Students and Financial Literacy

A college education is one of the most important investments you will ever make. By managing how you pay for school and what you spend money on, you can worry less about debt and more about your career come graduation time.

Receiving scholarships can greatly reduce how much you pay for college. Scholarships come in many shapes, sizes – and dollar amounts. Many students receive partial scholarships from different sources.

Page Contents

    Making the Big Decisions

    Many feel pressure to obtain a degree, make enough money to handle living expenses while in school, and live out the college experience—but it’s hard when the dream seems unaffordable.

    Finding the right resources is the first step.

    Students hope to get an education that will allow them to stay competitive in their field and face many choices regarding the best way to get a degree. This involves deciding which school to go to, which scholarship to apply for and how much loan debt to take on.

    Use this student guide to financial literacy to help you determine where to begin your college career.

    Need-based Scholarships

    Applying for need-based scholarships starts with filling out the Free Application for Federal Student Aid, or FAFSA. The FAFSA checks to see what free money you’re eligible to receive from the government and it’s also required before applying for many non-federal scholarships as well.

    “When Should I Fill Out My FAFSA?”

    You can fill out your FAFSA as early as the January 1st date before the fall semester you plan to attend. The federal deadline is June 30th, however many states have earlier deadlines.

    Hurry, hurry! States where awards are made until funds run out:

    • Alaska
    • Illinois
    • North Carolina
    • South Carolina
    • Oregon
    • Tennessee
    • Vermont
    • Washington

    “I don’t have access to my parents’ information — won’t I need it?”

    You are considered independent and thus only need your own information to fill out the FAFSA if you:

    • Are 24 years old or older
    • Plan to enroll as a graduate, law or medical student
    • Are a U.S. Armed Forces veteran
    • Have children
    • Are married

    Merit-based Scholarships

    For those who’ve made big achievements academically, athletically or artistically merit-based scholarships.

    Some scholarships will ask you to submit letters of recommendation from teachers, coaches or organization leaders who can speak to your best qualities. When asking someone to write a letter for you, always give them plenty of time, tell them the best way to get the letter where it needs to go, and the deadline it needs to be there by.

    Most scholarships must be renewed each year. Make sure you stay on top of any requirements, like GPA and class completions, and reapply by the deadline.


    Great grades and standardized test scores can earn you scholarship dollars. Check if your school or state offers a program to help subsidize the cost of college as a reward for academic achievement.


    More than 177,000 athletic scholarships awarded in 2012. However, athletic scholarships rarely cover the full cost of attendance. For instance, the average amount the NCAA issues is $8,707.

    The Arts

    Some schools offer scholarships for music and the performing arts. Make sure you check out the audition deadline to make sure your application is accepted.


    Many organizations give away scholarships for writing an essay around a topic critical to its cause. If you’ve got a way with words, this could be a great way to earn free money towards your education.

    How Student Loans Work

    Seven out of ten college students will graduate with student debt – and that debt can have a long-term impact.

    Federal Student Loans vs. Private Student Loans by the Numbers

    Take these two students, Mike and Brian. Both attended the same school and accepted loans for $28,400 each, the average amount borrowed by the class of 2013.

    Federal vs. Private Interest Rates : Monthly Payment : Amount of Interest Paid over 10 years $291.47 / month $6,575.90 $384.33 / month $17,719.47 Mike 4.29% 10.57% Brian (Federal) (Private) $ over 10 years

    Mike took out a loan with the average interest rate offered by Federal Stafford Loans, 4.29%, and deferred interest until graduation. After college, it will take him 10 years of making payments of $291.47 to pay off the total amount of the loan. In the end, Mike will have paid $6,575.90 in interest. estimates that to be able to comfortably afford those payments, he will need an annual salary of at least $34,976.40.

