Finding money for your university tuition and going to college shouldn’t saddle you with lifelong debt - or bankrupt you right now. You can find tuition money in many ways. Avoid the worst ways, and you’ll be miles ahead.
When I first wrote this page, I told you about what I said was the worst way to fund your college education: credit cards. I have since found a worse way to pay your university tuition.
Take a look at my experience overusing my credit cards, and I'll put together another worst way and link it to this page so you can compare the two.
If you have a worst way story to share, send it to me here and I'll add it as a worst way. You can help someone avoid making a mistake, and save them some money for college.
By the way, I will change or leave out names or companies you mention. The important part as I see it is just to outline how you got the money and how it didn't work out - company names, good friends who let you down, or failed relationships, while important, will remain anonymous ;o)
I've been there. I was 18 or so the first time I bought on credit. My first purchases were on my parents' card, and soon after on my own credit card.
One day you’ll get a credit card application in the mail. You might apply, or you might already have a card. Credit cards can be very helpful. You can use them to get out of a jam, to buy books when you know you’ll pay them off, or some other short term need.
You get into problems with credit cards when you use them to buy something that you don’t have any plans or money to pay off. You just figure you’ll pay it as you go. You carry a balance. And pretty soon, you find yourself carrying a very high balance. Not smart, and damaging to your future.
I had credit cards in college. I didn’t actually use mine for tuition money – I had covered that in a variety of other ways. But I wanted to take out a pretty girl, and then another pretty girl, and hey, it was only a few bucks for dinner. And then another dinner, and a movie, and so on. I can’t blame her – it was my card, and she didn’t sign the receipts!
That card I was able to pay off over the summer. But as time went on, I got a few more cards. I ended up with about $5,000 in credit card debt after college. More than I should have had, and costly to keep up with. After I married one of those pretty girls, the habit spread to her pocketbook, and we were both hooked.
When I went back for a graduate degree, I had credit cards as well. And I was laid off just before I started school. I had some aid – a flexible tuition scholarship that I could apply as needed, and I got a student loan. This time it was fall. We had 2 kids, no job, and Christmas was coming. I charged over $1000 for various things I thought I had to have that for gifts and other Christmas stuff.
This time I made a different decision. Instead of keeping the debt on a credit card, I closed the card and paid the debt with my student loan. Maybe that wasn’t the greatest choice, but it also reduced my borrowing cost, and closed the card for good. The payments for that part of my student debt total maybe $20 a month of my total consolidation loan. I can live with that while I pay it off. And I don’t have the credit card bills and balances stacking up.
I used to call credit cards the worst way to pay for anything in college, especially tuition when you could get a student loan of some kind to do it. Credit cards have high, sometimes astronomical interest rates. You have to come up with a payment every month. And the card is revolving. Bad ideas for a new adult. Avoid them and use a student loan, but only use what you need.
I could have spent less that Christmas, and owed less as a result. Overall, I think I did a fair job the second time around, but no new debt would have been even better since my university tuition was already paid.
And what happened to my student credit cards? Eventually we paid them off. Today, we don’t have any credit cards because we know what harm they can do if not managed well. You could compare the damage to our finances with a siphon into my budget every month, with interest, over limit fees, lost opportunities, and delays in really getting ahead.
Learn from my mistakes, and my victory: skip the cards or use them as little as possible. You probably already have a debit card that works like a credit card, and you can get an overdraft loan. Once you have an overdraft, you can lower the limit by simply asking your bank. I did by just writing them a quick note.
If you need a student loan, use just what you need. Then, when you graduate, you’ll be footloose and fancy free. You’ll get a job, have some cash, and have the world at your feet, nothing to hold you back. And your university tuition will have been well worth it!
Know someone who totally abuses their credit cards? Maybe they should read this page. Send them the link, or add it to your favorites to come back to later.
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