Today's college students must navigate a far different financial landscape than those who graduated just a few years ago. Tuition is higher, jobs are sparse and personal debt levels are increasing.
Money management skills are vital now more than ever, said Mike Sullivan, director of education for Take Charge America, a national nonprofit credit counseling and debt management agency based in Phoenix, Ariz.
"Many young adults don't realize the impact of poor money management until they're ready to enter the workforce or purchase a home," he said. "Excessive spending and inadequate planning at 18, 19 or 20 can put many dreams on hold."
The federal government is also coming to the aid of students, passing regulations to protect young consumers from acquiring an exorbitant amount of debt.
As of February of this year, consumers younger than 21 must have an older co-signer with a good credit history in order to obtain a credit card, or show proof of income.
Efforts are also underway to make student loans more manageable. As of July 1, rates for Parent PLUS loans and new subsidized Stafford loans have dropped nearly one percent.
Additionally, all federal loans must be issued directly from the Department of Education, not private lenders, which may help additional families qualify.
Yet according to Sullivan, regulations alone aren't enough to keep young consumers from graduating with unnecessary debt. He offers four tips:
• Load Up on Classes: At many institutions, full-time students pay the same tuition for 12 credits as for 16. Take as many classes as you can while still maintaining balance. Graduating a semester earlier can save in tuition, books, course fees, parking and rent.
• Choose Your School Carefully: Be sure to weigh the pros and cons of an institution along with the life you plan to lead upon graduating. Students with limited funds can save cash and reduce loans by attending a public school in their home state or taking select courses at a community college.
• Hold Off on Attending?: Beginning in 2014, the Health Care and Education Reconciliation Act stipulates that graduates can repay student loans based on a maximum of 10 percent of their income, rather than 15. Additionally, loans will be canceled after 20 years of repayment as opposed to 25. While tuition costs may be higher, waiting a few years offers time to save money and reduce loan interest.
• Save Daily: Host potlucks rather than dining out, get a Netflix subscription rather than going to the movies and swap clothes with friends rather than hitting the mall.
For more tips, visit www.takechargeamerica.org.
