There are a lot of decisions to be made when you head to college, and while they can seem like not a big deal in the moment, they can actually affect you for many years, and impact your financial future. For example, if you decide to go to a four year college, with no scholarships, at $20,000 a year for tuition and $15,000 for living expenses, you would graduate with $140,000 in debt!
If on the other hand you go to community college and pay $5,000 a year, work part time and graduate in three years with no debt, then start your professional life a year earlier making $25,000 a year, you would be $170,000 ahead compared to the previous scenario.
There is no right or wrong answer as of to which you should pick, because there are many other factors. Getting six figures in debt to pay for med school, then get a six figure salary could be a sensible move. This is a competitive sector, and you don’t want a part time job getting in the way of your academic results. Some colleges offer work and study programs, where a company sponsors your tuition in exchange for working for them.
But if you are like the average millenial, you will probably graduate college with $30,000 or more in debt. There are many ways you can manage and optimize your finances, as to get a strong financial start as soon as possible. First, think about where you are going to study, and crunch the numbers. A few years at a cheaper college may allow you to then transfer to your top college of choice, and graduate there at a fraction of the price. Your state surely has great options at a lower cost than out of state colleges. So spend a few hours researching, and deciding which college offers the best return on your investment, both in terms of cash outlay in the next few years, and graduate salary.
Take MBAs for example. Prices vary greatly, and you can get one for as little as $10,000. On the other hand, if you can get accepted into a top MBA, your starting salary will be much higher, making it worth your while. A $10,000 difference in starting salary at age 30 means $350,000 more money until age 65 when you retire.
Once you have picked the best college for your needs, research financial assistance. There are a ton of grants and scholarships that can help you reduce your tuition costs. Spending a few weeks applying for as many as you can, even if that means “just” getting a few thousand dollars in extra help is a much better use of your time than working minimum wage to pay for college.
Now that you have your college budget written down, it is time to decide how you are going to pay for the remainder of the cost. Private student loans, parental help and part time work are usually the way to go. Once again, spend time finding the best rate for your student loans! If you are going to pay them off over a decade or more, even half a point difference in interest rate can add up to a lot of money.
Borrow only what you need for college, and work for your fun money, holidays, and other expenses. Your future self will thank you.