Thoughts on Minimizing Debt While in College

Not long ago, JD over at GetRichSlowly mentioned that he had been asked how you’re supposed to spend less than you earn when you’re in college and not earning anything. This is a great question, and one that I thought I’d take a shot at myself.

While it’s not mathematically possible to spend less than you earn when you’re not making any money, there are still a number of things you can do to keep yourself from sliding too far into oblivion…

Apply for scholarships

While it’s too late for most struggling students to take full advantage of this advice, anyone finishing up high school and heading to college should consider all possible alternatives when it comes to applying for scholarships. Even if it’s “only” a few hundred (or few thousand) dollars, that translates into less debt at the end.

Consider getting a part-time job

I know, I know. This is probably the last thing that a lot of students want to hear, but… Increasing the income side of the equation is a great way to help balance the books. Even if you can only make a small dent in your expenses, you’ll graduate with less debt and, if you’re fortunate enough to land a job in a related field, you might even pick up some useful work experience.

Minimize your expenses

There are two sides to every coin. We’ve already addressed the income side, but what about outgo? Yes, you’re likely in the hole financially, but that doesn’t mean you should throw in the towel and just keep on spending. You know the drill… Carefully consider your spending decisions, distinguish between wants and needs, and cut costs wherever possible.

Admittedly, picking up a part-time job and cutting your expenses often won’t enough to balance your budget while in college. Rather, a great many students will go into debt while they’re in school. This isn’t necessarily a bad thing, as education is an investment that typically pays generous future dividends. So…

Borrow intelligently

When debt is unavoidable, be smart about it. Stay away from high interest consumer debt (credit cards). Instead, try to limit your borrowing to student loans, which typically offer an interest deferral while you remain a student as well as possible tax breaks when you’re paying them back.

The bottom line… Just because you can’t actually spend less than you earn doesn’t mean that you shouldn’t narrow the gap as much as possible. All too often, debt becomes a slippery slope. Since you can’t afford to stay out of it in the first place, what’s the harm of taking on just a bit more? Avoid that sort of thinking and you’ll have a far richer existence once you graduate and get a “real” job.

12 Responses to “Thoughts on Minimizing Debt While in College”

  1. Anonymous

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  2. Anonymous

    I think that minimizing expenses is very important. I remember in my college days that writing down my budget and choosing very carefully where I would spend my money on helped me a lot pay off my debit card and stay away from debt.

  3. Anonymous

    – 1st year – Full time accounting student – wanted to drop out but didn’t – worked part time nights

    – 2nd year – Sunk into depression – hated accounting – worked part time – did not go to class – lost my scholarship(s)

    – 3rd year – Tried to get my life back together – switch major – worked part time

    – 4th year – Couldn’t finish on time – stop working – try to change myself – turned my 3.10 into a 3.5 – thought I was doing good

    – Remaining 1/2 year – Did not work and finish college off with a bang

    – 5 months later – no job – no money – credit card debt – student loans 65,000 – I feel cheated. Did I work hard for nothing? They won’t hire me because I don’t have experience. I applied to random internships but never got one. So here I am – empty handed and in debt. What’s the point?? It should end somewhere.

  4. Anonymous

    I’ve seen a lot of websites lately talking about the idea that instead of spending a lot of time educating yourself on investing, you should spend time on your ability to make more money in your career.

    Similarly, I would suggest that the best contribution a college student can make to their financial future is choosing a major. Instead of conserving notebooks (less than $3 apiece?) change your major from something you like to something that will make you money.

    Instead of history, literature, and other fluff majors, spend your four years investing in a degree that will guarantee you a starting salary of say $70,000 (engineering, finance, etc.). That way, even if you spend a little too much on soda or notebooks, you’re earning twice the salary of someone who chose to major in English. Debt’s a lot easier to repay that way.

  5. Anonymous

    I agree with taking out loans for two reasons.

    1) The rates are so low you can easily re-coop the loss. Not to mention they’re even lower because the interest is tax deductible.

    2) The money you’re spending is an investment in your potential to make money. Think of it as if I take out $30,000 in student loans and this increases my ability to make income from $35,000 to $50,000 a year I can easily pay back my investment in no time.