    Now let’s take Brian. He’s paying an interest rate of 10.57%, a rate that’s on the high end for private loans but not unheard of. It will take him 10 years of making payments of $384.33 to pay of the total amount of the loan. At the end of that decade, Brian will have paid $17,719.47 in interest – more than double what Mike paid.

    And there’s more bad news for Brian. estimations say that Brian would need to make at least $46.119.60 a year to comfortably make those payments – and the average starting salary for a Class of 2013 college graduates was $45,327.

    of are like

    Choose Wisely

    Nothing affects how much the cost of college more than your choice of school. Public universities tend to be significantly less costly than private universities. Compare tuition for a public four-year college at $16,860 to a private nonprofit school costing $39,596.

    Two-year schools, known also as state colleges, community colleges or junior colleges, are also a great way to reduce your overall cost for college. Sometimes called a 2 + 2 plan, community colleges often work with nearby four-year universities to ensure all credits earned at a two-year school easily transfer and apply toward a bachelors program at a university. According to the Chronicle of High Education, this route could save you anywhere from $6,800 to $35,000.

    In order to ensure you’re making the smartest investment possible with your time and tuition dollars, here are several factors to consider:

    • Cost of Attendance
    • Graduation Rates
    • Program Offerings
    • Average Starting Salary
    • Out-of-State Costs

    Cost of Attendance

    Cost of Attendance

    Some schools come with a higher price tag. Schools that accept financial aid all publish “Cost of Attendance” figures that estimates the total cost a student would spend including tuition, books, housing, food and personal expenses.

    Graduation Rates

    Average Graduation Rates

    Your goal is to walk off campus diploma in hand, so it’s important to see just how many students at a school are doing that. On average 59% of U.S. university students obtained a bachelor’s degree in four years.

    Program Offerings

    Your School’s Program Offerings

    It’s okay to not be sure what major you’re interested in on day one. Still, make sure the college you select has a good selection of programs that interest you and could develop into a career path.

    Starting Salary

    Average Starting Salary

    You already know your college education is an investment in your future earnings. According to the U.S. Census Bureau, someone with a bachelor’s earns an average of $68,812 a year. But not all degrees are created equal. Graduates of some schools earn higher salaries than graduates of other schools. Because of that you can’t use just the national averages to predict your starting salary after graduation.

    In-State Tuition for Out-of-State Colleges

    In-State Tuition for Out-of-State Colleges

    Have your sights on a great school in another state? Don’t lose hope that it will be financially out of reach. Some schools allow top performers to apply during their sophomore year for a waiver allowing them to pay in-state tuition. Plus, programs like the New England Regional Student Program offers in-state tuition for students from neighboring states.

    It All Adds Up

    It’s not just tuition that will cost you money in college. There’s also living expenses. After all, when you’re on your own for the first time, it’s easy to get carried away with spending.

    Deciding where to “room” will be one major choice. Sure, having your very own apartment sounds great, but dorm rooms offer a great opportunity to live a traditional college experience. Living on campus means you’re both closer to the library and closer to the fun. However, living on campus typically means paying more money.

    “Room and board” is the traditional term for the cost of housing and a meal plan at college. In the U.S., room and board will run an average of $8,887 at public universities and $10,089 at private universities.

    Getting the Most out of Your Meal Plan

    The “board” part is your meal plan. Meal plans can be a great way to ensure you’ve got something to eat while you’re studying hard. But don’t be duped into buying a bigger meal plan than you need.

    Some colleges require you to purchase a meal plan if you live on campus. Still, you should be able to select the one that meets your needs. Make sure you monitor your usage: at the end of the semester, you usually lose unused credits for meals.

    Consider if you can make meals at home. Look at your price-per-meal to see if going out to eat at places off campus cost the same price or less. You can do this by taking the total cost of your meal plan and dividing it by the number of meals you get, which will give you a good idea of how much your meal plan actually costs.

    Credit Cards for Students

    “You’re approved!” College is the first time many people will receive an offer for a credit card in the mail, promising “free money” and an array of benefits.

