College students aren’t well known for their big bank accounts; many don’t believe they make enough to bother saving before graduation. It’s not unusual for new grads to assume that college loans, rent, living expenses, and debt will simply take care of themselves after graduation.
But not every grad gets hired just days after graduating college. For some, the job search could take weeks or even months. Add to that the weak economy and the fact that lenders don’t always allow deferment, and it’s no wonder recent grads are under so much financial pressure.
If you’re still in school, you still have time to save up. Here are five reasons why every college student should be saving while in school.
Because you don’t know how long it will take to find a good job.
The state of the economy has been in the news a lot lately—and the news isn’t good. New graduates face a tough job market, and you never know how long it will take you to find a job—or to find one that pays enough to allow you to live independently while paying off your loans. If you have some savings in the bank, you’ll be able to support yourself for a time while you look for a job that pays a wage you can live with.
Because you’ll have to start paying back those loans sometime.
Some loans—particularly federal Stafford and Perkins loans—can be deferred for up to six months after you graduate. But not all loans give you a grace period after graduation. Private loans have varying terms; some lenders will allow you to defer, while others won’t. Even some government loans, such as PLUS loans for graduate students, must be repaid the minute you graduate or stop attending school. If you have savings in the bank, you can start paying those loans immediately—even if the job offers are slow in coming.
Some loans—particularly non-subsidized government and private loans—continue to accumulate interest while you’re in college. Save money while you’re in school, and you may even be able to make payments and keep your balance down while you’re in college.
Because you’ll want to get your own place.
Even if you get a job as soon as you graduate college, you may not have the cash to get your own place right away. Renting an apartment requires a first and last month’s payment, plus a security deposit—you might need to pay thousands up front before you can move in. If you have some savings in the bank, you’ll be able to pay for your first place right away—without having to save money over weeks and months.
Because Mom and Dad won’t foot the bill forever.
Whether you need a car to make your daily commute or just a little occasional help with the rent or college loan payments, many college students find they can’t afford what they need without help—unless they’ve been saving for it. Many rely on their parents for help in those first crucial years. But between the mortgage crisis, unemployment trends, and a stagnant economy, many parents are not in the best financial position of their lives either. If you have money saved, you can get off to a strong start after graduation—without being a burden on them.
Because savings equal freedom.
Many recent grads don’t realize how much pressure they’ll be under to earn money right away after graduation—especially if they’ve got loans to pay back. If you have savings, however, you can buy yourself some time. Savings can allow you to travel, take an unpaid internship, or volunteer in an area you’re passionate about—all while paying back your loans. If you have money in the bank, the search for a job doesn’t have to be so urgent.
Most students don’t have a lot of disposable income. But if you do, it’s wise to put some in a savings account early, allowing your money some time to grow. Put a little money away for use after college, and you may find that graduation isn’t as frightening as it seems.
By Jennifer Williamson, Distance-Education.org Columnist
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