Author: Teddy Nykiel

What College Students Need to Know About Driving for Uber, Lyft

Posted on by Teddy Nykiel

Rideshare companies promise ultimate flexibility for drivers: Set your own schedule, earn more during busy times, get paid quickly. It seems ideal for college students looking to earn summer cash.

But driving for Uber, Lyft or other rideshare services requires more than simply downloading the app and filling up your gas tank.

Here’s what to know before signing up to be a driver this summer.

Age requirements

Rideshare driving may not be an option for undergraduate freshmen and sophomores due to age requirements.

  • Uber: You must meet your city’s minimum driving age requirements and have at least one year of licensed driving experience in the U.S. Drivers younger than 23 must have three years of licensed driving experience.
  • Lyft: You must be 21 or older. The exception: Drivers can be 18 years old in New York City.

If you’re too young for Uber or Lyft, other options include driving for a takeout or grocery delivery service. The age requirement for DoorDash and Instacart is 18. With Uber Eats, you must meet the minimum age to drive in your city and have at least one year of driving experience.

Insurance coverage

For both Uber and Lyft, drivers must have a valid U.S. driver’s license and provide proof of insurance with their name on the policy. Drivers should inform their insurer that they’re driving for a ridesharing service, or they could risk getting dropped.

But personal auto insurance likely won’t cover drivers when a rideshare app is open. Insurance companies want you to purchase commercial insurance if you’re using your car to make money.

To help solve this, Uber and Lyft insure drivers while they’re en route to pick up passengers and when passengers are in the car. However, coverage is limited when the app is on and drivers are waiting for a ride request. To cover yourself during those gaps, consider purchasing rideshare insurance.

Financial aid impact

Need-based financial aid is determined with tax information from two years prior. In other words, money earned in summer 2019 may reduce the amount of need-based aid a student receives for the 2021-22 school year. But if you expect to graduate within two years, this summer’s earnings won’t impact future financial aid.

Students can earn up to a certain amount before it counts against them for need-based financial aid. The income protection allowance for dependent students is $6,660 for the 2019-20 school year. The allowance is higher for independent students and parents.

If a summer job as a rideshare driver pushes your annual earnings above the income allowance, you could be eligible for less need-based financial aid in the future.

However, students working as independent contractors — as rideshare drivers do — have the “unique ability” to deduct certain expenses from their income and potentially keep their income under the allowance, says Billie Jo Weis, a client service manager at My College Planning Team, a financial aid advising firm in the Chicago area.

Tax implications

Rideshare companies don’t withhold taxes from drivers’ paychecks. Instead, you’re responsible for paying taxes on income earned through the app. You may be able to reduce your taxable income — therefore potentially increasing access to need-based financial aid — by deducting driving-related expenses including gas, tolls and repairs.

Keep track of your car- and driving-related expenses, including your mileage with the app on. The IRS allows drivers to deduct a set amount — 54.5 cents per mile in 2018 and 58 cents in 2019 — for every mile driven for business purposes. Uber and Lyft provide annual reports to each driver that include total mileage and earnings.

Potential perks

Between insurance, financial aid and tax considerations, being a rideshare driver may sound like more of a headache than it’s worth.

But you may have the opportunity to earn more than just cash.

For instance, Uber is piloting a program that offers free tuition for undergraduate degrees online through Arizona State University. It’s available to drivers in more than two dozen cities who have completed 3,000 rides and have gold, platinum or diamond status on Uber Pro, the company’s rewards system.

Emily Kuckelman, 28, of Denver is participating in the program by taking classes in graphic information technology online at ASU while driving 30 to 35 hours a week for Uber. The former teacher estimates that she earns $13,000 to $17,000 more annually than in her previous career. Plus, it’s flexible with her class schedule, she says.

“If I can afford to not drive, I don’t have to,” says Kuckelman, who works during peak hours to take advantage of Uber’s in-app promotions for drivers. “I want to make the most amount of money in the least amount of time.”

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The article What College Students Need to Know About Driving for Uber, Lyft originally appeared on NerdWallet.

9 Money Tips for 2019 College Grads Anticipating Their First Paychecks

Posted on by Teddy Nykiel

When you’ve been living on a college budget, the first real paychecks from your post-graduation job can feel like more money than you know what to do with. Here’s how to spend, save and invest that income while paying down debt and splurging a bit, too.

