Budgeting in College: How You Can Adjust to Start Making Payments Towards Student Loans

budgeting in college

If you have outstanding student loans, much like many other college students, you will quickly realize that your money does not go as far as you would like it to. Sometimes, you may have to choose between making a payment and eating for the night. These are tough choices to make and many students must make them on a regular basis.


Before you panic, you do not have to be in this situation and it takes a bit of time to work your way out of it as well. One of the best ways to ensure that you do not have to choose between a bill and food is to make sure that you budget properly in college and adjust your spending habits to ensure that you can make the payments you need to.

Not sure how to do that? Let’s take a look at some of the things you can do now and in the future to get yourself setup for success.

Budget with the 50-20-30 Rule

Have you ever heard of the 50-20-30 rule? If not, it is a good way to budget your monthly income and make sure that bills are paid on time, all of the time. This rule has helped many students be able to afford their student loan payments in addition to their necessities and luxuries.

The way this rule works is it breaks down your income into percentages and determines how much of a percent should go to each category that you need to pay for.

For example, the rule says that 50 percent of the income you take home should be used to pay for your necessities and essentials. The essentials are divided up into utilities, housing, groceries, and transportation. No other category should be included in this amount.

Therefore, if you bring home $1,300 per month, no more than $650 of this should go to those four things.

Next, the rule says that 20 percent of the income you bring home should go to your financial priorities. This includes things such as your student loan payment, credit card debt, and any other financial contributions you need to make.

Lastly, the rule states that 30 percent of the income you bring home should go to your lifestyle choices, which could include things such as fitness memberships, cable, Internet, eating dinner out, pet care, child care, etc.

Adjust Your Budget to Meet Your Goals

The 50-20-30 rule is great for those who have any type of an income and it can help you manage your money succinctly, but sometimes it does not always work out for people.

Another option you have when it comes to budgeting is to sit down and think about your short-term and long-term goals and then adjust your budget to meet those needs.

For example, if you have a single student loan that is only $1,000, but it has an interest rate of 7 percent, you want to pay it down. You can adjust your budget to accommodate higher payments monthly until this loan is paid off.

Once the loan is paid off, you can restructure your budget again and then reevaluate where you stand. Yes, you will have to cut out some of your luxuries, but there are ways around that as well. For example, to pay this loan off quickly, you may have to give up the Internet in your home until the loan is gone. BUT, you can head to the Starbucks right across the street and use the free Wi-Fi they offer.

While it may be tight for a while, you will soon be able to enjoy financial freedom once some of your debts are paid off.

Assess Your Income and After-Tax Take Home Pay

While budgeting is one step in the process, if you do not have an income or a large income, you will find that many of the budgeting options do not work out in your favor. It is important for you to sit down and determine how much income you make and what your after-tax take home pay is.

Often times, you will find that you may need to think about getting a second job or you may need to look for a position that can offer you more hours or more pay based on your experience.

To help you understand how income plays a role in how much you can afford, let’s take a look at the 50-20-30 rule with a bring home income of $1,100 per month. On this income, you would be able to allocate no more than $550 towards essentials and necessities, $220 on paying off your debt, and $330 on yourself.

This does not equate to much in the large scale of things. It will be very hard for you to find a place to rent for only a couple hundred bucks per month. You would even be hard-pressed to find a place for $550 per month and that still would not include your groceries, utilities, and transportation.

If you do find that you run into this problem, you may need to consider moving back in with your parents or budgeting your money another way. Cutting out all of your unnecessary expenses may net you another $100 or $200 out of that $330.

Talk to Your Student Loan Provider

Luckily, if you have federal student loans, you will find that you can adjust your payment plan and there are flexible options available. If you are on a tight budget, talk to your student loan provider as they may be able to give you some guidance and help you apply for the income-based repayment plan or even place your loans in forbearance until you can start making payments again.

Student loan payments need to be paid and there is no getting out of it, so it is important that you learn how to budget early on and make it work for you.