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Deciding to become a student loan borrower is a choice that can affect your finances long after you've left college.

Student loans can be a great way to help you cover the costs of college, but it is very important to remember that they must be repaid. Every dollar that you must spend on student loans reduces the amount you can spend on a car, a home, vacation travel, and other expenses. So borrow what you must for your college education, but don't borrow any more than absolutely necessary. When you are out of college, you'll be glad you followed this advice!

Thinking about a student loan?
Check out how much you'll really pay.

There are several ways to reduce the total cost of your student loan borrowing:

• Borrow less.
  • Live like a “poor” college student.
  • Explore all other financing options, including scholarships, grants, work-study, and other part-time work
• Borrow only subsidized Stafford loans, if you are eligible. Then the government will pay the interest for you while you are in school and during authorized grace and deferment periods. And you will get a lower interest rate.
• Make interest payments while you are in school, if you borrow unsubsidized loans.
• Make principal payments while you are in school, and pay ahead on your loans during repayment periods. There is no penalty for early repayment of Stafford loans.

Setting a spending plan, or a budget, is a good idea for every college student. It's a great way to keep track of what you've spent and make sure you'll have enough money to cover your expenses in the future. What's most important is that you're in control of your finances. Being smart about your money now will prevent overwhelming debt when you leave college.

So how do you make a budget that's going to work? Here are some tips:

Keep it simple
A budget shouldn't be so complicated that you don't understand it or don't want to use it. Begin with many categories and combine them as you become more experienced. For example, you may want to begin by keeping track of groceries, snacks, and eating out as separate categories. However, you may be able to combine these into a general food category once you have a good idea of how much you'll need to spend.

Be realistic
Keep your budget realistic or you'll have a tough time sticking to it. Do your best to eliminate excessive spending, but if you realize you'll never cut a certain luxury (for example, you just can't give up Friday night movie rentals), don't expect to keep that area below the amount that will cost. Instead, cut spending from another area you don't care about as much, like eating out or clothing.

Analyze your spending
Look at each expenditure and think about these questions:

• Was this a need? If so, could it have been purchased for less? Could you plan ahead and stock up when it is on sale? Is there a generic version? Could you buy this second-hand to save money?
  
• Was this a want? If so, why did you buy it? Beware of shopping for entertainment and don't fall into the trap of trying to keep up with your friends. College is not the time to splurge. Being responsible now will help you leave college without excessive debt, leaving more of your money free for spending later.

Make informed spending choices
Before making a purchase, check out your budget. Can you afford it? Do you really need it? Can it wait another month? Don't buy things if you don't have the money to pay for them. Plan ahead to make sure you have the money to pay for what you need.

Evaluate your income
The purpose of budgeting is to fit your spending to your income, to live within (perhaps even below) your means. If you've adjusted your spending as much as you feel you can and it's still not working, then you have to increase your income. Think about getting another or better-paying job to help you make ends meet.

Reward yourself
You've worked hard, pinched pennies, and made your budget work for you. Way to go! Now how to reward yourself? Instead of spending money, relax, spend time with friends, or take a walk. Think about how good it will feel to escape heavy debt as you leave college.

Are you ready to budget? Visit our Budget Calculator.

Credit card companies offer many incentivs to college students to entice you to sign up. Be extremely cautious!

Free clothing, mugs, or low introductory rates may sound good, but once you have signed up, that low rate may be increased to as much as 20%. Even if you have signed up, keep in mind that you can cut up the card and call the company to tell them you don't want it.

If you'd like to have a credit card, don't get carried away charging more than you can afford. If you are unable to pay off the entire balance each month, you may be on your way to financial trouble. Large amounts of credit card debt could affect your ability to continue with college or to make car or house payments later on. Think about sharing a credit card with your parents; they can help you make smart financial decisions.

Top 10 Ways to Save Money at College

Don't let college debt take over your life. Check out these easy ways to save money at college - you'll be glad you did later.

1. Don't buy what you don't need. It's easy to let your money slip away on fun or convenient purchases. You'll be glad to have the cash available when you really need it.
2. Don't get a credit card! If you must have one, shop around for low interest rates and no annual fees. Then only use it for emergencies.
3. Save money on gas: walk, ride your bike, and share rides with friends.
4. Whether you'll be living in a dorm or off-campus, get a roommate to share the expenses and fun of college.
5. Long distance phone calls are expensive. Look into pre-paid phone cards or use e-mail.
6. Buy used books - either from the campus bookstore or from a student who finished that class last semester.
7. Find free fun: Take advantage of on-campus entertainment such as concerts, plays, and sporting events.
8. Stop eating out. Use your college meal plan or learn how to cook.
9. Instead of going to the movies, rent one! Or better yet, see if your public library has a video section.
10. Stay on top of your finances. Bounced checks and late fees can quickly drain your money away.

Keep in mind that college isn't the time to splurge. Staying out of debt now will mean more freedom later!

Check out 40 Money Management Tips, brought to you by NEFE.

Do I Really Need It?

You're in a store, facing aisle upon aisle of new and exciting products. Before spending your hard-earned cash, think about whether you really need it or if your "I want it" monster is taking over.

Some questions to ask before handing over your money:

1. Can it wait? Go home and think about it. You may decide you can live without it.
2. Can I get a better deal? Shop around. See if you can buy it used, use a coupon, or wait for a sale.
3. How long did it take me to earn it? Before making a purchase, compare the price to your hourly pay, minus taxes. Is that new sweater really worth the ten hours you had to work to earn it?
4. How useful is it? See if you can put the item to more than one use. For example, a new backpack may be used for:
   • Your school books
   • A suitcase for weekend trips
   • A picnic basket
   The more uses an item has, the more valuable it is.
5. Do I currently own something that meets this need?
   That new stereo may have great features, but does your old CD player really need to be replaced?

It's worth taking the time to ask these questions to keep your money in your pocket.

Think About Your Future

Show Me the Future, http://showmethefuture.com, is an exciting game that gives you a fun way to help you think about your future! You'll be assigned an identity including a job and a family, and you get to make choices like what kind of home you'll live in, the type of vehicle you want to drive, and the amount of your income to spend on food, clothes, and entertainment.

Play the game again and again - it's different every time. And each time you play, you'll learn a little more about how to make the best choices you can in your own life.

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