6.4 Financial Wellness

Financial wellness relates to your satisfaction with current and future financial situations. It requires you to understand your finances, establish good financial habits and plan for the future For college students, financial wellness is especially important because it influences many aspects of academic life—such as the ability to focus on coursework, participate fully in campus opportunities, and plan for long-term success after graduation. Worrying about tuition, rent, or daily expenses can create distractions that affect concentration. By adopting healthy money management habits, students can reduce stress, and create a solid foundation for both academic achievement and life after college. Ask yourself, how often do you experience the following²:

1. I live within my means and take responsibility for my financial decisions.
2. My spending and saving habits reflect my values and beliefs.
3. I pay bills on time and positively manage credit.
4. I balance present-day spending with saving for the future.
5. I have similar financial beliefs and practices as those with whom I am close.

Financing Your Education

Paying for college is an undeniable component of the educational process. Understanding the factors that combine to create the overall cost of a college education can help a student make decisions about how to achieve the goal of obtaining a college degree.

The cost of getting to and from your college can vary significantly based on how close a student lives to the college campus and the transportation method selected. Some colleges may have a transportation fee as part of the student fees that might provide mass transit options for getting to school. Colleges may also have parking fees for those students who drive to the campus. Seasonal weather conditions are another factor in transportation choices. As a student estimating the cost of college, remember to think about the entire school year. An apartment near campus may have a higher rent than living 10+ miles away, but it may save you time and money to not have to drive and park daily.

Students tend to underestimate how much money will be needed for personal expenses. For example, many students today cannot survive without smartphones, computers, and data plans. You will also need basic health care and hygiene products, clothing, and funds for occasional social events and family commitments. You may also spend money here and there on conveniences like food delivery or online shopping. These amounts add up fast, especially if you are not cognizant of what you are spending. Track your spending for a few weeks to have an accurate estimate of what you spend in this category.

Choosing to spend time and money going to college has an opportunity cost. If you are spending time and money on your education, you will not be spending that same time and money elsewhere. One example of this relationship is employment. Attending classes and doing homework may mean you can’t work at a job as much as you want to. It may also mean you will have less time to spend with friends and family. Pursuing a college degree comes with many delayed rewards – graduating, working in a field you enjoy, and earning more money – and those rewards are not guaranteed. It is important to consider this when choosing your next steps in life and if going to college right now is the best option for you to reach your goals.

Financial Aid Basics

Most students will need some form of financial aid to help pay for college. Before accepting an offer of assistance, it is important for a student to understand what each possible offer means and what the student’s responsibility will be after accepting the offer. The Office of US Department of Education offers financial assistance to students in the forms of grants, loans, and work-study programs. Filling out the FAFSA application is the first start towards receiving financial aid for college. Grants are seen as the best type of funding as it is money you receive that you do not need to repay. Grants are usually based on your financial need as determined on the FAFSA, so you do not need to fill out applications like you would with a scholarship. Work Study funding can also be really helpful to students. By opting into work study funding, you make yourself eligible for many on campus jobs. On-campus jobs are more convenient for students as your employer is required to work around your class schedule and you cannot work more than part-time hours. Your wages are also not taxed as much as they would be at an off-campus job.

Scholarships are also funds that the student does not need to pay back. Thinking about applying for scholarships can seem like an overwhelming prospect, and students have many excuses for not applying. There are so many scholarships available for college that knowing where to start is the first obstacle to the process. Scholarships are not limited to people entering college straight from high school. In fact, every college has a scholarships website where students can apply for scholarships up until their senior year.

You may still need funding once you have accepted work study, grants, and scholarships. That is where student loans come in. It is crucial to understand the terms of your loans before taking them out. Loans offered through the Federal government will be subsidized or unsubsidized loans. The key difference between unsubsidized and subsidized loans is the amount of debt a student will leave college owing. Unsubsidized loans charge students interest while they are attending college, so the interest is growing on the loan during that time. A student might think they are borrowing $4,000.00, but unsubsidized loans add interest to the amount borrowed which adds up over time. Subsidized loans do not add interest for the student until after they have left school, so $4000.00 really is $4,000.00, no extras added.