    A word of caution on number #2. If you’re not sure you want to pursue a career in your selected field of study you shouldnt be spending a lot of money on it. Obviously you can change your mind down the road, but if you dont spend at least a little time reaping the benefits of your investment then this was a lost investment.

    You can also justify the investment in other ways even if you dont stay in the same field by saying…”well if I never met so and so then I wouldnt have the job I had today”. These are more “social investments”.

    Whatever you do dont pile up tons of loan debt without a plan to pay it off eventually.

  6. Anonymous

    I’m a working student during my college days in order to obtain discounts from school fees.

    College is an early foothold for your to develop yourself a wise and discipline spender.

  7. Anonymous

    I worked two or three jobs during college, in addition to receiving grants and loans. I’m not sure where some college students get the idea that they don’t need to juggle work and school, if mom and pop aren’t paying the bills. If a young adult can’t hack a part time job while attending school (and having some fun) then I question his or her ability to manage life after college—it just gets more complicated, with more people and obligations competing for your time.

    Working through college teaches students the value of time and money. If forces them to ask questions about the things they wear, eat, and drive, not to mention motivating them to actually attend class—if the cost of one class is equal to three weeks deliving pizzas, that class is going to be perceived as much more valuable.

  8. Anonymous

    Having graduated two years ago, I can say that I didn’t have the right tools to steer me in the right direction while in college or even after graduation. My parents were great examples of living within your means, etc…, but there was so much that I still had to learn.

    I found much information in resources such as or, which have recently helped me learn about investing, credit cards, and most importantly credit reports (now that id theft is so common).

  9. Anonymous

    I’d like to add a few thoughts:

    1) Realize that you are not living with your parents anymore
    –Though it takes a real adjustment in thought, as a college student you should realize that the lifestyle you had as an adolescent was based upon your parents’ income, not your own. (There are, of course, exceptions). When you start at the ground floor of your own career you should realize that cable television, high speed internet, dinners out, movies at the theater, and a refrigerator full of comfort food are all luxuries that can and should be cut and only added back when you can pay for them without incurring debt.

    2) Use what you’re already paying for
    –There are all kinds of universities and your mileage will definitely vary, but you should check into what your college fees are going toward and make use of that. I guarantee you do not have a “free” gym and “free” internet access – to the contrary, you are already paying for it. The same goes for the applications installed in the computer lab and the periodicals in the library. Don’t make the mistake of paying for these all over again.

    3) Don’t nickel and dime yourself
    –Over the course of a 4 year education, every $5 a week you can reduce is the equivalent of a $1000 scholarship. Just $5! It was a real awakening to me one day, my second year in college, when I was cleaning my apartment and found four half-empty bottles of Mr. Pibb from the previous week. These had each cost me $1.25 and my job at the time was $6.25 an hour – and they had meant so little to me that I hadn’t even finished them! Honest to God, I have not bought a soda in the 8 years since.

    4) Avoid the college merchandise trap
    –You know that $25 college-themed t-shirt in the bookstore? Those notebooks that are 50% more expensive than the ones at Wal-Mart because they have your university seal? Those are for alumni, not for you. If you want a school shirt, ask for it for Christmas.

    5) Make judicious use of supplies
    –This is the easiest thing in the world to reduce costs on. Find out what calculator you’ll need for your top-level math course and buy -that- one for your first-level course so you don’t have to upgrade. Buy a quality backpack you won’t need to replace and invest in locks so you don’t lose anything to loose zippers or pickpockets. You can fit two courses into a single-subject notebook if you use the entire width of the paper (divide the pages into 2 columns) and write on both sides of the page. Make use of free paper from the recycle bin of the computer lab – with a paper cutter and a stapler and you can make innumerable flash cards and “hipster PDAs” for free.

  10. Anonymous

    One thing I did to help fund college bills was to volunteer for experiments. Yep, just imagine getting paid $40 to listen to classical musical for a half hour for 3 days. Or what about getting $20 for your opinion on what 2-out-of-3 items seem more similar? The most I made was $100 for being a control in a study for Parkinson’s. It did involve being injected with a radioactive isotope and having a mri done. This was over 10 years ago, but it was helpful. =)

  11. Anonymous

    I got a scholarship while going to college and I also had many nights of Instant Noodle and taking the free shuttle to class. I actually didn’t spend that much money in college as I picked a school that was close to my house so I didn’t have to spend any money on housing except for the first year.

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