1. Create a simple budget

Yep, a budget is the first step. Once you give each dollar a purpose and ensure you’re meeting essential needs, you can spend on things you value and feel confident that you can afford them.

The 50/30/20 approach is a good budget starting point.

  • Spend 50% on needs like rent, groceries and minimum loan payments.
  • Spend 30% on splurges like trips, takeout and concert tickets.
  • Spend 20% on savings and extra payments on high-interest debt.

2. Make a money priority list

You can’t do everything at once when you’re saving money and repaying debt. Prioritize in this order:

  • Save $500 for emergencies in a high-yield savings account.
  • Contribute enough to your 401(k) to get your employer’s match, if there is one.
  • Pay off high-interest debt like credit cards.
  • Save for retirement. Aim for 15% of your pretax income.
  • Grow your emergency fund. Aim for three to six months’ worth of expenses.

3. Understand investing basics

While buying individual stocks is one investment option, it’s not what personal finance experts recommend for beginners.

Your first priority is a retirement account like a 401(k) or Roth IRA, even as you embark on what will likely be a decades-long career.

The money in these accounts is invested in stocks and bonds and grows over time due to compound interest. For example, every $1,000 invested at age 22 becomes nearly $20,000 when you are 72, assuming a 6% rate of return.

4. Establish a retirement plan

So how do you actually start saving for retirement? If your employer offers an account like a 401(k), make a transfer from each paycheck to it. If the employer offers to match your contributions to a certain amount, aim to contribute at least enough to get the full match — it’s free money!

If you don’t have an employer-sponsored retirement account, open an individual retirement account through an online broker or automated financial advisor. A Roth IRA is a tax-friendly option for new graduates.

5. Take an inventory of student debt

Saving for the future is crucial, but you’re likely facing something more pressing: student loans. Start dealing with them by answering these questions:

  • Are the loans federal, private or a mix of both?
  • How much do you owe?
  • What are the loan interest rates?

Most student loans are owned by the Department of Education. To see your federal loan details, visit the Federal Student Aid website. For private student loans with a bank like Sallie Mae or Discover, check your account with that lender.

6. Begin making student loan payments

Most student loans have a six-month grace period, meaning payments won’t come due until late fall. But if you can start making payments earlier, you’ll save on interest and establish the habit of paying.

For federal loans, you’ll make payments to your loan servicer, the company the government hires to handle loan repayment. If your monthly payments are too high relative to your earnings, apply for an income-driven repayment plan that caps payments at 10% to 20% of your income and forgives the remaining balance after 20 or 25 years. Private student loans aren’t eligible.

7. Work on your credit

You may be hard-pressed to name a benefit of student debt, but here’s one: Consistent on-time payments reflect positively on your credit. And a credit score in the high 600s or above is essential to accessing the best rates on loans, insurance and a mortgage. Some employers and landlords check credit, too.

Review your credit report to see where you stand. Chances are, you don’t have much of a file. To start working on your score, apply for a secured credit card or a basic credit card at your bank.

8. Use credit cards as a tool

Having a credit card doesn’t mean you have to carry a balance.

Instead, pay off your card on time every month and use less than 30% of your available credit. If your card limit is $3,000, for example, limit your balance to $1,000 or less.

As your credit improves, you’ll qualify for cards with more benefits like cash back and points or miles.

9. Make your money work for you

Earning credit card rewards is a prime example of making money work for you.

Another example: If you have good credit and relatively low debt compared with your income, you can refinance student loans to a lower interest rate. This will free up money to invest, spend on a vacation or save for a down payment.

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The article 9 Money Tips for 2019 College Grads Anticipating Their First Paychecks originally appeared on NerdWallet.

Why College Students Take on Loans They Can’t Repay

Posted on by Teddy Nykiel

Students take on college debt with the best of intentions. They’ve been told that a college degree is a ticket to success. That they should pursue their dreams. That student debt is good debt.

But how do smart students wind up with debt they can’t repay? Here are three reasons, plus ways to avoid these financial traps.

They’re told it’s ‘good debt’

In high school, students hear that they should earn a college degree to have a well-paying, successful career.

