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5 things every college student should do with their money


Leaving home for college is the first time that many young adults find themselves on their own — responsible for attending classes, cooking meals and managing money largely by themselves.

It's inevitable to make a few financial mistakes, even if you're prepared. But with a little effort, you can minimize them, no matter how green you are on the subject when you head off to campus.

Here are five tips for getting your finances in order while you're in school.

1. Start making student loan payments

Technically, undergraduates often don't need to make payments on their loans until six months after graduating or dropping below half-time status. But by making payments throughout your college years, if you're able, you can potentially save thousands of dollars in interest, depending on the size of the loans and the interest rate.

"It'll cost less in the future once you enter repayment if you get that principal down," Elaine Griffin Rubin, senior contributor and communications specialist at Edvisors, told CNBC. "And it will lower your monthly payments."

If you start making payments before the grace period, there are no minimum payments and no penalty for prepaying, which can help you not only lessen your debt load, but get in the habit of making payments while acclimating to a budget.

2. Build your credit history

One of the most important parts of your credit history is how long you have had access to credit. That means the sooner you get started, responsibly, the better your score will be, experts say.

Banks and credit unions offer specialized cards for college students who don't have long credit histories. Another option, if your parents or guardians are up for it, is to become an authorized user on someone else's card.

"If you're using cards responsibly, it can be possible to build up great credit in two to four years," John Ganotis, founder of, previously told CNBC Make It. "The only way to really maximize scores is time."

A higher score can help secure better credit card offers, as well as home and auto loan rates, saving you even more money in interest payments. Here are some great first-time credit card options for students.

3. Prioritize credit card debt repayment

While building credit history is important, you also want to avoid falling into debt. Over 35% of U.S. college students say they have more than $1,000 in credit card debt, according to a report published earlier this summer by EVERFI and AIG.


That might not seem like a pressing issue compared to the record amount of loan debt students are taking on, but credit cards typically have higher interest rates than other types of debt. The average credit card APR is 17.71%, according to, while federal student loan rates are currently less than half that. If you start accruing credit card debt in school, paying that off, in full, should be your top financial priority.

That said, college students do seem to practice smart financial habits when it comes to credit cards: More than 70% say they pay their bills on time, according to Sallie Mae's 2019 Majoring in Money report, with 60% saying that they pay off their cards in full every month.

4. Start building an emergency fund

When you leave school, you'll want options. Moving across the country to pursue a job, going on an extended trip or taking time to find a role you're passionate about all require capital, and a fully-funded emergency fund will help make the time after graduation easier.

But with college being more expensive than ever before, it can seem like an uphill battle to save for a rainy day. Start by keeping your other expenses as low as possible.

"The best way to keep your costs down while in school is one, have multiple roommates; two, drive a paid off car; and three, learn how to cook cheaply while checking out the amazing lists out there on sites like Pinterest," Travis Hornsby, founder of Student Loan Planner, tells CNBC Make It.

One of the most important factors to your bottom line? Limiting the cost of attendance as much as possible, which includes taking advantage of financial aid.

For more inspiration on how to build up your emergency fund, check out these helpful tips:

5. Fill out FAFSA for 2020

It might be 2019, but the deadline for the Free Application for Federal Student Aid for the 2020-2021 school year opens October 1, and students should apply as early as possible.

FAFSA allows students to apply for financial aid from the federal government, no strings attached, for college or grad school. It must be filed each year in order for you to continue to receive federal financial support. Any college student can — and should — apply. As college finance experts put it, it's free money. And that will help keep your loan balance down.

"Regardless of your personal financial situation, you should be filing the FAFSA form every year to open doors to potential grants or loans that otherwise you would not have access to," Amin Dabit, head of Advisory Services at Personal Capital, tells CNBC Make It. "Filing as early as possible can be an advantage as well. There is a defined pool of money that is allocated every year. If you apply late or after the deadline, you might miss out on money."

You will need your Social Security number, your income tax information (or your parents') for 2018, investment and bank records and an FSA ID. If you're struggling to fill out the form, Dabit suggests seeking help from your university's financial aid office or from a financial advisor. Apply on the Department of Ed's federal student aid website.

Don't miss: Over a third of college students already have credit card debt

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Why Ramit Sethi says student loans 'can be a great investment'
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