Search Programs

5 Financial Mistakes to Avoid When Returning to College

By Jessica Martel | Published 5/12/2021

Expert Contributor

Jessica Martel
Jessica Martel is a professional researcher and writer specializing in the areas of personal finance, financial literacy, and the psychology of money. Her work has appeared on Investopedia, The Balance, Money Under 30, Scotiabank, and more.

Thinking about returning to school to get your bachelor's degree? Or maybe you have your sights set on a career switch that requires a master's?

If you're considering a return to post-secondary, it's probably with the intention of bettering your career or your finances. To achieve these goals, it's important that you make wise financial decisions while attending college. Here are five financial mistakes you will want to avoid when returning to college.

1. Not Having a Budget

With the added costs associated with college, it's important to be conscious of what you can and can't afford. Without a budget, it's easy to lose control of your money. While going to college to improve your job prospects can be a smart financial decision, it can also result in serious problems if you are not managing your finances.

How to Create a Simple Budget

Creating a budget doesn't have to be complicated. It can be as simple as recording your income and expenses on a sheet of paper:

Record Your Income

On one side of the paper, write down all of your income sources (full-time job, side hustle, spousal support).

Record Your Expenses

On the other side of the paper make a list of where you spend your money. In addition to your regular expenses like rent, groceries, and insurance you want to include all of the new expenses associated with college (tuition, textbooks, gas for your commute, parking).

Subtract Your Expenses From Your Income

To determine how much money you have remaining perform this simple equation (income - expenses =). If the number is negative, this means you are not bringing in enough money to cover your expenses. It's time to see what you can cut from your budget.

Or for additional help with budgeting, there are some great tools you can use:

  • Monthly Budget - a free budgeting worksheet from the Consumer Financial Protection Bureau
  • Mint - a free app that allows you to track your spending, customize your budget, and set goals
  • You Need a Budget (YNAB) - $12/month after a free trial, YNAB provides similar features to Mint with budgeting reports and custom goals, and also advertises that it teaches you proven methods to manage your money

2. Not Applying for Financial Aid and Scholarships

If you're returning to school as a mature student, you might think that you aren't eligible for financial aid or scholarships. This is not always the case. If you continue to work while going to college, you might make too much money to receive financial need-based aid. However, you might qualify for other aid. Any assistance you can potentially qualify for is worth the effort involved in applying. Graduating with excessive amounts of student debt can prevent you from achieving the exact goals that you returned to school for - more money, more freedom, and more opportunities.

Graduating with excessive amounts of student debt can prevent you from achieving the exact goals that you returned to school for - more money, more freedom, and more opportunities.

How to Apply for Financial Aid and Scholarships

There is no age limit on financial aid, so be sure to complete the Free Application for Federal Student Aid (FAFSA) forms to see what you qualify for. There are opportunities for adults returning to school who are single parents. For instance, single parents who qualify for federal aid can use the money to pay for childcare while attending class. There are also scholarships specifically designed for those who have served in the military. There are even a variety of scholarships meant for adult students returning to college. You can use the U.S. Department of Labor's scholarship search and use keywords to seek out targeted scholarships to apply for. For more comprehensive information on how to apply for the FAFSA and what kinds of aid you may be eligible for, check out OnlineU's Student's Guide to Applying for Financial Aid.


You can use the U.S. Department of Labor's scholarship search and use keywords to seek out targeted scholarships to apply for.

3. Overusing Your Credit Card

Even after applying for financial aid and scholarships, you might find you need more money to cover the cost of college. While it might be tempting to use your credit card to fill in the financial gaps, avoid doing this. The last thing you want is to graduate with a maxed-out credit card (or two or three) and a ton of high-interest debt.

Credit card companies love to target college campuses. However, in 2009, the Credit Card Accountability Responsibility and Disclosure Act was passed. In addition to new limits on credit card fees, there were also new rules put in place to better protect college students.

For instance, credit card companies can no longer appear on college campuses and offer sign-up gifts to students in exchange for completing a credit card application. Additionally, young students under the age of 21 are required to have an adult co-signer or they must meet specific criteria to prove that they are capable of repaying their credit card balance.

The last thing you want is to graduate with a maxed-out credit card (or two or three) and a ton of high-interest debt.