“We as a society kind of have this compulsory higher education,” says Daniel T. Kirsch, author of “Sold My Soul for a Student Loan.” “We’re encouraging everyone to take out debt and calling it ‘good debt’.”

But student debt isn’t good when your degree doesn’t lead to a job that earns enough to repay it.

This is the case for 36-year-old Jennifer Atkins of Jacksonville, Florida. A first-generation college student, she believed a university diploma would help her get ahead.

“I had the mentality back then that I was doing what I was supposed to do in life,” says Atkins, who earned three degrees, including a master of nonprofit management in 2014.

Now, Atkins has two kids, over $100,000 in student loan debt and is unemployed. She quit her job in 2017 due to complications with her second pregnancy and hasn’t found a job lucrative enough to justify paying for child care.

Avoid this trap: Limit borrowing so that future monthly payments don’t consume over 10% of take-home pay. By that standard, someone expecting to earn $50,000 a year could afford a monthly payment of about $279, according to NerdWallet’s student loan affordability calculator. At the current undergraduate federal student loan interest rate of 5.05%, that payment would support college debt of about $26,000.

The loans don’t feel real

Some students are willing to take on large amounts of college debt because they don’t connect with the reality that they’ll eventually have to repay it with interest. This aligns with what behavioral economists call “present bias,” the idea that people often make choices that benefit them in the short term and overlook future consequences.

Atkins remembers accepting student loans in small increments throughout 10 years of higher education — $3,000 here, $5,000 there. She worked throughout school, but the loans were crucial to making ends meet.

“None of it was real to me back then,” Atkins says. “I had no problem clicking ‘accept’ on those student loans.”

In hindsight, Atkins says she wishes she had had a mandatory career counseling session to walk her through the numbers and understand her debt in the context of her future earnings and expenses.

Such counseling may have helped. Imagining our future selves can help us overcome present bias, says Jeff Kreisler, co-author of the behavioral economics book, “Dollars and Sense.”

“If you make the future more specific, then you can connect to it,” he says.

Avoid this trap: Do the math as you go. Every dollar you borrow will have to be repaid with interest. But you can choose to borrow less than you’re offered. It may be tempting to accept the full amount, but you’ll have a lower monthly payment in the future if you borrow only enough to cover tuition and basic living costs.

They lack information

In many cases, students lack the financial education needed to make borrowing decisions.

Susan Dawson, 47, who has a Ph.D in history and works as a historian for a federal agency, can afford her student loan payments thanks to a second job teaching online classes and a federal repayment plan that caps her monthly payments at a percentage of her income. But she says if she had known the earning potential in her field, she would have chosen a different career.

“I feel stupid because I did not know what questions to ask,” says Dawson, who has a six-figure student loan balance, and lives and works in Washington, D.C.

Things she wishes she had asked about include:

  • Typical earnings in her field.
  • Her future monthly student loan payments.
  • How student loan interest works.

Avoid this trap: Check the Bureau of Labor Statistics’ Occupational Outlook Handbook to research wages and education requirements for various fields. Use a student loan calculator to estimate future monthly payments. Interest accrues while you’re in school — unless you have subsidized loans — but you can pay the interest during school to keep your balance from ballooning.

This article was written by NerdWallet and was originally published by The Associated Press. 

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The article Why College Students Take on Loans They Can’t Repay originally appeared on NerdWallet.

How to Have a Proper Parental Fight Over College Costs

Posted on by Teddy Nykiel

As teens submit college applications and weigh different post-graduation paths, their parents face tough decisions, too. Do they:

  • Help pay tuition, even if it means dipping into retirement savings?
  • Take out parent loans, as a growing number of people do?
  • Encourage their children to attend a dream college, no matter the cost?

When couples clash over the answers, it’s often because their values about money and education are at odds, says Megan Ford, a financial therapist at the University of Georgia and president of the Financial Therapy Association. Financial therapy, a relatively new field, addresses financial, emotional and relational challenges.

Imagine a hypothetical student’s parents. One equates prestigious institutions with success and is bent on sending the child to an Ivy League school. The other believes a less-expensive state university offers an equally valuable education. Of course, the child’s opinion matters, too.

To reconcile a disagreement, start by understanding costs for your family. Then have honest conversations, look for common ground and call in experts if necessary.