Understanding interest rates and how they impact student loans is essential. Many students shy away from doing the math to understand what their responsibility will be in repaying a loan. It is also essential that students understand the difference between a subsidized and an unsubsidized loan. Your financial aid award letter from your university will specify if you qualify for subsidized or unsubsidized loans and the maximum amount you can borrow for each.

Occasionally, students will need to borrow more money than the FAFSA can offer them and choose to take out a private student loan from a bank. These loans should be used as a last resort. Private student loans are not regulated the same way federal student loans are, meaning they can have higher interest rates and stricter timelines for repayment. If you must take out a private student loan, it is in your best interest to take out a small amount and prioritize paying off the loan as quickly as you can.

Another important thing to remember when borrowing money for college is that if you add the cost of books and supplies or other needs onto the loan you have taken on for tuition, and you have unsubsidized loans, that extra money also grows over time with interest. Be watchful when adding even small amounts of money to your loan balances. It can add up quickly!

Video: Voices of Debt: The Student Loan Crisis – Don’t Major in Debt

Video: Student Loan Crisis | Natalia Abrams | TEDxHartford

Loans – The Good and The Bad

It’s understandable to be concerned about student loan debt and want to borrow as little money as possible, if any at all. This aversion to debt can help you make healthy financial decisions but  also influence you to prioritize working over attending class and keeping up with assignments. It’s important to strike a balance between work and school to make sure you are succeeding in both without being overwhelmingly stressed.

Consider both long and short term pros and cons of working while attending college and taking on student loan debt. Working and being a student simultaneously can be done, but it’s necessary to figure out how much of your time per week you are willing to devote to each. Students regularly withdraw from courses or repeat courses because their schedules were too hectic and they needed a lifestyle change. The costs of paying for courses you do not complete or taking a course multiple times can be thousands of extra dollars spent. If you are noticing this pattern in your own college experience, reflect on why and what changes you can make.

Students often want to do it all: work full time to earn money, take classes full time, have an active social life, and maintain their physical and mental health, and do it all perfectly. This is an impossible standard to meet. Working fewer hours and taking on a little more debt may be the best course of action for you to succeed in courses and graduate in a timely manner. Taking fewer classes each semester so you can financially support yourself and your family can be the path that works for you. The cost of going to college seems to be constantly increasing. Understanding the opportunity cost both now and in the future needs to be an important part of a student’s decision process when selecting a college and a major. Do the math! There are plenty of resources to help you. Follow your dreams, but be informed.

Remember, you are a consumer when it comes to taking on loans for college. Not thinking about what the debt means after college only compounds the issues. It is important to think about how much you could afford to pay monthly on a student loan once you have completed college. It’s easy to do the math on loan costs. The Smart Student’s Guide to Financial Aid has a free loan calculator that will do the work for you. All you have to do is plug in the numbers. The loan calculator will also give you an estimate of what your annual salary will need to be able to repay the loan. Of course, the loan calculator will not know your other financial commitments, so be sure to look at the monthly payment and decide if you afford that additional expense.

It is also important to realize that even if you don’t finish college, you will have to repay a loan taken out for college. According to an article titled The Feds Don’t Care If You Dropped Out of College. They Want Their Money, students who dropped out of college and ultimately didn’t obtain a degree or certificate, generally don’t earn higher wages after leaving school. Statistics show that students who start college but don’t finish struggle with student debt.

Citations

1. Lamoreaux, Alise. A Different Road to College. OER Commons. https://openoregon.pressbooks.pub/collegetransition/chapter/chapter-8/. CC BY 4.0.
2. Wellness Services. (2025, May 15). Dimensions of Wellness. Wellness Services. https://www.boisestate.edu/wellness/dimensions/