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by Access Group | March 10, 2009


It's hard to make money last. This is especially true if you receive funds only once every three, four, or five months. And that's exactly what happens with your financial aid funds. These funds generally are disbursed to you once each term at or near the beginning of the term. It's your responsibility to make sure that you budget your funds so that they last until your next disbursement. This can be very difficult. It's like getting paid once a quarter by your employer.

Although your financial aid funds should never be confused with earnings, they still may be the main source of money you use to pay your expenses. And if you run out, the financial aid staff at your school may not be able to let you borrow additional funds. So how can you make your funds last? The following tips can help you figure out how to stretch your funds from the first day of classes all the way through the end of final exams.

Set Up a Holding Account

One way to make your funds last is to open a savings account that you can use as a Holding Account just for your financial aid funds. Follow these three steps:

Step 1:Open a savings account for your financial aid funds. Instead of using your checking account to hold all of your financial aid funds, open a separate savings account. You can use this account to hold your financial aid funds until they are to be used based on your monthly budget.

Step 2:Calculate your monthly spending plan (i.e., budget) to know how much you can afford to spend each month. We recommend that you create a monthly in-school budget before you borrow so you don't end up taking on a larger debt burden than you need. If you already have a budget, take the time to review it so you know how much you can afford to spend each month. (See "Creating Your Budget" later in this article if you don't already have a budget.) This amount will become your monthly "allowance."

Step 3:Transfer your budgeted "allowance" to pay all your expenses each month. Ask your savings institution to automatically transfer at the beginning of each month the funds you have budgeted for your monthly "allowance." This electronic transfer should be from your Holding Account to your checking account.

You may want to avoid getting an ATM card for your holding account so you are not tempted to draw funds from the account ahead of your monthly budget schedule. If you have to make a trip to the bank in-person instead of running to the nearest ATM, you may be forced to consider whether the extra withdrawal is really worth it.

Drawing from your holding account before the automatic transfer occurs indicates that you're probably exceeding your budget, and you might run out of funds before the end of the term.

Prepay What You Can

Certain items in your budget can be pre-paid. You may want to speak with your landlord and arrange to prepay your rent for the entire term when you receive your financial aid funds instead of paying month by month. Check with your utility companies as well; you may be able to prepay fixed monthly service charges for such things as your cable, telephone, and cell phone. You can usually prepay your car insurance, as well.

Be careful if you are attempting to pre-pay your car loan. Unless you are granted permission from the financial institution from which you borrowed this loan, the extra lump sum payment you send them at the beginning of the term may count as one monthly payment plus an extra amount towards the principal loan amount, not as separate advance monthly payments that you are making in order to extend the due date on your next loan payment. You would then still be responsible for making payments each subsequent month.

Be Thrifty!

Take action early to minimize your expenses and help ensure that your funds last. Here are some suggestions to help you make the most of your money.

  • Live with one or more roommates.
  • Take your lunch; bring your own coffee (and/or other beverages).
  • Eat at cheap places when dining out.
  • Dress for less.
  • Clip and use coupons.
  • Use prepaid phone cards for long distance.
  • Find free or cheap entertainment; go to matinees; rent videos.
  • Don't buy a new car; use public transportation or car pool.
  • Avoid "impulse" buying; always make a list when you shop and stick to it.
  • Beware of buying for "convenience," such as having food delivered.
  • Use cash instead of your credit cards.

Create Your Budget

Though we recommend that you create your in-school budget before you borrow, it's never too late to create a budget. Creating a monthly in-school budget can help you manage your financial aid funds. Access Group provides interactive budget calculators that can help you develop your budget.

You should customize your budget to accurately reflect your personal expenses. However, lifestyle requirements should be realistic. You may have to cut your expenses when you re-evaluate your in-school budget to ensure that you have enough funds to last until your next disbursement. Live below your means as a student.

Your financial aid disbursements are calculated to cover your education and living expenses while you're in school. Even though it may seem difficult, you can make it last. Remember, creating a budget is an important first step. Help yourself stick to that budget by holding your funds in a savings account, transferring your monthly "allowance" electronically to your checking account, and prepaying your fixed expenses.


Filed Under: Education|Grad School