Illustration by JENNY YURSHANSKY/Daily Bruin
By Carolina Reyes
Daily Bruin Contributor
When students initially take out a loan or receive financial
aid, officials from the UCLA Loan Office give them advice during
orientation on how to manage their money.
But as the quarter drags along, a lot of students stop managing
their money, leading to what Edward C. Flores, scholarship and
outreach coordinator at the financial aid office, has termed
“the $140 pizza.”
“First week students get together and they study and one
of them says “˜let’s get go get pizza,'” he
said. “Second week they get together and they say
“˜let’s go get pizza.'”
“After ten weeks and after three quarters and finally
after one year, they end up with a $140 pizza!” he said.
According to Flores, students can avoid situations like
searching for an emergency loan and charging rent on a credit card
by simply learning to balance a budget.
“Students need to work toward not borrowing as much money,
taking advantage of work-study and learning the value of not taking
out too many credit cards,” he said.
One way students can budget their money each quarter involves
setting aside some money each quarter, Flores said.
Edward Ayala, a sixth-year microbiology and molecular genetics
student, budgets his money by considering what each of his
quarterly expenses are as soon as he gets his financial aid
disbursement.
“I just keep in mind that I can only spend the money I set
aside on rent. I also have a part-time job that helps me pay for
groceries, books and entertainment.”
HOW TO REDUCE INDIRECT COSTS Students can find
a number of ways to save money. Buy used textbooks, available at
the book store. After classes end, books can be resold to the
vendor.
Decrease flexible expenses. Try cutting back on clothes or
entertainment by waiting to buy. Shop smarter: buy on sale, buy
used, buy in bulk, borrow.
Opt for basic, no-frill packages for travel, phone and utility
services. Eliminate extras and luxury options.
SOURCE: UCLA Resource Management Getting into debt can not only
mean a bad credit history, but it can also affect a student’s
educational future. According to Flores, the financial aid office
has heard of graduate schools withdrawing their offers of admission
because students have poor credit.
“The reality of it is that graduate schools and
professional schools are becoming more expensive,” Flores
said. “So you have a $25,000 or $35,000 budget from which you
can only borrow $18,500 under the annual federal
maximums.”
Because graduate students may need more funds, they might need
to apply to private auxiliary loans, he added.
Often, if students have poor credit, they will not qualify for
those funds and cannot pay for the school fees. If they can’t
pay, then the institutions may need to withdraw their offer of
admission.
Some students said they try to avoid using their credit card too
often.
“I’m just getting out of my credit card debt that
I’ve had since my freshman year,” said Carmell Norice,
a fourth-year neurological science student. “That’s why
I’m really trying to avoid getting myself in debt and saving
money for upcoming graduate and medical school
applications.”
Other students like Franchesca Paolone, a third-year Spanish
student, avoided getting a credit card altogether.
“My biggest fear is to have tons of bills and no
money,” she said. “I don’t have a credit card. I
use my mom’s credit card and, when the bill comes, I just pay
her.”
Although financial aid counselors advise students not to acquire
too many credit cards, not having a credit card can have its
drawbacks.
Landlords, employers, college loan issuers, insurance companies
and car loan companies check a person’s credit history to
verify financial information consumers provide them when deciding
whether or not to conduct business with them.
To help students better manage their funds, the Financial Aid
Office provides a resource on the Web called EdWise.
Through EdWise, students can learn to budget their money, learn
to borrow less, and learn how to start repaying their loans while
they’re still in school.
The Loan Office also provides debt management session workshops
twice a week throughout the year .
Loan associate Cynthia Mancillo advises students to attend the
debt management sessions to learn how to be financially
responsible.
“The sessions show you different ways of how to budget
your money by showing you how to break down your quarterly
expenses,” she said.
Even students who do not have loans can benefit from the
management workshops. Mancillo said many students who are not
borrowers attend the sessions to learn the risks involved if they
want to borrow money in the future.
Some students are not aware of the difference between a
subsidized and unsubsidized loan, according to Mancillo.
An unsubsidized loan requires students to pay their own
interest, giving students the option of repaying their loans while
still attending school.
A subsidized loan, however, does not require students to make
interest payments while they are attending school on at least a
half time basis. Instead, the government pays the interest on the
loan for students.
The hidden catch is that, with an unsubsidized loan, interest
will be added back to the original amount borrowed and interest
will be charged on the loan and the interest incurred on the loan.
Thus, students end up paying interest on interest.
By paying as little as $20 a month, students can pay off a lot
of the loan money they take out over the years, Flores said.
“Students need to learn that in the repayment portion if
they make the equivalent of one extra payment a year, say $10-15 a
month, it almost cuts the loan in half,” he said.
The “UCLA Resource Management Guide,” a brochure
from the Financial Aid Office, shows that after making an in-school
payment at $20.83 a month, at the end of four years a student will
have a balance of $11,999.68, out of a $14,000 loan, instead of
$14,000.
The guide also advises students to consider living at home their
first year to gain experience in managing and budgeting their
resources.
“My advice to students is to try and avoid getting in
debt, period,” Mancillo said. “Don’t make school
your career.”
“You’re going to make a lot of money when you get
out of school,” she continued. “But while you’re
in school you should try to keep a budget.”