Establish your college-cost baseline

First, estimate what college would cost your family at different schools. Look up school net price calculators — almost every college is required to have one — and compare the amount you’d owe after grants and scholarships at various institutions.

You may be surprised. For example, contrast Harvard University’s sticker price of $69,600 with its estimated net price of $9,600 for a Massachusetts family of five with a gross annual income of $100,000 and one undergraduate student. Going Crimson could be cheaper than attending a state university where the sticker price is lower but the financial aid package smaller, resulting in bigger out-of-pocket costs.

Net price calculations are just estimates, but they’re a good starting place for discussing whether parents will contribute and the sacrifices they might need to make to do so.

Hear each other out

When it comes to financial disputes, relationship therapists recommend digging into the reasons behind opinions before compromising or trying to persuade. People’s values about money and education are often rooted in their past, Ford says.

She recommends asking questions like, “What did education mean to your family growing up?” and “How did you pay for your college?”

Explore whether a stance represents a broader emotion, says Jennifer Dunkle, a financial and couples therapist in Fort Collins, Colorado. The parent lobbying for the pricey private school, for instance, may regret not attending his or her own dream college. The other parent may have put himself or herself through college and want the child to practice responsibility by doing the same.

Find areas you align on

Strive to find areas, however small, that you agree on. Here’s a freebie: Kids should submit the Free Application for Federal Student Aid, known as the FAFSA, so they can be eligible for federal grants, work-study programs and, if necessary, federal student loans.

As you seek agreement, Dunkle recommends an exercise derived from the research-based Gottman Method of couples therapy. You each draw a large circle. Inside, write things you’re not willing to waver on — for instance, “We will not dip into our retirement savings to pay for the kids’ college.” Outside of the circle, write what you’re willing to be flexible about, for example, “I paid for college completely on my own, so my child should do the same.”

Then, compare notes. Seeing the issues on paper may illuminate a compromise.

Call an expert

If you’re still gridlocked, consider bringing in backup. A few sessions with a couples or financial therapist can help if you’re struggling with communication or underlying emotional issues, Ford says.

In addition, a certified financial planner can help you crunch numbers — for instance, by how many years would you need to delay retirement if you pay for your daughter’s $50,000-a-year private college? Experts generally recommend prioritizing your retirement savings above a child’s college costs; you have a limited earning time left, while your child has longer to offset college debt.

Throughout the college-planning process, remember that it’s natural for emotions to run high when a kid leaves for school, Dunkle says.

“It’s a developmental change in the life of the family,” she says. “It can be a hard transition for everyone.”

Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: teddy@nerdwallet.com. Twitter: @teddynykiel.

This article was written by NerdWallet and was originally published by USA Today.

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Why Some Students Quit College — and How They Can Finish

Posted on by Teddy Nykiel

Growing up in Cookeville, Tennessee, a university town about 80 miles east of Nashville, Hayley Furcean was determined to be the first college graduate in her family.

“I’ve always been the smart kid,” she says.

After graduating from high school in 2008, she earned a full academic scholarship for her first year at Tennessee Technological University in Cookeville and began studying early childhood education. But things took a turn the summer after freshman year, when her grandmother died.

Furcean began questioning whether teaching preschool was what she wanted to do with her life. She moved out of her parents’ home, which meant picking up more shifts at work to pay rent and bills. She suffered from depression and often skipped class.

“My grades went from A’s to F’s,” Furcean says. “It was really tough at that time to prioritize school when I felt like everything else was falling apart.”

After sophomore year, she left school.

Furcean’s story is personal, but her situation is common. In 2016, 36 million people ages 25 and over had earned some college credit but no degree, according to the U.S. Census Bureau. Students’ reasons for stopping short of a diploma are wide-ranging: poor grades, strained finances, negative college experiences, programs that weren’t the right fit.

Without a degree, it can be impossible to qualify for many jobs. By 2020, 65% of all U.S. jobs will require some kind of higher education, according to estimates by the Georgetown University Center on Education and the Workforce. It’s also challenging for people with no diploma to earn enough to repay student debt. College dropouts who started school in 2003-04 were more likely to have defaulted on their school loans by 2015 than students who had completed an associate or bachelor’s degree, according to National Center for Education Statistics data.

