Families bust their tails for years to scrimp and save for their
children’s college education.
Families bust their tails for years to scrimp and save for their children’s college education.
But they must keep in mind that the job isn’t done once the child starts college. It’s just as important to keep expenses in line over the course of the student’s college career.
“When a child goes off to college, it’s a time to reprioritize spending – both current and projected,” said Paul Goebel, senior associate dean of students at the University of North Texas Student Money Management Center.
For parents, he said, the question becomes, “How much are they going to be able to provide in financial support in college and living expenses?”
Unfortunately, there’s no one answer, as each family’s situation is different. But there are some common themes each family must address.
The first step, experts say, is to have the money talk with your college-age child.
“Before the student heads to college, the parents and student should sit down and have a talk about college finances,” said June Walbert, a certified financial planner at USAA Financial Planning. “If you don’t know that money is tight as a student, you may not conduct yourself as if money is tight.”
Robert and Sandy Dubek of Flower Mound, Texas, had the talk with each of their five children as they prepared them for college.
The key message was that paying for college isn’t easy and the children should graduate in four years.
“It’s not cheap,” said Robert Dubek, an area manager for the Federal Investigative Services, which conducts background checks for people seeking security clearance. “It’s an investment, so when we make a commitment to something, we need to finish it.”
Once you’ve had the talk, there are steps you can take to control your costs.
HUNT FOR FINANCIAL AID
The Dubeks told their children about searching for scholarships and renewing grants and other financial aid each year.
“We pay for tuition and a certain amount for room and board,” Robert Dubek said. “Their job was to apply for different scholarships.”
“Kids should not stop looking for free money,” Walbert said. “Tell your counselor about your major, and maybe they know of a specific pot of money that you otherwise wouldn’t know about.”
Textbooks are a major expense for students, so consider renting them from the campus bookstore.
“The parents we’ve talked to say typically rental programs save about 50 percent on new textbooks and about 25 off the cost of used textbooks,” Goebel said.
Sell your purchased textbooks back immediately after final exams, said Derrick Kinney, financial adviser at Derrick Kinney & Associates.
“Even waiting a day or two can drop the buyback price by 50 percent or more,” he said.
SAVE ON FOOD, FUN
Consider buying a campus meal plan for your child. But don’t waste money on a meal plan if he or she won’t use it.
“If you purchase a meal plan, use a meal plan,” Goebel said.
However, he said, “there will be times when a student wants to eat away from the meal hall, so you have to account for those expenses in your budget.”
The Dubeks’ kids are responsible for their miscellaneous expenses, such as entertainment and dues for fraternities and sororities.
Daughter Alexandria, 21, and sons Tyler and Kyle, both 19, have jobs to earn spending money. Another daughter, Erica, 17, who will join Alexandria and Tyler at Kansas State University in the fall, also will be looking for a job. (Their oldest daughter, 25-year-old Kacie, is not enrolled in college.)
“You have to draw the line somewhere, and you have to draw some boundaries,” Robert Dubek said.
BUY RENTERS INSURANCE
“College students are known to be pretty careless with their things, especially with laptops, the iPad, iPhone,” Walbert said. “If a family is struggling anyway to send their child to college, it’s going to be a real stretch for them to replace all of those items in one fell swoop.”
Be sure you buy replacement cost coverage insurance, not actual cash value.
CHECK HEALTH PLANS
A provision in the health care reform law allows people younger than 26 to remain on their parents’ health plans. This may be your best bet, Walbert said.
“To get the best coverage at the best price, the student should stay on the parent’s policy,” she said.
Students who don’t have health insurance through a parent’s policy may buy a student plan. In general, these plans have more limited benefits and more exclusions than traditional health plans, according to the National Association of Insurance Commissioners.
If your child is insured through a health maintenance organization or preferred provider organization, check how the plan treats a college student not living at home.
Your child will dread this question, but you have to ask it: Do they really need a car on campus?
The Dubeks answered that question quickly. “We don’t live large, so the kids have to realize that they don’t get cars,” Robert Dubek said.
However, he and his wife will co-sign on a car loan for their kids, but the children are responsible for car payments and auto insurance premiums.
CHOOSING A BANK
Many banks have checking accounts designed specifically for students.
“You want a free checking account with no minimum balance requirement, debit card and rebates on ATM fees,” Walbert said. “Sometimes the bank account runs a little thin, and you want to make sure you’re not penalized if you fall below a balance.”
Find a bank that doesn’t charge fees if you exceed a specified number of transactions per month.
You can open a joint account with your child so you can easily deposit money. Or, your child can have his or her own checking account – but you need to keep a close watch.
“I recommend at the end of every semester that you talk to your child about how the money thing went,” Walbert said. “You will know whether you need to cough up more money, and you can also counsel them on better (money) management.”
WATCH THE CREDIT CARDS
Credit cards can be trouble for college students because the debt can dog them after they graduate.
People under age 21 must have an adult co-signer to get a credit card if they can’t show they have the means to pay off the debt on their own. Think carefully before co-signing for a credit card. If your child is late on payments, it would hurt both your credit records.
If your child isn’t good at managing money, get them a prepaid credit card that you preload with funds. Your child will never spend more money than is loaded on the card.
“It’s fair for the kid to know that once the card is dry, it’s dry,” Walbert said.
The bottom line, Walbert said, is the college experience should help teach students how to manage their money and make ends meet without a financial hardship.
“That’s the trick,” she said.
“We want our students to grow into financially responsible and financially independent people,” Walbert said. “We want them off our payroll.”