Pay Attention to Budgets and Spending on Campus

When it comes to college expenses, personal finance experts suggest that you map out what you know. That includes your one-time income and your known expenses, including housing, cell phone and internet, travel, and books and course packs. Pay mandatory costs as soon as you can. (Pay rent, for example, to keep a roof over your head.) 

Also, pay attention to casual spending each day. What you spend casually can be a significant factor in helping you stick to your budget. And making a plan to budget will help you stay on track. You can use an app or online tool such as Student Budget Planner or mint.com.

Keep your budget plan on your smartphone, download the information to a spreadsheet, write the basics in a notebook – whatever works best for you. Then stick with it. Track income and spending using one of several methods: 

• Cash method: Carry only the cash you can spend for a particular event or trip.
• Envelope method: Carry receipts in an envelope with you and review regularly.
• Checkbook register or app method: These reduce your budget balance each time you make a purchase. 
• Notebook method: Note each purchase and know the budget impact. 

Borrow Only What You Need For Your U-M Education 

Students should borrow only what is necessary to achieve the goal of a U-M college degree. Consider options that could reduce the need to borrow: 

• Use personal or family assets before considering a loan
• Look at the U-M Payment Plan for fall/winter, which helps families spread costs over five months for each semester
• Consider part-time employment to stretch your dollars without borrowing 
• Review your lifestyle choices and expenses for ways to trim costs 

Compare Private Loan Programs and Exhaust Federal Loan Eligibility 

Before borrowing through a private lender, we encourage students to: 

• Exhaust all other financial aid sources, including federal loans and Federal Work-Study
• Look for ways to reduce expenses before deciding how much to borrow
• Borrow only what is needed for your educational costs 
• Ask questions and compare rates and terms offered by different lenders 

Private student loans are offered through a variety of banks and other lenders. The best rates on private loans are generally offered to borrowers with good credit or who have a cosigner with good credit. When shopping, look for a loan that can be handled in both the short term and the long term. 

You will be repaying it for several years after graduation. 

The terms of federal student loan programs are often more favorable than those of private loans. You can compare typical private loans with the terms of the Federal PLUS Loan.

A Caution to Private Loan Borrowers

Students and families should research carefully, compare rates and terms offered by lenders, and be sure they understand them. If possible, limit borrowing by reducing expenses.

“Loan debt can accumulate quickly and result in a lifetime burden of high payments and credit denials for automobile purchases, credit cards, and home mortgages. Private loans also can reduce eligibility for more desirable federal, state, and college aid programs. To avoid these problems, read and understand the terms and conditions of all loans.” 

– The Michigan Student Financial Aid Association