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Debt Management for Students

         A Quick Lesson in Personal Finance

         Avoid Back-to-School Overspending

         $ Money Saving Tips $

         Credit Cards
         Things to know about credit cards

         Manage Debt Now!
         Close Look at Credit
         Record Keeping

Whether you are just starting college or graduate school or if you are leaving college to start a new career, you will be facing new financial challenges.



According to recent estimates, about 50% of all college students leave college with a diploma and debt of about $17,500 with close to $13,000 in student loans and the remainder on credit cards.

Excessive debt comes from wanting, and getting, everything now. Debt obligates your future income. Debt can be expensive. Interest payments on debt work against you.

A survey of 1996 bankruptcy filers by Visa USA reported that 8.7% were aged 18-25.

Nellie Mae Corporation, a leading non-profit source of college student loans, reports that 65% of applicants have credit cards, 20% having 4 or more cards. The average undergraduate in 1996 carried a credit balance of $2,226, while 14% reported balances between $3,000 and $7,000, and an average available credit limit of $6,122. Similar statistics for graduate students were higher.


A Quick Lesson in Personal Finance

Borrowing for school has become a common practice for college students. Students should look at borrowing to help meet educational expenses as an investment in their future, but should use common sense and good personal finance practices. Don’t feel alone if it seems like there is never enough money to make ends meet. It happens to almost everyone at one time or another. The key is to avoid making bad financial decisions that you will have to live with later on.

Make sure you have researched all potential sources of scholarships and grants before borrowing. The Financial Aid Office is a great resource center that you can use to find ways of paying for school.


Avoid Back-to-School Overspending

As the days become shorter we realize that fall is just around the corner, and so are those back-to-school items. The following are some tips to help you create your own "Back-to-School Spending Plan".

TIP #1: Try to set aside money each week to prepare for back-to-school shopping. Try to pay with cash wherever possible or use layaway if available.

TIP #2: Create a master list of needed school supplies. Buy in bulk and save some money.

TIP #3: Develop a spending plan before you begin shopping. Determine a dollar amount both appropriate and affordable to spend on each item.

TIP #4: Analyze what is needed. Examine what you have from last year to determine what is wearable and what needs to be replaced. Set priorities on purchases. If your priorities include a more expensive item than the plan will permit, start saving earlier.

TIP #5: Try to shop as early as possible and avoid
the last minute rush.

TIP #6: Check for sales before shopping.

TIP #7: Use the Internet to shop for discounts. You may be able to download coupons for popular stores at different web sites including, www.coolsavings.com and www.mycoupons.com.

TIP #8: Compare price and quality to ensure the best deal.

Source:CCCS Credit Counseling


$ Money Saving Tips $

Figure out a monthly budget and stick to it. Spending an extra $10 to $20 per week adds up quickly and you may find yourself running out of money if you don’t budget accordingly. Keep accurate, organized records of your finances to help you plan and budget.

Be a well-informed borrower. Borrow as little as possible and know the differences between your loans. Know the terms and conditions of each loan you borrow and understand your rights and responsibilities.

Be realistic about your salary expectations once you graduate. Educate yourself about the job market that you plan to pursue. Plan for the future by estimating a realistic future salary and figuring your discretionary income.

If awarded Federal Work Study, set your work schedule and make sure you work your full schedule to maximize on earnings potential!

If you need furniture you can often find some good deals on barely used furnishings and appliances at thrift stores.

Thrift shops can also be a great place to get clothes at a fraction of retail price.

Take advantage of free entertainment on campus and in the surrounding community. There are many wonderful things to do that cost little or nothing. Check out the school or local community paper for listings.

Don’t bring a car to college unless absolutely necessary. Maintaining a car is expensive. Public and campus transportation is generally accessible and more affordable.

When traveling, be sure to look for discounts before booking flights or renting cars. Many agencies give student discounts.

For school supplies and household items, shop at discount stores which are usually less expensive then convenience stores.

Keep your student ID handy at all times. Don’t hesitate to ask museums, movie theaters and public transportation, etc, if they offer student discounts.

Look for sales and use coupons when making purchases. Most items you want go on sale at some point.

Try bringing your lunch or coffee some days. Buying them each day adds up!

Take advantage of tax benefits related to educational loans.

Source: Debt Management Counseling/Jan Marie Coombs - Citizen's Bank Education Finance    


Credit Cards

Many people think that credit cards are "free". In reality, you pay for the use of credit cards in every purchase you make. The merchant providing the service pays the credit card company and charges you in the price of the goods and services you buy (1.5 % to 3% or perhaps more). If you pay your credit balance each month, that is all you pay. If you carry your balance forward, you will also be charged interest of up to 19% or more on your balances.


Things to know about credit cards
Credit cards can be a very handy tool for students if used correctly. If not, they can become a burden and can cost you a great deal in the interest that you pay the credit card companies.

When applying for a credit card look for the best deal.
All credit cards are not the same.

1. Look for the lowest interest rate you can find.

2. Look for a card with no annual fee.

3. Use only one credit card.

4. Don’t charge more than you can pay off the next month.

Paying balances in full at the end of each month is the best way to make sure that credit card debt does not get out of hand.

Avoid using credit cards to buy things that you could not afford to buy if you did not have one.

Even small card limits of $500 to $1,500 can seem enormous when you don’t have the money to pay your balance and interest charges begin stacking up every month.


Manage Debt Now

  • Stop spending money on things you don’t need.

  • If you can, live at home for a few months after graduation to save on rent.

  • Don’t use your credit card.
  • If you have a summer job, work overtime or get another part time job and pay off your credit card debt.
  • Remember, you can only spend your money once. After that you are spending the credit card company’s money and they charge you big time for the privilege!

Consumer Credit Counseling Service is a free nonprofit foundation, available to help you manage your debt. Call (800) 388-2227 or contact them at www.creditcounseling.org.


Close Look at Credit

  • Maintaining good credit will help you: 
  • Rent an apartment
  • Buy a car or house
  • Get good interest rates on loans and credit cards
  • Enable you to continue your education

Signs that you might have a problem with too much debt are:

  • You regularly spend more than you take in every month.
  • You charge for small purchases such as groceries and gas
    because you don’t have cash available.
  • You cannot pay more than the minimum on your credit card.
  • You are receiving calls from credit card collectors.

Record Keeping

  • Keep all copies of loan, credit card and
    checking account paperwork.

  • Keep all notification from lenders, guarantors and servicers.

  • Keep all copies of utility bills, etc to help in making
    an accurate budget.

  • Read and respond to all mail.


Keep in mind that the value of your Worcester State University education will become a life-long asset to you. It is not only an asset of monetary value but one of how you approach a lifetime of experience and challenges. The development of prudent financial decisions such as how much you borrow or spend while in college and the judicial use of credit cards and checking accounts and other financial management tools will affect how you approach finances and debt management in the years to come. 


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