You may think that tuition is the only financial hurdle you’ll encounter as a college student. But the truth is that several other money-related problems can crop up. A 2024 study from Sallie Mae and Ipsos cites financial challenges as a primary reason 38% of people drop out of college. Further, financial issues are a contributing factor for 48% of people who decide to leave school.
Fortunately, proper preparation and recognition of financial challenges that can arise may help you avoid these pitfalls.
7 Prevalent Financial Issues for College Students (And Their Solutions)
Common financial issues for college students range from being unprepared for emergency expenses to problems with money management. Here’s more about why these potential issues can arise so that you can stop them in their tracks.
1. Not Considering All Education-Related Expenses
Many students focus primarily on tuition and room and board costs, which is understandable as these expenses add up. But other education-related expenses add up, too, and accounting for those is important. If you’re not prepared, you could end up struggling financially. Potential costs include:
- Textbooks
- Classroom supplies
- Class fees
- Transportation
- Car insurance
- Healthcare
- Discretionary costs
What to Do: Make sure you account for all of your expenses. If you aren’t sure where to start, seek help from your financial aid office. A financial aid representative can guide you on what the typical student budget is, and they should be able to tell you the cost of attendance for your program. Use this information as a starting point, and be sure to account for other necessary expenses that may not be included in the cost of attendance.
2. Missing Out on Grants and Scholarships
Many students miss out on valuable financial aid through grants and scholarships. For example, the National College Attainment Network reported that $4 billion in Pell Grants went unclaimed in 2023.
What to Do: Gift aid can be a lifesaver if you’re struggling with money. To ensure you don’t miss out, fill out the Free Application for Federal Student Aid (FAFSA) before every school year. Also, contact your financial aid office to ask about institutional grants or scholarships, and research financial aid opportunities from non-profit organizations or companies. You can find available grants and scholarships using The College Board’s scholarship tool.
3. Not Utilizing All Financial Aid Resources
Not taking advantage of financial aid could mean leaving money on the table as a college student. The financial aid department can be invaluable and connect you to institutional aid, private student loans, and even emergency grants or loans provided through the school.
What to Do: Contact your financial aid office if money is tight, as you may be eligible for additional aid. And at some schools, you might even qualify for an emergency loan or grant if you have an unexpected expense—such as a medical bill or car repair—threatening your education.
4. Not Having a Source of Income
You may be overwhelmed by coursework as a college student, and the idea of working might seem impossible. But not having a source of income beyond your financial aid package can make it challenging to cover your expenses. Without an income stream, an emergency expense could leave you scrambling, and you could turn to expensive debt like credit cards to foot the bill.
What to Do: Consider picking up a part-time job or a side gig where you babysit, walk dogs, deliver groceries or drive for a rideshare service. Save some of your earnings for emergencies, and set aside some for discretionary purchases—like your spring break plans.
As a bonus, working in school gives you something to put on your resume, making it easier to secure an internship or a job after graduation. Many colleges even offer work-study programs, which generally have flexible schedules, to help cover tuition costs.
5. Not Creating (and Sticking to) a Budget
College may be the first time you’re responsible for managing your money independently. This can be challenging If you don’t know how to create a budget or track your spending, as it’s easy to overspend and end up in debt.
What to Do: Creating a budget doesn’t have to be complicated. Start tracking your regular income if you have a part-time job. Then list your expenses, such as rent or cell phone bills. Once you have a handle on your spending and earning, you can develop a budget that works for you. Many helpful budgeting tools and free apps are available to make the process easier, such as Goodbudget.
6. Not Using Credit Wisely
Relying too heavily on credit cards can also become a major problem for college students. According to a 2024 WalletHub study, college students hold an average of just over $2,000 in credit card debt, and 32% pay less than their full credit card balance each month. Given that credit cards have some of the highest interest rates around, balances can easily grow if they aren’t paid in full, which can make it more challenging to get out of debt.
What to Do: Only use your credit card for essential purchases to ensure your payments are manageable. For example, you can use your card to pay for gas for your car so you can get to class or buy groceries for the week, but don’t use your card to pay for dinners out with friends or for spring break trips. If possible, pay off your full card balance each month to avoid costly interest charges.
7. Not Learning Basic Financial Literacy Skills
Some high schools don’t teach financial literacy, so many college students enter school without a good understanding of personal finance. This can lead to problems like not knowing how to create a budget and not understanding how interest factors into your student loan repayment.
What to Do: Spend some time learning the fundamentals of personal finance. Your college’s office for student services may have some resources for you. Coursera also offers several financial literacy courses that you can explore independently.
Preparing for College
It’s common to have trouble adjusting to college life and managing money independently as a college student. But fortunately, understanding these challenges and how to handle them can help. Rely on financial aid resources, create a budget, and learn the fundamentals of personal finance so you can make smart money decisions while in school and beyond.
