You may have a thrifty child by nature, but college brings a host of new expenses beyond tuition that need to be discussed openly and often. First-year students are about to encounter a whole new level of responsibility, financial and otherwise, that will throw even the savviest for a loop. They waste money without realizing it, and they often don’t understand the impact of college costs on the family bank account even if you spell it out for them.
Talking about money is important for every family but essential for those taking loans to afford college. The more frugal your student can learn to be, the less debt everyone incurs. So, wade into the weeds on money to mitigate misunderstanding down the line. Indirect costs include things such as books, flights home, summer storage fees, dorm detritus, weekend trips, pizza parties, Greek fees … you get the picture. These are things students can, and in some cases, should shoulder, even if your family can afford to pay. When you pony up for extras, you deny your teen the opportunity to begin building real decision-making skills around budgeting.
So, who’s going to pay for what? We’ve learned that requiring our daughter to cover personal expenses leads to careful budgeting on her part. What falls in the personal category will vary from family to family. Here’s what to discuss for your student’s first year.
Dorm extras. Whatever your student brings will need to be hauled home, stored over the summer — likely for a fee — or given away or tossed. My daughter learned she doesn’t like owning stuff. Even if you cover the initial dorm set-up (less is more), equip your teen with a student Amazon Prime membership for needs that arise afterward. Let them cover the costs for their new bulletin boards, mirrors and framed prints. They’ll choose more wisely.
Books. Some parents consider books their responsibility, but when students spend their own money, they learn budget tricks, like buying used and renting. Check Amazon and compare costs with Chegg and SlugBooks. Or, students might rent for a nominal fee from a student who took the class previously and bought the textbook (my daughter’s strategy). Be aware, some majors and classes require additional software and fees.
Food. Your kid has a meal plan and if managed well, they shouldn’t go hungry. On-campus cafes may accept meal cards, but in many cases, that will cost more than the cafeteria. If money is tight — as it is for most college families — your kid can make do with the cafeteria. Late-night pizza should be on them.
Entertainment. Campuses often offer activities for free or low costs — movies, lectures, music and sponsored day trips. Don’t send extra money just because kids have rich friends to keep up with. Again, this is something they can learn to budget and work toward.
Clothes. Funding snow boots and a winter parka for an Arctic winter? Fine. But most kids move into their dorm room with too many clothes, not too few. No reason to spend extra dough on cute outfits.
Greek scene. Joining a sorority or fraternity comes with many mandatory extra costs. How will your family handle them? Discuss up front.
Car. Many colleges don’t allow first-years to bring a car to campus, but if they do, students should consider not taking one to save on insurance, gas and parking fees. Colleges have robust ride-share Facebook pages. There’s also the airport shuttle and Zipcar on many campuses. If your student insists on a car, costs should be on them, but can they really afford it? Part of learning to budget is weighing real costs and choices.
Spring break trips. Don’t pay for them. Period. This should be on your student, as trips are not mandatory. They can decide whether a week in the Bahamas is worth the costs, and this will teach them how to choose wisely.
Travel home. Some parents can afford travel costs, some can’t. We told our daughter if she wanted to attend college a flight away, she needed to cover her travel. She’s become a savvy airline shopper and uses Hopper for cheap flight alerts.
Health insurance. My daughter thinks health insurance is stressful. That’s because I yakked about in-network and out-of-network providers her entire first year. But students need to start to understand how health insurance works, even if you’re paying for it. First, find out if your coverage extends to your student’s college or whether you need to buy the campus health insurance plan. Find out, too, if the student clinic provides free/low-cost care or requires insurance and whether its providers are part of your network. Locate nearby in-network providers for health care beyond routine clinic care. Plan for this conversation to be ongoing.
The drop/add schedule. Every college has deadlines for dropping/adding a class. Missing the deadline for dropping a course can be an expensive lesson as well as affect financial aid. Help your student understand the college policies, and encourage speaking to an academic adviser before tough classes become an issue.
Part-time work. Studies show that students who work part-time get better grades because they become more effective time managers. They’ll also have a head start on gaining skills. But the primary reason to work is to keep cash flow going. Even if your student doesn’t qualify for work-study, it may be possible to find a convenient campus job. And summer work is a must.
Tracking expenses. Some kids intuitively take to budgeting, but many don’t. Introduce them to an app like Mint so they can track expenses and watch their spending. If they take a credit card to campus, show them how to set up online payments, explain what happens if they miss a payment (paying in full is best), and teach them it’s a tool for building credit, not a cash substitute.
You’ll run into unexpected costs along the way, but if you can hash out the basics in advance, your student won’t be so shocked when they bump up against budget challenges. The first year in college is a wake-up for everyone.