As a broke college student, the allure of student loans can be strong. When you’re accustomed to seeing maybe just $100—or even as little as $5—in your bank account, discovering that you’re eligible to borrow $4,000 or more in student loans can be incredibly tempting.
However, it’s crucial to carefully consider this option, especially if you have alternatives like work-study positions or grant money.
Student loans can be predatory, particularly for low-income students who are still unsure about their degree paths.
The promise of easy money now can lead to significant financial burdens later. It’s important to weigh the long-term implications of borrowing money that will need to be repaid with interest.
A useful rule of thumb is to avoid taking out loans that exceed your expected starting salary upon graduation.
This guideline can help ensure that your debt remains manageable and does not become an overwhelming burden as you transition from college to your career.
Understanding Grant Money and Its Benefits
Many students often confuse grant money with loans, but it’s important to understand the key differences. The significant advantage of grants is that you don’t have to pay them back, unlike loans which must be repaid with interest.
Here’s how grant money works…
- Once you receive it, the funds first go through your college to cover your tuition and fees.
- After these expenses are paid, any leftover money is reimbursed to you.
- This remaining amount can be used for other educational expenses, such as books, supplies, and living costs.
- As long as you meet the necessary requirements—such as maintaining a certain GPA or passing your classes—you won’t need to worry about repaying this money.
On the other hand, loans must be repaid after you finish school.
Some loans have interest that accrues immediately, while others, like certain federal loans, may not start accruing interest until after graduation.
Private loans often come with stricter terms and higher interest rates compared to federal loans.
To avoid the burden of loan repayment, it’s best to focus on securing grant money and scholarships and all other resources possible. Again, these forms of financial aid do not need to be repaid and can significantly reduce your college expenses. Additionally, if you can manage with a work-study position, it’s a more beneficial route than taking out loans with the hope of earning enough right after graduation.
If you exhausted all options and loans are needed focus on those with low interest rates and figure out which ones don’t stat accumulating interest until your finished with school.
Understanding Subsidized and Unsubsidized Loans
The Hidden Dangers of Student Debt for Low-Income Students
One often overlooked aspect of student debt is how it can put you behind financially, especially for those of us who come from backgrounds where finances aren’t openly discussed.
While the immediate experience of being broke—struggling to feed yourself or feeling like you have no other options—is undeniably tough, taking out loans can have long-term consequences that are far more detrimental.
Feeling broke in the moment is challenging, but there are college resources available that can help you get by without resorting to loans. Many campuses have food banks, free bus passes and other additional resources in your city that you can tap into.
Work-study options, part-time jobs, and teaching assistant positions can provide a decent income while you study. Tutoring is another excellent way to earn money without accruing debt.
Anything you can do to avoid taking out loans is your best bet.
Remember, the goal is to manage your present needs without burdening your future self with debt that can take years, or even decades, to repay.
Redefining What It Means to Be a College Student Can Save You Money
The college life depicted on TV and in movies often glamorizes partying, spending money on beer and alcohol, and indulging in various temptations.
However, this doesn’t have to be—and arguably shouldn’t be—your college experience. Just because some students are living this way doesn’t mean you have to, nor does it mean you’ll miss out on the true college experience if you choose a different path.
Remember, you’re attending college to build a better future. This means thinking about your future in every aspect, not just academically. If you take out loans to fund a lifestyle filled with unnecessary expenses, you’re setting yourself back further than when you first started college.
For instance, on my campus, I see many students frequently spending money at the café on items like coffee, smoothies, and pastries.
These prices are far from cheap—a single Muscle Milk costs $8.
Saving Money Has Been Hard But I Still Save For Tomorrow (Student Funds)
If you make such purchases two or three times a week, you’re effectively sacrificing more than a couple of meals. It’s crucial to understand where your money is going and whether you’re getting value for what you spend.
If you’re using grant money, it’s especially important to stretch it as far as possible, since you only receive it every three months or every quarter or semester.
Being mindful of your spending can help you make the most of your financial resources.
In summary, redefining your college experience with a focus on financial responsibility doesn’t mean missing out. It means prioritizing your future and making smart choices that will benefit you in the long run.
A Personal Perspective on Managing Grant Money
Last quarter, my tuition came to around $1,900. After paying for everything, I received a reimbursement of $2,500.
Out of this, I allocated $500 towards essential expenses like household bills, college-related costs such as renting a calculator, and groceries for the month to avoid eating on campus.
Remarkably, I still managed to save $2,000 of that money.
One strategy I’ve adopted is to touch this savings sparingly and always replace what I take out.
For example, if I need $100 or $200 for an unforeseen expense, I ensure to put it back as soon as I get paid and only touch what I know I can put back.
This habit prevents me from depleting my savings and maintains a financial cushion for future uncertainties.
As the quarter ends and I prepare for the summer quarter, I anticipate receiving additional funds. These will also go straight into my savings account.
My perspective is long-term: next year, when I pursue my bachelor’s degree, the financial landscape might change. Even though I am still eligible for grant money as a low-income, independent student, unforeseen expenses could arise.
Low-income students often qualify for more financial assistance, but it’s let’s not to take this for granted.
Conclusion: Last Words on College Finances as a Low-Income Student
Let’s recap:
- As a low-income, broke student, the best thing you can do is take full advantage of all the financial assistance available to you.
- Put aside any pride and make use of resources like food banks. The stereotypical image of a person in a trench coat pushing a cart and waiting in line at a soup kitchen is not the reality.
- If you’re low-income, you’re eligible for the food bank, even if you have some money in your bank account.
For instance, if you have $200 left for the month or week, don’t hesitate to go to the food bank. If you know you won’t get paid for a couple of weeks, save your money for when you truly need it and use the food bank in the meantime.
Don’t wait until you’re desperate and think you need a loan because pride got in the way of asking for help.
Remember, you can always pay it forward after you leave college.
- Only take out a loan if you genuinely need it, and even then, only borrow what you absolutely need. Don’t be tempted to take out the full amount just because you’re eligible.
Some students, realizing they no longer need the loan, have even returned the money.
Others have taken out only a fraction of what they were eligible for—perhaps $100 out of a possible $4,000—because they didn’t want to start their post-college life buried in debt.
So be strategic and make the most of your college journey without student loan debt as much as possible.
The Broke College Student 
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