To help students, colleges should do more to identify those at risk for dropping out and help them avoid doing so, says Hadass Sheffer, president of The Graduate! Network, an organization working to increase the number of adults who complete college. For instance, institutions could unintrusively track students’ attendance and whether they turn in assignments, and intervene with those who show signs of trouble, Sheffer says.

“The path to giving up is the path of least resistance,” Sheffer says. “What if you had to jump through hoops to quit?”

A second chance

In January, Furcean returned to Tennessee Tech University for her second go at a bachelor’s degree. She’s taking classes at night and online in workplace leadership and business management, and works full time as a preschool teacher.

Her schedule is demanding, but Furcean, now 27, has extra support. She works with an advisor at her local branch of Tennessee Reconnect, an organization that offers free services for adults going back to college. These resources are crucial because many returning students struggle with understanding how to re-enroll in college and pay for it, Sheffer says.

Programs like Tennessee Reconnect are available in more than 20 communities across 13 states — students can find one near them through The Graduate! Network’s website. Those who don’t have access to free help can navigate the process independently by following these tips:

  • Contact your original school’s admissions, advising or registrar’s office to find out what you need to do to finish your degree.
  • Consider other schools, particularly if you had a bad experience at your previous institution. If you need a more flexible class schedule, explore options including online or hybrid programs, which mix online and in-person classes.
  • Look for a college that offers a prior learning assessment program if you plan to study in a field you’ve already worked in, says Lexi Anderson, a policy analyst at Education Commission of the States, a Denver-based organization focused on state-level education policy. You may be able to earn college credit for experience and skills you already have.
  • Apply for grants and federal student loans, which come with flexible repayment options, by submitting the Free Application for Federal Student Aid, or the FAFSA. Contrary to what some believe, adult students are eligible for financial aid, including Pell Grants. Additionally, search for scholarships designated for adult learners.

The article Why Some Students Quit College — and How They Can Finish originally appeared on NerdWallet.

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Go off the Beaten Path to Curb College Debt

Posted on by Teddy Nykiel

When people think of college, they envision sprawling green campuses, majestic brick buildings and roaring football crowds. But that picturesque university experience can also come with a sky-high price tag.

“I’m concerned that we sell college to students that could get training in a shorter period of time and for less of a cost,” says Gay Johnson, the career and technical education coordinator at Waxahachie Independent School District in Waxahachie, Texas.

As Americans’ education debt skyrockets, many students are looking to avoid college loans. Some are scarred by their parents’ and siblings’ debt woes, and others by student loan horror stories in the news.

To curb debt, students can submit the Free Application for Federal Student Aid, or FAFSA, to apply for federal grants and work-study programs. Or they can consider cheaper alternatives to a four-year school. Here’s how to get valuable career training without the university price tag.

1. Get paid to learn with an apprenticeship

It may sound far-fetched that you can make money for learning instead of having to pay for it, but it’s possible through registered apprenticeships. These programs, administered federally or by states, offer training in the classroom and on the job. They pay an average starting wage of $15 an hour and offer raises as apprentices’ skills improve, according to the U.S. Department of Labor.

There are more than 21,000 registered apprenticeship programs nationwide in industries including construction, health care, manufacturing and transportation, according to the department. Programs typically consist of full-time work and learning, and run from one to six years. Apprentices receive industry-recognized credentials upon completion of their program.

Search for opportunities through CareerOneStops’s apprenticeship finder, sponsored by the labor department.

2. Train for a career at a two-year college

Many students enroll in community college with the intention of transferring to a four-year school. But these local colleges also offer career-training programs for a wide range of occupations, including accounting, audio technology, early childhood education, law enforcement and surgical technology. These two-year programs often culminate in an associate of applied science degree and are not designed for students who want to transfer.

People with bachelor’s degrees typically earn more, but 30 million U.S. jobs don’t require such a degree and pay $55,000 per year on average, according to a 2017 report by the Center on Education and the Workforce at Georgetown University. They include positions in manufacturing, health care, finance and information technology — and many require only an associate degree.

3. Gain hands-on knowledge at a trade school

Trade schools, also known as technical, career or vocational schools, emphasize hands-on instruction while preparing students for the workforce. The programs typically are two years or less in length, and can lead to licenses, certificates and associate degrees in fields including cosmetology, culinary arts, health care and welding.

