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College Cash

• What’s in Their Wallet? •

Before our kids left for college, we wondered what else we might need to pay for besides tuition, room and board. But then we thought again – there would be other expenses for things like textbooks and school supplies. And what about spending money for the occasional night out?

As we began to talk with other parents about this very personal subject, we realized that there were a zillion ways to slice this pie. Who pays for what is a personal decision that varies from family to family. You need to do what you think is right for your kid, reflecting your family values, and discuss finances with your student before they leave for college.

Many students who are used to receiving a weekly or monthly allowance from their parents for spending money may expect this will continue in college.  Other students who use the money they earn from a summer job or a part-time job during high school for their spending money may be wondering if they will have the same arrangement in college. Talk it out. Establish a budget together and talk about ways to save money, too, even if it is just a few dollars at a time. After all, our kids are on the road to adulthood and becoming financially responsible is a big part of growing up. Helping your kid establish good financial habits now is one of the best things you can do for them.

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Consider having your kid keep track of expenses for a couple of months at the beginning of freshman year.  This will help them learn what they actually spend money on and help you come up with a realistic monthly allowance.  

The Debit Card

One of the simplest ways to start your student on the road to financial responsibility and financial independence is for them to open a checking account connected to a debit card in their own name. Many banks have student checking accounts that do not have fees, or have special programs for students. In fact, some banks are even partnering with specific universities to offer special programs for students. See Article on University-Bank Partnerships.

You can arrange to transfer money into your student’s checking account, either on an established schedule or when they need to make big purchases (like books!). Your student can then learn to monitor the account to make sure they maintain enough money so they don’t get overdrawn. Some valuable lessons there on spending and budgeting! And it is much easier (and helps you avoid fees) if the parent has an account at the same bank from which transfers can be made.

However, and this is key, make sure the bank you use has a branch or ATM on or near campus. This way, you’ll avoid paying fees if cash is taken from an ATM affiliated with another bank.

Campus Cash Cards

Most colleges have something known as Campus Cash, which is generally tied to the student’s ID card and allows the student ID to function as a debit card for certain purchases, including meals on campus. Some schools call their Campus Cash a clever name (“Jumbo Cash”-Tufts, “Munch Money”-Northwestern). The cards can typically be used at the campus bookstore, laundry rooms and eateries, and often at some off-campus restaurants and stores as well.

Here’s how these cards work: Money is loaded onto the card through a website—by student, parent, grandparent—and the student presents the card (usually their school ID card) as payment. They can only spend up to the amount loaded onto the card, so there is no worry of being overdrawn.  It is a great way for family members to send money to a student—they just need the student ID number and it can all be done online. Although Campus Cash is convenient, it should not take the place of a bank debit card since it is usually restricted to vendors on campus and a limited number of off-campus purchases.

Credit Cards

Now that your student is off to college, they may start receiving lots of mail asking them to apply for a credit card.  Some require a parent to co-sign, and some will issue the card directly to the student without parent involvement, particularly if the student can show some earnings from a summer or other part-time job.  Having a credit card in the student’s own name (not tied to a parent’s account) can be a very good, and very bad thing.

The good: Students can start establishing their own credit and learn financial responsibility. The bad: They can get into trouble by spending too much since they don’t feel the effects of their purchases until they get the bill. You really have to know your child and discuss the responsibilities and consequences that goes along with having a credit card.  Even if they have a credit card tied to a parent’s account, students need to understand that decisions they make in college with regard to use of a credit card can have long term and sometimes devastating consequences on their own and their parent’s credit for the future.

So… How much allowance is sufficient and appropriate?  How much work, outside of studying, do you expect your kid to do during the school year? Before you have the finance talk, get knowsy. Read up on the subject and talk to other parents about what they’ve done with their college students.


Want to know more?

Faculty Share Their Money Advice for College Freshmen – US News and World Report

The New Freshman 15: Financial Tips for College Students – DailyFinance

The Money Secrets Your College Student Is Keeping – DailyFinance

Personal Finance Advice for College Students-Kiplinger



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