By Alan Prahl
With thousands of students making their annual migration to college, this is a great time to have a candid conversation about financial aid and financial responsibilities.
Review the financial aid package being offered by the school. If there is a shortfall, brainstorm together about possible ways to cover the deficit. Contact the school and ask for more financial aid. Ask about all the options they have available, including grants, scholarships, part-time jobs and loans. Student loans can be a good investment in your future, but only borrow what you need.
Parents, be clear about what college expenses you will cover and what your son or daughter must pay for now or later. In addition to tuition and fees, talk about spending on eating out, clothes and entertainment. Don’t hesitate to set clear spending boundaries, like a monthly limit on miscellaneous spending.
Debit cards are a convenient way for parents to provide some spending money. Students should keep track of their available balance and avoid overdraft fees. Discuss who pays overdraft fees.
Students need to diligently pay their bills on time, including their cellphone, credit card, car payment, etc. Timely payments help build a positive credit score. Many employers, landlords and car insurance companies use credit scores to decide who they will hire, rent to or insure. Like it or not, your student’s history of paying bills will follow them around for years so make it a positive history.
It’s easy to overspend using credit cards and build up debt. That’s why many parents tell their college-bound students to only use a credit card for emergencies. Parents should be clear and explain what they mean by an emergency.
Talking about money may initially feel awkward or uncomfortable, but the more you talk and work together, the easier it gets to communicate. You’ll be surprised how much you learn from each other.