Top Ways to Save Money At College

Top Ways to Save Money At College
Anya Kamenetz

College tuition at public universities is up 24 percent in just the last five years. With graduation right around the corner, many high school seniors and their families are wondering how they can save on one of the biggest expenses they'll face. Assuming you've already made your choice of colleges, here are some top ways to conserve resources while in school.

1) Limit Loans -- and take out the right kind of loans.

Many families still aren't clear on the distinctions between PLUS loans, subsidized loans, unsubsidized loans and private loans, and most students don't really know how much they're borrowing. Subsidized Stafford federal loans are the cheapest money you can get for college, with a 3.4 percent interest rate this year. After that, you should max out unsubsidized Stafford loans, and then parents should look at PLUS loans (where the parent is the borrower) before turning to the most expensive type of loan, the private or alternative student loan. Your college's financial aid office can help you make sure your financial aid package is the best possible deal. You can appeal a financial aid package, if you have compelling reasons based on your family's special circumstances.

2) Rethink your budget.

As a rule of thumb, students should not borrow more in student loans than their expected starting salary upon graduation -- so, $35,000 for liberal arts-leaning folks, maybe closer to $60,000 for budding engineers. If your bill is going higher than that, it may be time to talk about lifestyle. Do you really need a car, or can you take the bus for a year? Can you get by with a refurbished laptop? You may be required to live on campus the first year, but are there cheaper housing options down the road? Or can you live at home that first year and move to campus later?

3) Get a job.

Some college freshmen are leery of working, but you shouldn't be, as long as you limit your hours. A 2008 study of the National Survey of Student Engagement found that working more than 20 hours a week was associated with lower grades for first-year students, but working 20 hours or less, as long as it's on campus, was actually associated with higher grades.

3) Start slow with credit.

In 2004, the last year when the figure was available, the average college student carried a balance of $2,169. In many cases getting a student credit card now requires a parent co-signer. To limit your risk even more, you might consider starting your credit history with a secured credit card. With this kind of card, such as the Open Sky Secured Visa, the charges are backed up by a cash deposit, which may even earn interest. The card will not let you charge more than the amount already in the bank, so you can't rack up crazy overdraft charges.

4) Graduate on time.

This may seem like a no-brainer, but hear me out. According to the Education Trust, only 57 percent of students who started a four-year college in 2002 had graduated by 2008. In case math's not your strong suit, that's six years later -- 150 percent of the time allotted. It goes without saying that staying in college past four years will increase your bill considerably.

So what can you do to raise your chances of graduating? Declaring a major early can help, especially at public colleges where classes get crowded. You should also plan on picking up extra credits in the summers, perhaps at cheaper community colleges.

You can compare the four-year graduation rate for your chosen college and other similar schools at http://www.collegeresults.org/.

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