Classes start in just a few weeks, and you’re expecting a massive deposit of student loan money any day. But what to do with that money?
Student loan money is often used for tuition but can also cover books, supplies, and housing costs—you name it! And there’s a chance you received more than you technically need for your school costs. But, fam: it’s not free money!
This post will give you a few quick tips for managing your lump-sum student loan disbursement. Then you can avoid taking on more debt than you need and pay for it 15 years after graduation– cuz that ain’t it.
Focus on What You Need
It’s easy to get BIG HEART EYES EMOJI when you see several thousand dollars hit your account—the possibilities are endless! So it’s critical to set some clear boundaries with the money before it takes you down.
Take a moment to figure out how much of the money is for this semester (or even next semester if the loan covers the whole year), books, a laptop, or housing. Then, if there’s some extra leftover, you have two options: return the extra, or put it in a separate savings account for emergencies.
Put Extra in a Separate Account
There’s a chance you’ll have some extra student loan money left over after covering your needs—but resist the urge to give your dorm an aesthetic glow up. (Beanbag chairs kinda suck anyway, tbh. You'll have to refill them and they always burst during uber-stressful times, like exam weeks or hookups.) Not only do student loans have the appeal of a lump sum deposit, but they typically don’t charge you interest until you graduate.
So if you think you may need a little extra cash for school emergencies, we recommend putting that extra money in a separate bank account. This will help you to separate the money from your “active use” funds. And then pay what you can back before graduation to reduce your interest payments!
Strategize for the Future Now
Look, student loans can be lifesavers and career-pavers, taking you where you want to be at a present cost you can afford. BUT! You have to balance meeting your needs today with the fact you’ll be paying it back for the next… 15 years! 20? 30?! Student loan money is a great way to make college education possible, but it’s also a LOT of money to ask new adults to handle. See meme for example:
(Note: the author of this blog post did in fact take out a many monies worth of student loans to study poems in college! )
In conclusion: work student discounts, hidden deals, and scholarship applications to minimize your need for student debt. For example, try renting books from Amazon instead of buying them new from your school. Or consider if your housing situation is worth the extra debt and maybe add a roommate. And $3.75 billion goes unclaimed in Pell Grants each year alone! Go ahead if you haven’t already, and: CLAIM YOUR PELL GRANT, PLS!
Kora is dedicated to helping college students successfully manage their finances now and after graduation. Use their app to track finances, compare where you stand against other students, and get notifications– plus earn up to 10% cashback with the Kora Student Card! Get started today!
