If you’re a student, whether you’re earning a little extra cash with a part-time job or paying your own way through life and college, it’s probably on your mind—a lot, perhaps, if you’re thinking about graduation and career options.
You can do three things now to make your financial future more secure:
1. Stay on track with 30 to Finish. Taking 30 credits per year is the best way to graduate on time and within budget.
The Indiana Commission on Higher Education estimates that every additional year students spend in college costs them at least $50,000 in tuition, fees and lost wages.
Plus, under Indiana law, students must complete 30 credit hours each of their four years of college—an average of five classes per semester—to keep their maximum amount of state financial aid. Committing to 30 credit hours a year also means students are more likely to complete their degree, research shows. Graduate on time and with less debt—a winning combination.
2. Keep borrowing to a minimum. Student loans may be necessary for you to reach your goals, but it’s important to know how borrowing for that investment might impact your life down the road.
The majority—59 percent—of Indiana students at a four-year college had some student loan debt at graduation. The average Indiana graduate’s college loan debt in 2017 was $29,562.* What do those numbers mean in real life? Using the student loan calculator at FinAid.org, an individual with student loans of $29,562 would have monthly payments of $340.20 for 10 years, assuming a 6.8 percent loan interest rate.
Finaid.org estimates an annual salary of at least $40,824 is required to afford to repay this loan amount, with 10% of the graduate’s gross monthly income devoted to repaying student loans for 10 years.
If you are considering student loans as part of your financial aid package, be sure to use a loan payment calculator like the one at Finaid.org to look at what different loan amounts might look like in your future.
You may decide to work harder at finding scholarships, for example, or take a part-time job to lower your total student debt.
And don’t forget about debt from other sources—credit cards charge a much higher interest rate, and could cripple your finances just as quickly. Car loans, too, might seem like a necessary evil if you need transportation, but driving a less expensive car and having more income each month is never a bad thing. The more debt you have, the more you have to work to keep up with monthly payments. Too much debt—from credit cards, house payments, car loans and student loans—could keep you in a career or job you don’t like.
3. Educate yourself. There’s no better time to learn about personal finance than before you start earning a “real” paycheck. Start with campus resources—at many campuses, you can find free personal finance classes, online or in classes or workshops.
Students at every Indiana University campus—and anyone who visits moneysmarts.iu.edu, for that matter—have access to tools to help crunch the numbers on how much you can expect to spend on any of IU’s nine campuses, or, if you need some human advice, connects you with an expert. You can also register for classes, such as “Basic Financial Planning and Investment,” for IU credit.
At Indiana State University, students have access to online learning modules about college spending and setting up spending plans, while graduating seniors have access to online tutorials on topics like employee benefits, student loan repayment and how to solve debt problems.
Purdue University offers open access to purdue.edu/mymoney, a web-based set of reliable tools offering students and graduates solid advice, calculators and budgeting guides.
By devoting a few hours each semester to thinking about money, your current financial situation and your goals for the future, you’ll emerge from college a smarter—if not necessarily richer—person.
*Based on graduates of four-year, public and private, non-profit institutions. Source: Project on Student Debt, an initiative of The Institute for College Access & Success