How to Avoid Overusing Your Credit Card

Even with these new protections in place for college students, it's important that you understand how credit works before you take on a credit card. To prevent yourself from overusing a credit card consider the following steps:

  • Create a budget.
  • Limit the number of credit cards you own and use.
  • Choose the card that is right for you (compare rates and fees).
  • Monitor your credit card usage.
  • Pay your credit card in full each month.
  • Reach out for assistance. If you are struggling with credit card debt, you can connect with a nonprofit counselor at the National Foundation for Credit Counseling (NFCC).

4. Not Having an Emergency Fund

An emergency fund is a pool of money that you save up in case you encounter job loss or some other kind of emergency. The purpose of an emergency fund is to provide a financial safety net and enough money to cover your essential bills for a period of time. A common rule of thumb is to have an emergency fund large enough to cover three to six months of basic expenses. However, the size of your fund will ultimately depend on your individual situation and what you can afford.

While an emergency fund might not top your list of financial priorities when returning to school, it's important that you keep putting money into this account. You can't predict when an emergency will occur. An emergency fund is especially important for students who are returning to school and are also responsible for supporting a family. Without an emergency fund, any kind of personal health issue, job loss, or major home expense may push you over your financial edge. This can result in you having to drop out of school or needing to take on additional debt.


A good rule of thumb is to have an emergency fund large enough to cover three to six months of basic expenses.

How to Create an Emergency Fund

If three to six months of expenses seem impossible, that's okay. Start small. Begin saving what you can. Even if you only have a few hundred dollars in your emergency fund, something is better than nothing. Here are a few tips to get you started:

Assess Your Budget

Determine what you can afford to save each month.

Open a Savings Account

Consider opening a high-interest saving account to maximize your savings.

Pay Yourself First

Automate your savings so that a predetermined amount of money comes off of your paycheck and goes straight into your emergency fund savings account.

Be Consistent

Make saving a priority and a habit.

5. Taking a Break From Investing

Going to college is an investment in yourself. However, this does not mean that you should pause actual investing. Investing is the act of using money to generate more money. People invest in the stock market early in their lives with the hopes of growing their money enough to fund a comfortable retirement or to achieve other long-term goals.

Getting an early start, remaining consistent, and being in it for the long run are important pieces in a successful investment journey. An early start allows your money to multiply through the power of compound interest. With compound interest, you earn interest on your initial investment and also earn interest on your interest. The longer your money is invested, the better.

How to Make Investing a Habit

Early and consistent investing is also important for habit formation. The more often and consistently you do something, the easier it is to continue to do it. Taking long breaks in investing can interrupt this habit and make it difficult to return to. Once you remove investing from your budget, it can be hard to find the money to put it back.

If you are already investing, don't stop this practice when you go to college. Keep going, even if you can only afford $10 or $20 per month. If you aren't investing, it's time to start. You don't need hundreds or thousands of dollars to get going. There are several micro-investing apps like Acorns that allow you to start investing with as little as $5. If you are a new investor, you can follow these simple steps to get started.

  • Open an investment account.
  • Choose where you want to invest your money. Consider low-cost index funds or exchange-traded funds (ETFs).
  • Invest consistently.
  • Don't panic and sell in response to market fluctuations.
  • Adopt a long term investment strategy and stay the course.


There are several micro-investing apps that allow you to start investing with as little as $5.

Take Control of Your Education and Your Finances

Going to college is exciting and can be life-changing. However, not managing your finances while going to school can result in poor credit, large amounts of student debt, reduced savings, and interrupted investing. All of these financial decisions can have a drastic impact on your future. Poor credit can prevent you from becoming a homeowner, purchasing a car, or getting a small business loan to propel your entrepreneurial endeavors.

Large amounts of student debt can be consuming and prevent you from achieving other financial goals. Letting the cost of school get in the way of consistent saving and investing can put you in a precarious position should an emergency arise and can prolong your dreams for a comfortable retirement. Luckily, you get to decide how you take control of your education and your finances.

Related Articles

2023 Most Affordable Online Master's Degrees in Theology

If you are interested in applying to a master's degree in theology, explore our list of accredited online colleges that offer the most affordable degrees.

By OnlineU Staff Writers | 12/2/2022

Everything You Need to Know About the FAFSA

Explore how to fill out the FAFSA, how eligibility and awards are determined, and what happens after you submit your application.

By OnlineU Staff Writers | 7/22/2022

Study Tips for College Students

Discover the best study tips and tools, and learn how to study smarter by building an effective study plan based on your learning style.

By OnlineU Staff Writers | 7/11/2022


Start Your Online College Search:

Review schools that align with your career aspirations.