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Main Body

Chapter 8: Managing Money

“You must gain control over your money or the lack of it will forever control you.”

~ Dave Ramsey

a plant growing out of a pot filled with coins
Photo by Micheile Henderson on Unsplash

Where Are You Now?

Assess your present knowledge and attitudes.

Yes Unsure No
1. I am confident I will make it through college without any financial hardships.
2. I realize that while in college I won’t have as much money to spend on things as in the past.
3. I plan to avoid debt as much as possible while in college so I don’t have large loans to pay back after college.
4. I am willing to make sacrifices and spend less on some things while in college.
5. I keep track of all my expenditures and maintain a budget so that I know when I am spending too much.
6. I believe I can have a happy and fulfilling life while a student without having a lot of money.
7. I know the best kinds of jobs to seek while in college.
8. I always pay off the full balance on my credit cards when the statement arrives.
9. I have applied for every possible form of financial aid to help pay for college.

Where Do You Want to Go?

Think about how you answered the questions above. Be honest with yourself. On a scale of 1 to 10, how do you feel about your current level of financial knowledge?

In financial trouble Very financially secure
1 2 3 4 5 6 7 8 9 10

In the following list, circle the three most important financial areas in which you think you may need to improve:

  • Making more money
  • Finding the best job
  • Spending less money
  • Living more cheaply
  • Paying bills on time
  • Avoiding overdraft and late-payment fees
  • Making a budget
  • Sticking to a budget
  • Controlling credit card spending
  • Getting help with personal finances
  • Saving money
  • Keeping good financial records
  • Building a good credit history
  • Applying for financial aid

Are there other areas in which you can improve your financial well-being and avoid potential money problems while in college? Write down other things you feel you need to work on.

Beyond Tuition: Understanding College Expenses

Paying for college is an undeniable component of the educational process. While there are political discussions underway about making college free, at this point in time, students must pay for college themselves or with the help of others. Understanding the factors that combine to create the overall cost of a college education can help a student make decisions about the college that is right for him or her.

Learning Objectives

  • Identify and discuss college expenses
  • Discuss what a scholarship is and some strategies to apply for scholarships
  • Describe college resources and how and why they can help college students

Expenses you may encounter while you are in college (and this isn’t even all of them!)

  • How much is the degree or certificate you want to earn going to cost?
  • What factors go into the cost of the college?
  • What costs are included in tuition?
  • What costs are not included in tuition?
  • What is college worth to you?
  • How much money can you afford to spend on college?
  • Where can you get financing for college if you need help paying for it?
  • How much money do you think you could afford on a monthly basis to pay back a loan related to financing college?
  • What is the current interest rate on student loans?
  • Are interest rates all the same?
  • What do you think your life will be like after college?

Today’s colleges are in a competitive market for students. Thinking about the services you as a student need or want from a college environment can help define what is personally important and what you are willing to pay for.

College costs can be measured by 7 main categories:

  1. Tuition: The price you pay for taking college classes is based on the academic program you choose. Tuition is also affected by selecting a school in the state where you live, and by whether the school is public, private, for-profit, or non-profit.
  2. Fees: Academic programs may have additional fees beyond tuition costs. For example, a student majoring in culinary arts will need specialized tools to participate in that program. Services the college provides to students can have associated fees. For example, a student health center may have a basic fee that all students must pay whether they use the service or not. Some colleges have dining fees that give students food cards to use on campus. Student fees are not fees students can opt out of. It is important for students to examine a college’s fee structure and maximize the services that are being paid for by fees.
  3. Books and supplies: The cost of books and the supplies students will need to complete a program can vary greatly. Books and supplies can add $1000 or more to the annual tuition cost. This is an important factor that is easily overlooked by students. Finding classes that offer low-cost book options, open educational resources (OER), or zero textbook cost (ZTC) sections can help reduce the overall cost of college. Students can also check online or with their bookstore for used books or rental options, and/or use reserve books in the library, if available. Sometimes finding a required textbook from Amazon or Chegg or other online sources will be less expensive than purchasing new textbooks from the college bookstore. Often, students will end up financing the cost of books and supplies with financial aid. It is important to remember that an additional $1000 financed with aid or credit cards can quickly add up to an unanticipated cost of college.
  4. Transportation: Getting to and from college costs vary significantly based on how close a student lives to the college campus and the transportation method selected. Some colleges may have a transportation fee as part of the student fees that might provide mass transit (trains or buses) options for getting to school. Colleges may also have parking fees for those students who drive to the campus. Seasonal weather conditions are another factor in transportation choices. As a student estimating the cost of college, remember to think about the entire school year.
  5. Living Expenses: Where will you be living while attending college and with whom? The answer to this question determines a major factor in the overall cost of attending college. Living with family may be less expensive for some, but many times is not an option for students. Answers to the question of where you will live and how much it will cost vary greatly. One thing to think about is how much did it cost you to live last year? Will going to school change that and if so, how? Will you have to eat or spend money on groceries/meals differently than in the past? If the college you choose has a dining fee built into your tuition costs, don’t overlook using it. Staying healthy is an important part of college success.
  6. Personal Expenses: Another wide-open category of cost, but don’t forget you will still need basic health care and hygiene. And you will still have social events and family commitments. Students tend to underestimate how much money will be needed for personal expenses. For example, many students today cannot survive without smartphones, computers, and data plans.
  7. Opportunity Cost: Choosing to spend time and money going to college has an opportunity cost. If you are spending time and money on your education, you will not be spending that same time and money somewhere else. One example of this relationship is employment. Attending classes and doing homework may mean you can’t work at a job as much as you want to. It may also mean you will have less time to spend with friends and family. If you have a long commute to school, that may impact other aspects of your daily life.