The curricula at trade school programs typically are more specialized than those at community colleges. So, for instance, you may not have to take basic English and math at a trade school.

To save the most money, it’s generally best to choose a program at a public school. More than half of programs that are less than two years and almost a third of two-year programs are at for-profit institutions, according to 2017 National Center for Education Statistics data. For-profit colleges often can be more expensive and less effective than other schools.

Which option is best for you?

Students should choose their academic path based on their career goals, interests, abilities, location and financial circumstances, Johnson says.

Instead of first picking a college and then a major, focus on your objectives. Then, find out what credentials are needed to achieve your goals, whether it’s a certificate, associate, bachelor’s, master’s or professional degree.

To get the most out of your tuition bucks, research schools using the U.S. Department of Education’s College Scorecard. Look for institutions that are reasonably priced and produce positive outcomes by comparing average annual costs, typical total debt after graduation and graduation rates.

“For decades and beyond, we’ve promoted college,” Johnson says. “There has to be an intentional effort to make sure we’re not sending the message that it’s only OK to go to a four-year school.”

The article Go off the Beaten Path to Curb College Debt originally appeared on NerdWallet.

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How to Ace Your Transfer to a 4-Year College

Posted on by Teddy Nykiel

Transferring from community college to a university should be as simple as basic math: Two years at the first school plus two years at the second equals a bachelor’s degree. But the equation is often more complicated.

Many students’ classes don’t transfer correctly, and they have to spend extra time and tuition dollars finishing their degree, if they complete it at all, according to a May 2017 report from the Community College Research Center.

The vast majority of community college students — 80 percent — intend to earn a bachelor’s degree or higher, according to 2011 National Center for Education Statistics data. But only 13 percent of students who start at a community college successfully transfer and earn a bachelor’s degree within six years, according to a 2017 report by the National Student Clearinghouse Research Center.

Here are five tips for acing the transfer process, so you can beat the odds and earn your bachelor’s degree on time and on budget.

Find out how your credits transfer

Like piecing together a puzzle, transfer students must figure out how their credits fit into the degree requirements for their new school. Many community colleges have transfer agreements with local colleges and universities — also known as articulation agreements — that map out how specific classes translate at the four-year institution.

It’s possible to transfer to a school that doesn’t have an articulation agreement with your community college, but you’ll have to do extra research and work closely with advisors at both schools.

Befriend an academic advisor

Students should meet with an advisor at their community college at least twice a semester, says Laura Riley, coordinator of the advising and transfer center at Kirkwood Community College in Cedar Rapids, Iowa.

A community college advisor can help you choose a major, pinpoint potential four-year schools and enroll in courses that will transfer to those schools. If you have questions about the school where you hope to transfer, reach out directly — many colleges and universities have a dedicated transfer office.

Consider a range of schools

What was a “reach” college for a high school senior might be a realistic option for a transfer student, says Kevin Meza, the transfer center coordinator at Glendale Community College in Glendale, California.

Admissions requirements for transfer students are different than those for high school seniors. They vary by school, but many institutions require transfer students from community colleges to have earned a certain number of transferable credits, maintained a certain grade point average and completed prerequisites such as English and math.

To give yourself choices, apply to some safeties, a handful of middle-of-the-road options and a few dream schools.

Apply for financial aid

It’s crucial to submit the Free Application for Federal Student Aid. The FAFSA is the application for all federal student loans, grants and work-study programs, and you need to submit it every year you’re in school to be considered for this aid. If you submitted the application before, you can file a renewal FAFSA, which is easier and faster.

Next, search for potential scholarships, including awards that are designated for transfer students. For instance, all members of Phi Theta Kappa Honor Society, a national group for high-achieving community college students, are eligible for scholarships from the group. The average member receives $2,500 disbursed over two years, according to the organization.

Earn a credential first

Community college students who earn an associate degree before transferring to a four-year institution are more likely to earn a bachelor’s degree, according to a 2015 study published in Research in Higher Education.

The type of associate degree matters. Students intending to transfer should pursue an associate degree designed for that purpose, such as an associate degree in arts or an associate degree in science. An associate degree in applied science is typically designed for students who want to enter the workforce immediately after community college.

