The other day I received my last school loan bill. It is for $13.34. I stared at it for a really long time before placing it into my bill pile. $13.34.

To get to that point took a tremendous amount of effort. I wasn’t sort of money smart then—although I am much better at it now—so I made some decisions years ago that weren’t the best, one of those being not taking advantage of not having to pay a bill while in graduate school. I should also point out that I had quite a few scholarships and fellowships so I didn’t initially borrow that much; but small amounts turn into massive amounts really fast. To get that last bill from the lender, I did some consolidating and applied for some things as a public school teacher, and now at 38 years old, I am looking at that bill for $13.34.

The other day I read an article about taking on student debt and the good things it can teach young people about money. I can agree with some of that. But I also remember the times I had to pull over on the highway to avoid panic attacks after hearing the amount I owed after interest. I also remember the times that I applied for loans, even when my tuition was covered, but because I wanted some extra breathing room in my budget and how much those few thousand turned into later. And I also remember when a loan made the difference between going to school or not. The short end of the story is that yes, there are some good and there are some bad.

The other day I also listened to a podcast about payday loans. The basic argument was very “hate the player, not the game.” It talked about how if someone knows what they are getting into and has a plan, the payday loan isn’t bad. The “bad” comes from borrowing the next one to pay back the first. Thinking about all of that, I thought of some ways to educate the player about the game, especially as my students currently weigh their college options and the money associated with those options.

Before I begin, I will also say that many people simply cannot borrow money at this moment. It is definitely a privilege to be able to take out any loan, especially a college loan. While many people cannot take out a college loan, I still think it is incredibly important to understand money in this way anyway and by never teaching this, I believe we make one of the largest mistakes when working with underrepresented groups.

1) Borrowing money isn’t a bad thing. Just like the payday loan, you can look at a school loan as helping with an expense and if you have plan so that you are not borrowing on top of borrowing, you can turn that bad thing into a good thing.

2) You have to create a plan. I get upset with clients when I am doing SAT prep with them and they aren’t writing anything down. So when I say to create a plan, that means to actually write down how and when you will pay back the loan.

3) Don’t wait until graduation to pay back a loan. The rule of thumb for borrowing is that you don’t want to borrow more than you will make right after college. I’ll clarify that a bit to say you want to end up with that much debt, but you may not start that way. Here is what I mean: say you borrow $30K during your first year of college. You can start paying that back as soon as the ink on the promissory note is dry. I don’t recommend working too much while in school, especially that first year, but let’s say you are making a few hundred per week and you send $50 of that each week to your lender, and in the summers, it’s even more. By the time you graduate, maybe that $30K loan now looks more like $15K. More importantly, interest is now only accruing on $15K, not $30K. That’s a huge savings.

4) You don’t have to borrow all that they offer. A good chunk of the offer is what the school and the federal government think you may need for living expenses. Once you have paid your tuition, room, and board, look at what is remaining. Can you deal with $800 less? $500 less? Remember you are trying to get your ending balance to be that manageable number, and thinking about having interest accrue on the smallest amount possible. So maybe you can adjust your living expenses some from the beginning. Some people will say to wait until the end of the term to return the leftover, but I think it’s important to create a budget first, driven by your needs rather than trying to reach a number that is far out there. To put that in more tangible terms, when financial advisors put people on a budget, they will often times say to use cash only. The debit or credit card is too theoretical and no one really knows precisely how much money is sitting in accounts. But with cash, it’s in your hand and you can’t go above that amount.

5) Look into how to save money on campus. People will often be concerned about creating a budget without knowing how much books will cost. I think that’s legitimate especially depending on major and how many of a certain type of class one takes. Keep in mind you will register for classes well before accepting your loans. This means that you can look into used and rental books and you will know this expense ahead of time. Aside from this, classes will also have the books on reserve so getting those materials would just be the cost of making copies. Google Books has an extremely vast library…again, that’s free. Also keep in mind that classes may ask that you get the most current edition but there may not be a difference with that cheaper edition you find on Amazon. Look into that first, of course. The basic point that I am making is that there are a huge number of ways to spend less on things you think may cost you a lot.

6) There is no such thing as too small. Throughout this piece, I have been giving tips that some people may think isn’t a ton of money so what’s the point. Guess what happens to $500 after it’s been accruing interest for five or ten years. That’s a ton of money. Spending the summer to work and save a few thousand for your books, will save a ton later. Sending in that $200 check each month, will save a ton later. And this also brings me to scholarships. Keep applying for them, regardless of how small they are. I tweet and post about scholarships all the time, and it’s pretty easy to set a Google alert for just “scholarship.” This is also why I ask clients to keep their personal statements handy and to ask recommenders to save their letters—you could really use those when it comes to applying for scholarships. And don’t forget the webinar that Amber and I did last year. Her average scholarship was about $1000 and she earned enough to go to school fully-funded.

7) But there is such a thing as too large. I hear students say things such as, “I will only be short $8000 or $30,000 or $50,000 and that’s okay to borrow.” Using my rule of thumb, that may be true. But you don’t want to actually go into something with that type of thinking. It feels like a weird kind of settling to me. And this is the greatest money lesson that can be learned here. All amounts are too much if you don’t know a way around it or how to get in front of it.

There are ways to get into college and meet my three goals: graduate, in four years, with as little debt as possible. Here is one item we will look at: Colleges see more than just the score on your SAT or ACT. By looking at your incorrect responses, they can see if you are college-ready especially for college-level writing and college-level Calculus (and I have to say it can be more telling than your grades). And because of the way the test is scored, two students could have the exact same score but have different incorrect responses, therefore the exam is telling a different story about their readiness. If you know the story that your SAT score report is telling, you can address any issues in your personal statement or letters of recommendation. We are going to work on these strategies and more at my next workshop on May 21. Sign up here!