    Sure, credit cards can be useful tools to build your credit, they can also lead to costly mistakes. Credit cards come with a type of interest called APR, or annual percentage rate. Most student credit cards come with an APR of 12.99-13.99 percent. That means if you charge $1000, you’ll end up spending 129.99 on interest every year you have that balance.

    On the flip side, building your credit early can pay off. As much as 15 percent of your credit score comes from the length of your credit history. A good way to manage your card is to charge a few things a month, like say streaming entertainment sources, and then set up your card to automatically be paid out of your checking account each month.

    If you’re like most college students you always have your cell phone with you, so you might as well use it to help with managing your money. Apps like Home Budget and Mint Quickview can help you establish and stick to a budget.

    • Credit card companies report late payments to credit bureau, which can negatively impact your credit before you even begin your career.
    • Damage from missed or late credit card payments can cost you in how good of interest rates you get on major purchases later in life, like a car or home.

    Planning for the Future

    Finding a job or internship

    Having a part time job or internship is a great way to gain experience in your field and increase your chances of getting a job when you graduate. In fact, 52 percent of college graduates with job offers straight out of college had internships first.

    Paid internships are the best of all — and not just because you get paid while gaining critical entry level experience. According to a report from the National Association of Colleges and Employers, 42 percent of paid internships translated into a post-graduation, full-time job offer. Plus, graduates from paid internships received higher starting salaries than graduates who got a job after unpaid internships.

    56.9% of 2014 Graduates had an internship during college.

    Starting Your Future

    Your university’s career resource center is a great place to make sure your resume and interview skills are on point and ready to go post-graduation. They also can help provide job lists of who’s looking for recent college graduates in your field.

    Best case scenario you graduate with a great job offer in a great place, right? Make sure you plan ahead because moving and starting your career is going to cost money. The average move will cost between $1,000 and $3,000, and many new places you move into will ask for a deposit on top of your first month’s rent.

    Investing in Your Future

    You can start investing as early as your first paycheck. By investing early in life, you can maximize earning interest on your investment.

    Investment options in your 20s:
    • If your job offers a 401(k), make sure you’re contributing to it on day one. A good rule of thumb is for every annual raise you get, put half of the raise towards your 401(k). That way you’ll never miss the money.
    • If you inherit money, using it to purchase an annuity is a great option to start a nest egg early. If you need the money later, you can always sell payments.
    • Roth IRAs are another good option if the company you work for doesn’t offer a retirement package.
    Click To Enlarge
    Click To Enlarge

    Page Sources

    1. Adams, S. (2012, November 12). 6 Things You Must Do To Get Your First Job After College. Retrieved from
    2. Bidwell, A. (2014, November 13). Average Student Loan Debt Hits $30,000 - US News. Retrieved from
    3. Kantrowitz, M. (2015). FinAid Loan Calculator. Retrieved from
    4. National Association of Colleges and Employers. (n.d.). The Class of 2014 Student Survey Report. Retrieved from
    5. Pennington, B. (2008, March 9). Expectations Lose to Reality of Sports Scholarships. Retrieved from
    6. Ronstadt, R. (2009, July 21). Community College: Savings Or A Trap?. Retrieved from
    7. Solomon, J. (2014, September 16). Schools can give out 4-year athletic scholarships, but many don't. Retrieved from
    8. Supiano, B. (2014, November 11). Forget the Rise in Tuition and Fees, What About Living Expenses? Retrieved from
    9. The Chronicle of Higher Education. (2014, November 13). Tuition and Fees, 1998-99 Through 2014-15. Retrieved from
    10. U.S. Department of Education, National Center for Education Statistics. (2015). The Condition of Education 2015 (NCES 2015-144), retrieved Williams, G. (2014, April 30).
    11. The Hidden Costs of Moving. Retrieved from from
    12. You know you have to fill out the Free Application for Federal Student Aid (FAFSA). Retrieved from