Borrowing Tips for College Students

Released  August 21, 2006
By Megan Greuling

CHARLOTTE, N.C., August 21, 2006 – College students face many new responsibilities when they leave for school. From time management to rigorous class loads, there is a lot for a student to think about. Financial independence is another big challenge that many students face and can often times be the most difficult.

“Becoming a college student is usually the transition point from being financially dependent on your parents to being fully dependent on yourself,” states Anthony Hsieh, president of “This can be scary but it can also be a very rewarding experience if you fully understand that the financial responsibilities and choices you make now could positively or negatively affect you for years to come.”

As part of its ongoing mission to empower borrowers, LendingTree offers five key tips to help college students get off on the right foot.

1. Understand how to take out a student loan that works best for you. Student loans are a great way to finance an education. Loans backed by the federal government tend to have lower rates and repayment terms that are more flexible. Subsidized Stafford loans, which are need-based, are particularly generous since a student is not responsible for interest on the loan until six months after they have graduated from school. Unsubsidized Stafford loans are not need-based and interest starts adding up right away.

2. Manage your first credit card by paying bills in full. College students are inundated with credit card offers the moment they step on campus. It is very easy to use a credit card instead of cash and that habit can easily contribute to students losing track of what they spend. Make sure to keep a careful eye on credit card use and remember what is purchased will be charged interest if not paid in full upon due date. How interest works and accumulates can be confusing, so make sure you take time to understand how credit card payments will be made on a limited budget before spending occurs. A credit card can be an important first step to building credit, but when used the wrong way, it can be detrimental to your credit report.

3. Learn how to manage your budget by planning. Every student has a different financial situation. Some students have allowances while other students work part-time. However, in both cases, in order to effectively manage a budget, make sure to take time each month to plan specific needs like groceries and utilities, in addition to any fun incidentals like concert tickets.

4. Be aware of the competitive pressure to spend. Recent surveys show that many college students continue to take on more and more debt to keep up with friends and peers. The college campus can place huge competitive consumption pressures on students due to the ease of acquiring credit along with the increased social acceptance of personal debt. Know the difference between things you need and things you want and ensure you are keeping track of all spending.

5. Take a financial literacy class if one is available. The key to managing a budget, loans, and credit cards effectively is understanding how it all works. Many credit cards put the details in hard-to-read fine print that can easily be overlooked. Take time to understand how interest accumulates as well as how to create a budget—even if it’s using allowance from your parents—to build your knowledge of managing your finances correctly and building credit that will help you in the future.

For more information about what college students should know to become a smart borrower, please view our borrowing tips for college students.

About LendingTree, LLC

LendingTree, LLC is the nation’s number one online lending exchange, providing a marketplace that connects consumers with multiple lenders that compete for their business. Since inception, LendingTree has facilitated more than 18 million loan requests and $141 billion in closed loan transactions. LendingTree provides access to mortgages and refinance loans, home equity loans/lines of credit, auto loans, personal loans, and credit cards via and 800-555-TREE.

Founded in 1998 with headquarters in Charlotte, North Carolina, LendingTree, LLC is part of IAC Financial Services and Real Estate, an operating business of IAC/InterActiveCorp (NASDAQ: IACI), which also owns or operates LendingTree Loans, LendingTree Settlement Services, LLC, GetSmart®,®, Domania®, and iNest®.