Making the Most of Your Financial Aid Money
You might wind up having to put all of your financial aid directly toward your schooling costs. With tuition, room and board, books, and all the rest of those school-related bills, there might be little left over at the end of the day. But if you have some extra cash available from your student loans, you could put it to use wisely if you don’t spend it on frivolity. Here are a few options to consider for any excess student loan money that could help you better secure your financial situation while going to college.
Pay off Higher Interest Debt
With a few bucks of your financial aid money left over, you might consider paying off some higher interest debt. If you should have had to incur credit card debt or private loan debt with higher interest rates, putting excess cash toward these debts could having you saving money over the long run.
Rather than letting an extra $1,000 sit in a savings account for a year at .2 percent interest (earning you right around a whopping $2 for the year) or some other paltry amount, you might rather put that money toward a credit card with an associated interest rate of 15 percent, possibly cutting about $150 in interest off your debt in the process, as long you don’t re-incur that credit card debt after paying it off.
Create an Emergency Fund
While putting your extra loan money toward higher interest debt might at first seem like a good idea, it might not be the only idea or the best idea. Putting that money to use to save yourself money down the road can be a pertinent and responsible action; however, it could also leave you less financially secure in the here and now. A jump in tuition rates, extra books for a particular class, job loss, a car repair, or a similar unforeseen expense could put you in jeopardy of re-incurring that credit card debt or worse. Therefore, putting your extra loan money toward building an emergency fund to better protect against such issues might be another plausible option for this money.
Invest in Your Education
You could be thinking that investing in your education is the whole reason you took on financial aid in the first place. And yes, it might be. However, with financial aid money left over, you might be able to make a further investment in your education. By using those extra funds to take supplemental or summer classes, you might actually be able to cut time off your educational career. Even shaving just an extra semester from your schooling could save you thousands of additional dollars on tuition, book, and room and board expenses.