Don’t Study your way into Debt

Although I was in university many years ago, I remember still the wide range of financial situations I saw during those years. I had a roommate who ran out of money and ate plain rice for weeks. I had a friend who got a great summer job, had a wonderful summer of going out and having fun, and ended up with nothing by September. Most sadly, one of my political science buddies, who was pulling As in the class, had to drop out because he had no money.

Today, money and school are an even more combustible combination. Tuition now runs over $5,000 a year for university. Colleges will run less, but no matter where you study, you also have to pay rent, eat, travel and buy things like clothes and the occasional drink and movie ticket.

Ideally, you’ve got a registered education savings plan (RESP) that you can draw down while in school. But even with that and great summer jobs (which are hard to get!), money is still tight. So how do you go to school and not run up a scary debt that will set you back once you’re back in the workforce? Here’s some ideas:

• Work. Sure, that’s a no brainer. But students have to stay focused on getting a job during summer breaks, and working during the school year. The best school-year jobs don’t pay the most. A minimum wage gig with limited hours where you can make enough for groceries and spending money, I think, is ideal. Programs like the Ontario Work Study Program, which is part of OSAP (Ontario Student Assistance Program), helps fund part-time jobs on Ontario campuses: fulfilling work that won’t get in the way of your studies. Caution here: intense jobs with a boss who doesn’t understand the pressures of school can impact your marks and won’t help you in the long run.

• Take care of the pennies. Yes, the dollars will take care of themselves. Eating out a lot, taking cabs, drinking cappuccinos — these constant small purchases will erode your summer savings quite rapidly. And when you get used to dropping money on a daily basis, it’s a really hard habit to break!

• Assess big costs. Be sure you’re set up in an affordable place to live. You might have to trade off extra space and bring in another roommate. Find good transportation to get to school: biking or taking transit will probably cost you less than having a car and driving it alone daily. (Carpooling might ease the burden if you have a car already.)

• Plan ahead. Check out your course outlines over the summer and buy the books used, in advance. Buy a student transit pass or bulk tickets instead of cash every time you ride. Use the resources at school to find out about things like student discounts or get your hands on coupon books.

• Be creative. Learn to cook nice meals and have friends over instead of eating out. Do your own mending. Shop in thrift stores. Sell some of your childhood toys online to make some cash.

• Leave the credit card at home. Use your card for large, planned purchases like flights or train rides home. Do not take it out on a Saturday shopping spree. Credit cards are the top way people get into debt: debt that is hard to get rid of due to the high interest rate on the card. Just make the minimum payment every month and it won’t be long before you have a pile of debt that’s hard to get rid of.

• Go home. If your parents are helping you out with school, great. But even if they’re not funding your education, they’re often keen to feed you when you visit. So visit! These trips home give you a break from student life and a moment to enjoy the finer things in life like meals out and a gift of new underwear from your mom.

• Think ahead. Look at going to school as an investment in your future. These are years that are not full of decadence and frills, perhaps, but they are important for the coming years. Remind yourself as you pass over a nice sweater or a fancy bottle of wine: my time will come, I just have to keep doing this.

• Repay your debts. When you are finally done school, visit your bank to take a look at your loans. Most students just pay off the minimum. Try to really understand your loans: how much interest you’re paying and what the terms are. Many loans have a federal and provincial component, and they often have different rates. When you do start making more income, you can pay off the higher interest loan first.

Going to school these days is a pricey venture. But with some budgeting and creative thinking, the school years can be fun without putting you into so much debt that it will affect your future.

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