Financial Advice for College Students: 7 Habits That Mean Borrowing Less

The best financial advice for college students is pretty simple: every dollar you don’t borrow now saves you that dollar plus interest later. Most of the habits below come back to that.

You don’t need a finance class or a big paycheck to pull them off. You need to know what you’re signing, keep a rough budget, and stay away from the few mistakes that follow people for years.

1. Borrow only what you need

Your financial aid offer might list more in loans than you actually need. You can accept less than what your school offers, and you can request more later, up to your limit, if something comes up.

Do the math before you click accept. Take your school’s bill, subtract grants, scholarships, savings and what you’ll earn, and borrow the gap, not the max.

That refund check feels great in September. It feels a lot less great when the first payment shows up.

If you do need loans, federal ones come first. Our guide on applying for a Stafford (Direct) loan walks through how they work, and comparing private student loans covers what to do if federal aid isn’t enough.

2. Pay the interest while you’re in school

Subsidized loans don’t charge you interest while you’re enrolled at least half time. With unsubsidized loans, you’re responsible for the interest the whole time, including while you’re in school, and unpaid interest can be added to your balance later.

Eleven bucks a month is doable for a lot of students with a part-time job. Pay it every month and you leave school owing what you borrowed, not more. Here’s why paying student loans while you’re in college pays off.

3. Keep a simple budget

You don’t need anything fancy. Once a month, write down two things:

• What comes in: your aid refund, paychecks and any help from family.
• What goes out: rent, food, your phone, gas or transit, and fun money.

The second number needs to be smaller. That’s it.

An app makes it easier to see where the money actually goes. We rounded up the best budgeting apps for college students.

Watch the small stuff. Food delivery and subscriptions you forgot about are where most student budgets leak.

4. Build a small emergency fund

A dead laptop or a surprise car repair shouldn’t go on a credit card or turn into a bigger loan. Start with a goal you can actually hit, even a few hundred dollars, and keep it in a savings account you don’t touch for anything else.

Once you have that cushion, keep adding to it bit by bit. After graduation, it’s what stops one bad month from turning into a missed student loan payment.

5. Be careful with credit cards, and watch your credit

If you’re under 21, a card issuer can’t open a credit card for you unless you have your own income to make the minimum payments or a cosigner who’s 21 or older.

That rule exists for a reason.

A card can help you build credit, but only if you pay the full balance every month. Carry a balance and you’re paying credit card interest on last month’s pizza.

Check your credit reports at AnnualCreditReport.com. It’s free every week, it doesn’t hurt your score, and it’s how you catch mistakes or identity theft early. For your score, Credit Sesame shows it free with no credit card required. More tips are in our guide on how to improve your credit score.

6. Earn a little on the side

Every dollar you earn during school is a dollar you don’t borrow. If you qualify, Federal Work-Study gives you a part-time job that fits your class schedule and pays at least the federal minimum wage.

For spare time between classes, survey and rewards apps can cover a few small bills. Survey Junkie lets you cash out starting at $5, and Swagbucks pays in points for surveys and shopping.

Neither one will make you rich. Treat it as pocket money, not rent money.

For bigger sign-up bonuses, ReferralWallet and SavingLoop both track which app sign-up offers are paying. And if you want more hours, our guide on making money as a broke college student has ideas that fit around class.

7. Know your loans before you graduate

It’s easy to leave school without knowing exactly how much you owe or who to pay. A few minutes now fixes that.

1. Log in to StudentAid.gov and write down every federal loan, its balance and its rate.
2. Find your loan servicer. That’s who you’ll actually pay.
3. Learn when payments start. Most federal loans give you a six-month grace period after you graduate or drop below half time.
4. Estimate your payment before it arrives, with the RAP calculator if your income will be modest.

Bottom line: borrow less, pay the interest if you can, and know your numbers. Do those three and you’ll graduate with a lot more choices than most of your classmates.

Next stepSee how long a balance will take to pay off with our student loan payoff calculator.