was the Managing Director of one of the largest and most profitable mutual funds in American when he wrote this straight forward guide for new investors.

Once you’re ready to put your money to work, try Robin Hood or other similar brokerage platforms that have zero or low transaction fees. This will help students to invest more of their money while avoiding expensive fees that can reduce buying power.

Find an Online Freelancing Gig

For students interested in working while in college, but uninterested in getting a job on campus, freelancing might be the way to go. Platforms like Upwork, Fiverr and Gigworker make it possible for students to gain valuable business experience while making money in off hours. Potential employers post over 3 million jobs worth over $1 billion on Upwork alone. There is a great deal of potential business available for an enterprising college student.

Use a Personal Finance App

To monitor spending and credit history, consider using a personal finance app. Platforms like Mint and Learnvest connect with your bank account and help you stick to predefined spending goals. The platforms also have the ability to remind you about upcoming bills and to alert you to suspicious spending activity.

In addition to a budgeting app, credit trackers like Credit Karma and Credit Wise offer a free service to help anyone easily track credit scores over time.


Budgeting responsibly in college can mean the difference between graduating with or without college debt. For students hoping to budget responsibly, understanding student loan options is key. It’s also a good idea for students to create a strategy to save and invest money wisely while also monitoring spending and credit. For students interested in making a few extra bucks, freelancing online through platforms like Upwork is also a good idea.

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