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5 Financial Mistakes Many College Freshmen Make

Tuesday | August 29, 2017 | by Ryan Bridges

Student managing finances

The years one spends in college are a unique and transformative time and are particularly exciting in the very beginning. It is a time when college freshmen leave their parents’ home for perhaps the first time. They are being asked to take on the responsibilities of being an adult. Although it can be very exciting, it can also be incredibly challenging. One area that college freshmen report having trouble in is handling finances. The following are the five most common financial mistakes many college freshmen make.

Not Knowing the True Costs of School

The cost of tuition is frequently brought up and people are always talking about how quickly the rates go up. However, this is not the only expense related to going to college or university. There are also the costs of housing, books, student activity fees, phone bills, gasoline, and food.

Each of these items deserves some attention. A lot of college freshmen had their parents cover some or all of these expenses for their whole school life. With the burden squarely on their own shoulders now, college freshmen should create a budget to know how much they are really spending and saving.

Accepting Credit Card Offers

In 2009, new federal regulations went into effect to prohibit credit card issuers from being on or near college campuses (within 1,000 feet of the campus). Despite this, credit card companies find ways to get to college students. The companies can still send direct mail or e-mail to these individuals. These students who are now legally defined as adults then get to make decisions about if they will accept the credit card offer or not.

For a lot of students, the temptation of having instant credit to spend is overwhelming. This leads to taking the bait and running up large credit card balances. This kind of mistake can have a negative impact on a student’s credit score and leave them with a large debt before they graduate from college. It is a mistake made by far too many college freshmen, but it is one that you can avoid. Just put your foot down and refuse to accept these offers.

Thinking of Student Loans as Free Money

Certain student loans that students borrow may not necessarily have to be paid back right away. In certain cases, some of these loans may not even accrue interest. That being said, these loans need to be paid back and are in no sense free money.

Many federal student loans have a six-month grace period built in for graduating students. These six months are meant to give a student enough time to find a job and start making payments on their loans. This may sound reassuring, but loans do not just go away. Do not let the grace period lull you into a false sense of security.

Not Submitting a Free Application for Federal Student Aid (FAFSA)

A FAFSA is a way students receive scholarships and federal grant money. It is a form that evaluates the financial situation of the student’s family to determine the amount of eligible aid and scholarships. It is a very important form that should be filled out as soon as possible. A lot of students make the mistake of skipping this step and it can cost them in the form of missing out on certain scholarship offers that they would have received.

Spending Money Unnecessarily

It is easy for any of us to spend more money than we really should. College students, in particular, have to be more cautious. For them, the temptation to spend money is everywhere. They can choose to spend their money on food, friends, family, and entertainment. Therefore, it is always a good idea to set and stay within your budget whenever possible. Be mindful of how you spend your money so you can have a financially responsible life.

Ryan Bridges is a contributing writer and media specialist for the CreditSoup.