The article How to Ace Your Transfer to a 4-Year College originally appeared on NerdWallet.

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6 Financial Aid Questions You’re Too Embarrassed to Ask

Posted on by Teddy Nykiel

While many colleges will soon send bills for this fall’s tuition, most won’t expect payment until late summer. That gives college-bound students and their families time to finalize financial aid details. Here are six basic, but crucial, things to know about using student loans, scholarships and more to pay for college.

1. When I take out a student loan, where does the money go?

Student-loan dollars go directly to your school and are typically applied to outstanding tuition and fees first. If there’s money left over, the bursar’s office will issue you a refund of the remaining balance through a check, debit card or electronic bank account transfer.

Tip: Don’t panic if you get the tuition bill before your financial aid disbursement. Colleges cannot credit federal aid to students’ accounts sooner than 10 days before classes start.

2. Can I use my student loans to cover living expenses?

Yes, if there’s money left after tuition and fees. If you’re living on campus, the school will apply that money toward room and board costs. Students living off campus will receive a loan refund and they should plan to use it for necessities like rent, food and transportation.

Tip: Just because you can take out loans for living expenses, doesn’t mean you should if you can cover those costs another way. Remember, you’ll have to repay anything you borrow, plus interest.

3. How do I get money out of my 529 account?

Simply contact your plan provider — you can make a withdrawal online or you can make a request via phone or mail. The complicated part is figuring out how and when to use 529 savings — that’s a topic worth consulting a financial advisor or tax professional about.

Tip: Money you withdraw from a 529 plan is tax-free if used for qualified higher education expenses. You’ll owe federal income taxes and a 10% penalty on earnings from the withdrawn amount if you use the money for nonqualified expenses like transportation, and fraternity or sorority dues.

4. What should I do if I didn’t get enough financial aid to cover my college costs?

First, appeal your aid award letter with your college if your financial situation has significantly changed since filing the Free Application for Federal Student Aid. If your situation is largely the same but you need more college funds, contact the school’s financial aid office to ensure you’re aware of all options. Some colleges may offer more financial help if you show proof of a better aid package from another institution.

Beyond that, be creative when pooling college funds. For example, apply for scholarships and plan to work part-time during school. As a last resort, you may need private student loans. If you go this route, compare your options before borrowing to make sure you find a loan with the best interest rate you qualify for.

Tip: Many campuses offer payment plans that allow families to swap a lump-sum tuition bill for smaller, monthly installments.

5. Do I have to pay taxes on financial aid money I receive?

Generally, no. Student loans, and most gift aid dollars, aren’t considered taxable income. You’ll owe taxes on grants and scholarships only if they total more than your qualified education expenses.

Income earned from a federal work-study job is taxable. Employers will deduct taxes from your paychecks, and you should report work-study income when filing taxes.

Tip: Money earned through a work-study job won’t count as income on your next FAFSA. In other words, a work-study job won’t prevent you from qualifying for financial aid in the future.

6. Can I get financial aid as a part-time student?

Yes, but you may not get as much money. For instance, part-time students who qualify for federal Pell Grants will receive a prorated amount based on the number of credit hours they’re taking.

Students need to be enrolled at least half-time, meaning they’re taking classes worth at least six credits each term, to be eligible for federal student loans.

Tip: It’s not too late to apply for federal financial aid for this summer or fall. The FAFSA deadline for the 2017-18 school year is June 30, 2018.

Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: teddy@nerdwallet.com. Twitter: @teddynykiel.

The article 6 Financial Aid Questions You’re Too Embarrassed to Ask originally appeared on NerdWallet.

Class of 2017: Get a Jump on Adulthood With These 7 Tips

Posted on by Teddy Nykiel

College prepares students to be everything from accountants and teachers to government workers and health care technicians, but not all students learn basic money management skills. Here’s advice for this year’s graduates on how to succeed financially.

1. Use a tried-and-true budgeting strategy

A regular paycheck, however small, can feel like a windfall for those used to surviving on a student’s budget. The 50-30-20 rule can be a helpful guideline for using your take-home pay wisely.

Spend about 50% on necessities including rent, groceries and transportation. Use up to 30% for wants such as takeout, concert tickets and online subscriptions, but minimize those expenses if you have a lot of debt. Put the remaining money toward savings and paying off debt, targeting the highest-interest payments first.

