Working Your Way Around College-Age Credit Card Debt
If you were to go onto a college campus today, you would be shocked by two things. The first is the sheer number of credit card companies that have set up shop on campuses from coast to coast trying to talk impressionable college kids into getting more credit cards than they need, and how many students on campus are going to school full time, working full or part time and trying to get decent grades simultaneously. It doesn’t take a rocket scientist major to figure out that this is a combustible combination that can leave credit scores ruined before you reach the age of 22. Here is a common sense plan you can follow to get through your college years in good financial shape.
If you have been cut off from mom and dad’s bank account and you are looking down the barrel at four years (or more, very few students actually graduate in four years anymore) of tuition and room and board, there are ways around it. No matter which path you choose, you need to make out a budget that clearly shows your average expenses and your savings. If you have any sources of income, include those as well. The goal here is to do the least amount of damage as possible to your future credit.
Chances are, you already have one credit card. If you don’t, apply for a student card with a decent interest rate. Assuming you have no credit, which is what most students who haven’t established their credit yet have, you will be approved. Now, the trick is to use it wisely. Many, many college students fall prey to having a huge amount of buying power for the first time in their lives and they max out their cards in the their first weeks out of the home. You need a credit card to build your credit score, but you can’t, and shouldn’t, live off of it.
The next step is to visit your school’s financial aid office. The interest rates on government student loans like Stafford and Perkins loans is going to be better than almost every credit card out there, and significantly better than any credit card someone with no established credit history could get. While no one wants to leave four years of college with a mountain of student loan debt, you will be MUCH better off having low, fixed rate interest accumulating on student loan debt than you would with high interest credit card debt.
Depending on your major, you can work and go to school full time and be successful. If you’ve chosen a major like engineering, where the freshman workload is outrageous, you might want to simply see if you can survive on your loans. If you are a liberal arts major where the first two year work load is more manageable, working might be more of an option.
While student loan rules vary from state to state, many universities offer a program called work-study. Work study is like a scholarship that you have to work for to get. You get a job on campus, usually everything from working in the dining commons to the library to working as an assistant on the various athletic teams on campus qualify, and your weekly paycheck comes from this work study fund. It is much easier to get a job on campus with work study than it is without since the government pays the majority of your salary.