1 Million Dollars

Sunday, July 17, 2011

Preparing for college

Classes for most universities start at the end of next month and that means bills for classes will be due sometime during this month. Do you know how you are going to pay for them? Do you even know what your options are? Have you accepted your financial aid at school yet?

Many students use their student loans to pay for school and the money they or their parents have for living expenses but that would be a mistake. If you did that, and you are still a dependent on your parents, your parents could not claim the higher education deduction or credit. The better idea is to pay for classes with your own money or your parents and then use the student loans for living expenses. If you have scholarships, they are only tax free if you are paying for school so use them as such, unless your parents want to get the tax deduction and are supporting you. If your parents are in the 28% tax bracket and you are in the 10% tax bracket, them paying the school makes and getting the deduction makes more sense then you saving tax money by using your scholarship for classes.

Keep in mind that if you are paying for more than 50% of your expenses, and this included scholarships and student loans, you are not a dependent according to the IRS. Many parents do not realize this and will continue to claim you, however if caught it can amount in major penalties, just like any of type of tax fraud.

If you are moving away for college, talk to your parents about what will happen to your room while you are away. Decide what you should take, decide if you want to get of anything. If you decide to get rid of stuff, decide if you want to have a yard sale, donate it or throw it out. Use google maps and determine if you need your car or if use a service such as zip car would be cheaper. Keep in mind the cost of parking on campus as well repair costs. Decide if you need a meal plan and if so how many meals you want. Most students use the two meal per day plan because you will not always be on campus or want to eat all your meals on campus. Decide what is important to you. Add up the costs you will be spending during this semester and school year subtract your financial aid, any money you have now and any money your parents say they will give you. Do you have enough? If not you need to fix it now!

Can you or your parent call the school and ask for a review and see if there is anything the school can do? Can your parents help a bit more? Now what can you do? Are there any people in your neighborhood that would like someone to mow their lawns or weed their gardens? Do you or your parents have friends how are going on vacation and do not know what to do with their pet? Could you offer to go over and pet sit? Can you offer to dog walk? Can you start doing surveys, open a swagbuck account or a mypoints account. None of these are big money makers but they add up. Every penny you get is one penny less you need borrow and pay back at a huge rate.

Does anyone have any other ideas for what students need to do before leaving for college?


  1. Get out the drinking urge and partying urge during the summer, and take your courses seriously. You need to be in the right mindset! :)

  2. Funny you talk about student aid, because today I just got an email that I am receiving $5000 over 8 months in student aid for being a grad student.

    It certainly made my day as I didn't even have to apply for it.

  3. That is amazing, Young and Thrify. Hope they give you the aid every year.

  4. Everyone needs to prepare for their final exams for them to pass and leave college! To be honest, I'm preparing for a major exam. O.o Anyway, how was the financial aid helping you personally?

  5. I got subsidized student loans my last year, Aurora, which did help me a lot.