Students & 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.

Written By : Catherine J. Byerly
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Why is Financial Literacy Important?

Let’s face it — money makes the world go ‘round. That’s not to say that love, happiness or other life goals aren’t important, but having money makes those goals and dreams achievable. Whatever your goals may be, perhaps to find a cure for cancer or start a family, you will need money to achieve them. Without financial literacy, making, keeping and growing your money will be nearly impossible, and your goals will stay at arm’s length.

Attending college or trade school is a wise choice because an investment in your professional know-how gives you the opportunity to make more money and accomplish your dreams. But for many Americans, college is our first lesson in financial literacy, and it isn’t always a pleasant one.

Finding the right resources is the first step in how to become financially literate.

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?”

FAFSA deadlines vary based on the school you’re applying to. 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
  • Kentucky
  • Vermont
  • Washington
States with fast-approaching deadlines:
  • Tennessee, Jan. 17
  • Connecticut, Feb. 15
  • Idaho, March 1
  • Maryland, March 1
  • Michigan, March 1
  • Oklahoma, March 1
  • Rhode Island, March 1
  • West Virginia, March 1
  • California, March 2

“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 171,000 athletic scholarships were awarded in 2016. Division III schools also awarded academic grants or need-based scholarships to more than 153,000 students athletes. However, athletic scholarships rarely cover the full cost of attendance. For instance, in the 2014-2015 school year, the NCAA issued an average scholarship of $14,270 to male Division I athletes and $15,162 to female Division I athletes.

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

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 $37,172 each, the average amount borrowed by the class of 2016.

7 out of 10 college students will graduate with student debt – and that debt can have a long-term impact.

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 monthly payments of $381.49 to pay off the total amount of the loan. In the end, Mike will have paid $8,607.24 in interest. estimates that to be able to comfortably afford those payments, he will need an annual salary of at least $45,778.80.

Graph showing the difference between federal and private student loans

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 monthly payments of $503.04 to pay of the total amount of the loan. At the end of that decade, Brian will have paid $23,192.48 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 $60,364.80 a year to comfortably make those payments – and the average starting salary for a Class of 2016 college graduates was $50,556.

1/5 of graduates are like Brian

Choosing Colleges Wisely

Nothing affects the cost of college more than your choice of school. Public universities tend to be significantly less costly than private universities. For example, according to the College Board estimates, 2016-2017 school year tuition cost $9,650 for in-state students of public colleges, $24,930 for out-of-state students at public colleges and $33,480 for students and private colleges.

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 Higher 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
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.
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. According to a 2014 article from the The New York Times, only 19% of full-time students at most public universities complete a bachelor’s degree in four years.
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.
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, and some occupations offer higher salaries than others. 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
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.

Sticking to a Budget

It’s not just tuition that will cost you money in college — you also have to take into account living expenses. For most students, college is the first time you will tackle “adult” bills like rent, electricity and car loans on your own.

College can be a rude awakening for some — even though your parents pay for room and board, the traditional term for the cost of housing and a meal plan at college, they typically won’t have tons of extra cash to send you for fun money. In the U.S. during the 2016-2017 school year, room and board ran an average of $10,440 at public universities and $11,890 at private universities.

One way to save yourself and your parents some money is by picking an affordable place to live. Dorm rooms may not be as fun, and are sometimes more expensive than apartments, but offer vast security options and make it easy to get to class. An off-campus apartment may seem like it’s less expensive, but don’t forget to tack on extra costs for parking, groceries and other bills like gas and water.

This is where making a budget comes in handy. By keeping a budget, or list of income and expenses, you can estimate how much money you’ll need each month to keep the lights on and how much extra you’ll have to spend on the fun stuff. Your fixed expenses that stay the same each month, like rent, Netflix subscriptions and fraternity dues, and flexible expenses that can vary from month to month, like electricity bills and groceries, all need to be accounted for in the budget. An allowance from your parents, paychecks from your part-time job or the few dollars you earned from your garage sale are all sources of income.

Making a budget is an excellent way to practice your financial literacy. It will help you set and attain your goals, both academically and financially, and will be a skill you’ll use for the rest of your life.

Pro Tip
“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.

  • 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.

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.

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 2015, roughly 65% of graduates with bachelor’s degrees participated in internships, and 60% of employers said they prefered to hire candidates who had internship experience.

Pro Tip
62.8% of 2015 graduates had an internship during college.

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, 72.2% of students with paid internships and 43.9% of students with unpaid internships at for-profit companies received job offers. Plus, graduates from paid internships received higher starting salaries than graduates who got a job after unpaid internships. The median offer to previous paid interns at for-profit companies was $53,521 in 2015.

Although co-ops are less popular, NACE studies also show they correlate to job opportunities for participants. Unlike an internship, which often occurs part-time or during semester breaks, students stop taking classes for anywhere from 3 – 12 months to participate in a cooperative education program. Instead of completing coursework, co-op students are expected to complete significant work projects on the job. In a 2015 survey, only 5.6% of students participated in co-ops.

Starting Your Career

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.

Graduation cap

Another place to look for a job is through your school’s alumni association, or even an alumni group on websites like LinkedIn. Alumni networks exist so people who had similar experiences at your alma mater can connect and help one another professionally. As a new graduate, you may be able to enter the alumni association for free or a reduced rate. If there are any networking events, make sure you attend and bring plenty of business cards.

In the best case scenario, you will graduate with a great job offer in place. Make sure to plan ahead for this, though, 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.
Graph showing the importance of investing in your retirement

12 Cited Research Articles

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  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
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