Financial Aid Basics

Most students will need some form of financial aid to help pay for college. Before accepting an offer of assistance, it is important for a student to understand what each possible offer means and what the student’s responsibility will be after accepting the offer. The US Department of Education offers financial assistance to students in the form of grants, loans, and work-study programs. For an explanation of each of the types of Financial Aid available, follow this link to LCC’s Financial Aid page and arrow down to the Ways to Cover Education Costs section.

Filling out the FAFSA Application is the first start toward receiving financial aid for college.

Understanding interest rates and how they impact student loans is essential. Many students shy away from doing the math to understand what their responsibility will be in repaying a loan. For more information about how to figure out how much you could pay in loans and interest, check out Beyond Tuition Understanding College Expenses. To better understand Private Student Loans, click here.

It is also essential that students understand the difference between a subsidized and unsubsidized loan. Both types of loans may be offered to a student in an award letter for financial aid. The key difference between unsubsidized and subsidized loans is that unsubsidized loans charge students interest while they are attending college, so the interest starts accruing right away. Subsidized loans do not add interest while the student is attending college, so a loan of $4000.00 for the first year is still $4,000.00 when the student stops attending college. With an unsubsidized loan, a student who borrows the same amount could owe 4,350.56 by the end of the first year of college!

Be watchful when adding even small amounts of money to your loan balances. It can add up quickly! Check out the video below for a reality check.

Video:  Voices of Debt – The Student Loan Crisis: Don’t Major in Debt

Loan Calculator

Students need to remember that they are consumers when it comes to taking on loans for college. Not thinking about what debt means after college only compounds the issues. It is important to think about how much you could afford to pay monthly on a student loan once you have completed college. It’s easy to do the math on loan costs. The Smart Student’s Guide to Financial Aid has a free loan calculator that will do the work for you. All you have to do is plug in the numbers. The loan calculator will also give you an estimate of how much you need to earn to be able to repay the loan.

It is also important to realize that even if you don’t finish college, you will have to repay a loan taken out for college. According to an article titled The Feds Don’t Care If You Dropped Out of College. They Want Their Money Back, students who dropped out of college and ultimately didn’t obtain a degree or certificate, generally don’t earn higher wages after leaving school. Statistics show that students who start college but don’t finish struggle with student debt.

The US government backs loans that are taken out through FAFSA/Federal Student Aid. Repayment is expected. The government has the authority to garnish wages and withhold tax returns as part of repayment of loans that are not paid. Government-backed debt cannot be forgiven in bankruptcy, except under rare circumstances.

The cost of going to college seems to be constantly increasing. Understanding the opportunity cost both now and in the future needs to be an important part of a student’s decision process when selecting a college and a major. Do the math! There are plenty of resources to help you. Follow your dreams, but be informed.

Financial aid vocabulary is a specialized language that students participating in the process must understand. Try free flashcards that can make learning financial aid vocabulary fun!

Activity: Making It Personal

  1. What is the tuition cost for the college/program you want to enroll in?
  2. What additional fees can you expect to pay along with tuition?
  3. What kinds of services will you get from the additional fees you pay?
  4. Can you estimate the cost of books and supplies for your chosen program?
  5. Are you more likely to be a full-time student or a part-time student?
  6. What is your plan for paying for college?
  7. If you were to take out loans, how much money do you think you would need to borrow?
  8. Who is ultimately responsible for your college expenses?
  9. Have you filled out the FAFSA application?
  10. What do you feel like you need more help with in relation to financing college?

Video:  Why financial aid is broken and a simple solution to fix it | Susan Dynarski | TEDxIndianapolis


Creative Common Attribution License Managing Money by Eva Menefee is adapted from REBUS Community-Blueprint for Success in College and Career and is licensed under the Creative Commons Attribution 4.0 International License.


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ACAD100: Success Pathways at Lansing Community College, Third Edition by Root,T, Eaton, T, Madigan, M and Menefee, E. is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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