You calculated your student loan payments after graduation based on your current tuition and expenses and realized if you keep accumulating educational debt at your current rate, your monthly student loan payment after graduation would be over $1,000. Should you transfer schools to one that's less expensive, or should you figure out a way to pay for the rest of your degree where you are at right now?
Evaluate Why You're Borrowing So Much
The amount you are borrowing may not be because of tuition for classes that help you towards your degree. It could be because of extra expenses such as spring break, taking extra classes outside of your major or not applying for scholarships for which you may qualify.
In order to figure out what your budget-busting culprits are, you will need both a copy of your budget and a copy of your transcript.
First, make sure your budget is highly detailed. Then, circle items you could do without and still be happy. For instance, you could see an amount for food that is higher than you would like, but it may be because of fast food, dining out or spoiled groceries. If your budget doesn't help you figure out the reasons your budget seems inflated, gather your bank statements in print or online. Then you can find individual purchases that add up in smaller categories of spending you could reduce.
One item that's often easy to reduce for college students is transportation. You could be paying for parking, car insurance, fuel or payments on a car loan when you live on campus. If you live within a mile of campus, you could walk to class to save on parking and fuel.
Next, look at your transcript. Why is a transcript important to your budget? Tuition is a budget item, too, and you need to evaluate how you are spending it.
- Are you taking enough courses to make room and board worth it?
While the exact amount of college credits required to earn a degree varies from major to major, most four-year degrees require at least 120 credits. This averages out to 15 credits per semester to finish in eight semesters, or at an average of 11 credits if you also attend college during the summer after your freshman, sophomore and junior years.
- Are you taking any courses twice to improve grades?
College isn't just a place to get an education to boost future employments options - it's also the place where you learn how to balance social activities, work and school for the first time away from your parents' supervision. You need to make sure your grades are a top priority because going to a party the night before exams could cost you a $1,000 or more to retake a course to boost your GPA.
- Are you happy with your choice of major?
If you are taking courses towards a career you're not sure you want to pursue, you may be wasting your tuition dollars.
Budgeting Fixes to Help You Avoid Transferring Colleges
Once you've gone through your budget and transcripts, you can take the following steps to curtail expenses.
- Compare prices on textbooks.
Buying your textbooks online often reduces the cost by a considerable amount.
- Get a part-time job or paid internship.
A paid internship can reduce extra course costs by helping you to focus in on your career goals. Call your college's career center for help.
- Look into tax credits.
An education tax credit works out to be a guaranteed scholarship from the government for thousands of dollars as long as you meet income restrictions. When you file your taxes, keep track of the education credits you qualify to receive. Then use any tax refund towards the following year's tuition. (See IRS Publication 570.)
The Finances Behind Switching Colleges
If you decide switching colleges is a possible option, you should find out the answers to the following questions: How long will transferring schools postpone my graduation? Will it cost me more to live in the new city? Is my current degree offered at the new school? Could I get a scholarship at the new school? All of these costs need to be factored into your decision.
The Bottom Line
Whether you spend $5,000 on your college education or $100,000, you are making an investment in your future that you don't want overshadowed by loan payments. If you stay at your current college or transfer to a cheaper one, spend each student loan dollar with the viewpoint that this is money you will have to pay back.
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