How to manage your financial aid award

If you’re a college student on financial aid, it’s not easy to stay within a budget.

Most colleges put college students’ financial aid awards toward tuition and fees first and then give the remaining money to the student as a financial aid refund in one or two installments a semester. This makes it difficult for students to manage their money and avoid blowing it all before the semester is over.

And if schools are late to disburse the funds, students can also find themselves in financial jeopardy, unable to cover rent, food, books, and other expenses.

photo credit: orphanjones via photopin cc

Treat college like a job

But a new pilot program aims to get students to treat college more like a job. Instead of getting paid a lump sum during the semester, the program disburses the money to students every two weeks, just like a paycheck.

Not only does the new arrangement help students manage their money better; it encourages them to stay

in school to continue to “earn” their financial aid award.

Financial aid like a paycheck

The “Aid Like a Paycheck” project was launched by the Institute for College Access and Success in 2009 to help low-income students succeed and graduate from college.

It was tested first on a small scale at Mt. San Antonio College, a school with 20,500 students in southern California. According to Education Week, biweekly payments of $125 to $350 were given to about 200 students. As students signed up for more credits or dropped classes, the disbursements were adjusted to reflect their new financial aid eligibility status.

Students in the program were also regularly emailed information about online tools to help with budgeting, borrowing, and money management.

Helping college students stay in school

The program was greeted with positive feedback from students and professors. Students reported the new system helps them spend their money wisely, reduce their work hours, and put more energy into their school work. And researchers say the program has the potential to help college students, particularly those with the largest financial need attending community colleges.

We’re glad to see innovative new projects like this that make it easier for students to manage their financial aid awards and stay in school, since running out of money is one of the top reasons needy students drop out of college. Check out our blog for more tips on budgeting and managing your money while in college and beyond.