2. Check your credit regularly

Credit is an indicator of your trustworthiness with money. Lenders, landlords and some employers check it before issuing loans or credit cards, leasing apartments and offering jobs. There are two important measures of credit: reports and scores. Checking these indicators regularly will help you spot mistakes and areas for improvement.

A credit report documents your history of paying bills and debts; go to annualcreditreport.com to request a free copy. Credit scores are based on the information in credit reports; you can get a free credit score online.

3. Negotiate your salary and bills

Make sure you’re getting paid fairly by researching how other companies compensate for similar roles. Check the Bureau of Labor Statistics’ Occupational Outlook Handbook and PayScale’s Salary Data & Career Research Center, and cite that data when speaking with prospective employers.

Cable, cell phone, internet, gym and medical bills can be negotiated, too. When talking to providers, try phrases like, “I wish to cancel” and “My budget can’t afford it,” says Jim Rasmussen, a certified financial planner and co-founder of One & Done Financial.

4. Understand your student loans and repayment options

It’s essential to know the types of loans you have — federal, private or a mix — because each loan type has different repayment options. Look up loans issued by the Department of Education by logging into your Federal Student Aid account. If you don’t see them there, they’re private loans.

Federal loans are eligible for loan forgiveness and income-driven repayment plans, which tie borrowers’ monthly payment to their income. Private loans lack those perks, but borrowers with good credit may be able to refinance to get a lower rate.

5. Set aside some graduation money

Experts recommend having three to six months of living expenses stashed for emergencies. If you receive any monetary gifts at graduation, use those funds to get started. Aim for $500 initially; adding a reasonable amount of your paycheck each month can help.

Keep the money in a savings account that’s separate from your checking and earns some interest; that way you won’t be tempted to spend it, and the amount will grow over time.

6. Comparison-shop for insurance

Get quotes from multiple companies before purchasing any type of insurance. Use an independent agent or compare rates online, and reevaluate your provider regularly.

“It’s not about loyalty,” Rasmussen says. “Companies’ rates typically increase and cycle; therefore, you can save thousands by checking the marketplace each year to see if your rates are competitive.”

7. Harness the power of compound interest

Retirement may feel like a lifetime away, but postgraduation is the best time to start saving for it. Thanks to compound interest, you’ll earn more money over time if you start investing in a retirement account in your 20s than if you start in your 30s. Plugging some examples into a compound interest calculator illustrates this:

  • A 22-year-old who invests $100 a month will have $226,304 by age 65, assuming a 6% rate of return and annual compounding.
  • A 32-year-old who invests $100 a month will have $117,535 by age 65, using the same assumptions.

Starting earlier allows more time for earned interest to grow. In this example, the 22-year-old invests just $12,000 more than the 32-year-old over time and has nearly double the amount of money at age 65.

Saving for retirement may not be doable right away, but — like the rest of these tips — it’s a healthy habit for new graduates to aspire to.

Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: teddy@nerdwallet.com. Twitter: @teddynykiel.

This article was written by NerdWallet and was originally published by USA Today.

The article Class of 2017: Get a Jump on Adulthood With These 7 Tips originally appeared on NerdWallet.

One-Word Answers to Your Money Questions

Posted on by Teddy Nykiel

Financial advice is loaded with fine print, disclaimers and caveats. But sometimes, you want a straight answer before digging deeper.

We answered 10 money questions in a single word, and linked to all the extra stuff.

1. How do lenders decide if I qualify for a loan or credit card?

Credit.

2. What if my credit isn’t good enough?

Co-signer.

3. Does checking my credit report hurt my score?

No.

4. What score do I need for my credit to be considered “excellent”?

720+.

5. How old do I have to be to get a credit card?

18.

6. How do I get money for college?

FAFSA.

7. How can I lower my student loan interest rates?

Refinance.

8. How much of my income should I spend on necessities like rent, food and gas?

50%.

9. How do I simplify multiple debt payments?

Consolidation.

10. How can I save for retirement if my employer doesn’t offer a retirement savings plan, like a 401(k)?

IRA.

Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: teddy@nerdwallet.com. Twitter: @teddynykiel.

The article One-Word Answers To Your Money Questions originally appeared on NerdWallet.