08 Aug Send Your Student to College With These Financial Smarts
Your child is heading off to college and you couldn’t be a prouder parent. You have both worked hard over the years to achieve this important goal. There are so many adventures that lie ahead, but you might still have a few lessons you need to impart before your student flies the coop. You hope your child has the technical skills to be a successful student and the personality traits to take advantage of college life, but have you provided the money management skills needed to keep him/her from financial stress? If not, here are a few things you need to discuss with your freshman while packing those bags:
• Know what you need to achieve: Some forms of financial aid come with academic requirements your student must meet in order to continue eligibility. Be aware of the criteria for “sufficient academic progress,” so that your student doesn’t run into problems due to poor grades or not taking enough hours.
• Mom and dad are not a bank: While money may have been more available when your child lived at home, having a child in college adds a whole new level of financial stress to the entire family’s finances. Set a reasonable budget for your student, and discuss what happens if the budget is not met. Be firm in not giving in to every request for money, unless there is a genuine emergency.
• Student loans are not for personal expenses: Have an in-depth discussion about student loan responsibilities NOW. Don’t wait until your child graduates to think about how you are going to repay the money you borrowed. Set clear boundaries as to who will be responsible for repayment, and only borrow the amount that is needed to pay for actual college expenses. This money should not be used to finance a college lifestyle. Your student may need to find a part-time job if money is tight, but that option is better than borrowing too much now and not being able to repay it later.
• You can keep looking for scholarships: There are still some great scholarship opportunities out there, even though your student may already be in college. In fact, some scholarships are only available to college students because they want to make sure students are serious about pursuing a particular field of study. Keep up the grades, and keep an eye out for additional funding opportunities.
• Easy credit can be a trap: There are some credit cards which offer seemingly attractive rates to college students. To a student who is uninitiated in the ways of money, these can quickly become a credit trap. Warn your student that credit cards can quickly raise rates, add on late payment fees and interest penalties, and easily spin out of control.
If you want your child to come out of college as a well-rounded individual, the education needs to begin before setting one foot on campus.