31 Mar What Parents Need to Teach College-Bound Students About Money
I have talked a lot about COVID and its impact on financial aid, college and your family over the past year. So many families watched helplessly as their jobs disappeared, income fell, and savings vanished. Some managed to overcome these challenges, while others are still struggling with COVID’s devastating consequences.
Money management skills took on even more importance for families with students already in college or about to attend college. Although there is some concern about the number of students applying to college, the uplifting news is that financial aid support and good money management skills can still make the dream of college happen for your child. It is, however, crucial for parents to take time now to impart the wisdom of your money management knowledge to any offspring who are about to embark on financial journeys of their own. Whether your student will be attending college this year or next fall, here are some key money lessons they will need:
- Always file the FAFSA: Yes, it may be a challenge to complete, and you might think that your student does not even qualify for financial aid, but it is imperative to file the FAFSA for every year your student will be in college. This one application is the key to unlocking access to financial support from federal, state and institutional resources. You cannot know for certain whether you qualify without submitting this form.
- Beware of over-borrowing: When times are great and money is flowing, it can be very tempting to use credit cards and student loans to finance a college lifestyle. But, when times get tough and money is harder to come by, those loan payments can be a terrible burden. Advise your student now about the perils of over-borrowing through the pre-college and college years. They should only borrow money that is definitely needed to pay for college expenses. Also make sure your student has the future opportunity to earn enough money to repay those loans without undue hardship.
- Work when you can, save as you go: One concept that seems to have gotten lost along the way is that we should save up to buy something, instead of relying on immediate gratification. An especially important lesson for college-bound students is the value of being able to balance work and study. Federal work-study or other part-time jobs during college can provide the extra money needed to cover the cost of daily expenses.
- Budgets are beautiful: It is really a good idea to learn how to budget money as young as possible. Students in junior and senior high should possess some of these fundamental skills, but they should be pros at budgeting by the time they are in college. Parents can teach their children throughout life to look at the money they have coming in versus the money that is going out, and adjust accordingly.
- Find alternate sources of income: Once the long-term impacts of the pandemic became apparent, people got much more creative at finding ways to earn money. Those skills should not be lost as the pandemic wanes. Look at selling items online, taking flexible-term driving or delivery jobs, or building side hustle businesses for ways of generating additional cash.
Another source of “income” for college-bound students is scholarships. This is money you “earn” by meeting specific requirements and completing the application process. The CFAA Scholarship Program can help students locate, organize and apply to 60 of these scholarship opportunities that could help to make a budget-balancing difference.
If you need more information about the college financial aid process, take advantage of a CFAA new client free strategy session. This provides more money information for your college-bound student, and gives us a chance to look at your individual situation, coordinate your college search and financial aid timelines, and uncover any potential funding gaps.
Parents face a huge test in making sure their children have the skills needed to make wise financial choices during the college years and beyond. For the latest financial aid information and college application to-do lists, look for my weekly JustAskJodi emails and check out my monthly CFAA e-newsletter.