Borrowing for College: Advice about Loans for Students and ParentsSuzanne Shaffer
A big question parents of new high school graduates have is “How much spending money do kids in college need these days?” Hand in hand with this is the question of who is responsible for this amount.
Parents of continuing students also need to revisit spending needs each year (and sometimes mid-year).
Families almost universally agree that students should be responsible for earning and saving money for at least some of the “extras” they will need in college, but there are many variables:
The first step is to talk about who will pay for what (beyond tuition, room and board; this is a separate strategy session) for the next four years. For example, “We said we would pay for textbooks freshman year, but after that they would know what to expect and would have to cover those expenses,” says Laura, a parent of two in college. In addition, “We sent them off to college well stocked with clothing” but after that they paid for their own clothes except for a few special items (an interview suit, a nice dress, winter coats).
Other expenses to discuss:
If your student will take a car to college, there is auto insurance, campus parking permit, gas, repairs/maintenance, etc.
“Making things clear — what we were willing to pay for and why — has helped,” Laura reflects. “It also helped to talk about financial matters as they were growing up. There are choices involved in everything.”
Now that you’ve discussed how much they may need each semester, you can help them set a goal for their summer earnings. Some students have already been working and/or saving gift money and have built up robust bank accounts by the time they graduate from high school. Others are just getting started. A summer job should allow them to add $2,000–$3,000 or more.
As your student evaluates what’s in their savings/checking accounts, you can talk about the advantages of maintaining a level of savings throughout college. It’s a good idea for them to always have a cushion in case of an unexpected expense and also aim to graduate with a healthy balance in the account.
Winter break and spring break can be good opportunities for your student to earn money in a short-term position or by picking up extra shifts at their on- or off-campus part-time job.
Some families give their students a monthly allowance, ranging from $75–$225, to supplement the student’s own savings. After the first year, especially for students making good money through summer employment, an allowance may no longer be necessary.
Cathy recommends a student checking account linked to the parent’s account. “They use their ATM card as needed but you can see EVERYTHING they spend $$ on.” Her daughter receives a $200/month allowance which is easy to set up as an automatic transfer; they can both view her spending habits and increase the allowance if needed for legitimate expenditures “or cut back if she’s eating too much fast food.”
Scott has a similar approach: “I deposit a monthly allowance directly into my daughter’s bank account and that money is hers to spend or save. We decided on an amount before she started school and reviewed it after her first semester and first year, agreeing on any changes.”
I am a firm believer in having students contribute as much as reasonably possible so that they don’t take their education for granted, and learn to budget, and can take pride in their success. – Beth in California
Some parents help their students budget by taking charge of the student’s own earnings and then doling it out in monthly installments as an allowance. Others put their students on their own credit card accounts — again, they can see the charges and talk about it.
A few questions to ask your student, and yourself: Will the student be in charge of their own savings? Do you want to control the amount of money available each month, at least for the first semester or two? Will you see their bank account activity?
To keep money coming in, many students get campus jobs, even if for just a few hours a week. Some parents prefer their students to settle in and wait until second semester freshman year or sophomore year to get a campus job. Your student may qualify for work study as part of their financial aid package, but even for students without work study there should be plenty of employment opportunities.
Beth’s two sons, soon to be juniors, have each held multiple jobs in areas that are both meaningful and fun (recycling truck driver, writing tutor, climbing wall instructor, research assistant, and tool shop proctor to name a few!). One started working freshman year to supplement his allowance and the other waited until sophomore year. “They have enjoyed the jobs and like earning money.”
They didn’t need an allowance after freshman year because of campus employment and solid summer earnings. But Beth observes, “If our kids were college athletes or heavily involved in non-paid extracurricular activities such as the school paper or student government, we would have to help them.”
Parents agree that it’s important to prioritize studies and extracurriculars. Laura says of her daughter, who has had several campus jobs — some resumé-building (tutoring, TA) and some not — “she likes to make money and she likes to be busy. As she has gotten more involved in campus activities, she has cut back on her jobs.”
Off-campus jobs are great for some students. Brigitte has been thrilled to see her daughter really loving her university community, even beyond the boundaries of campus: “Getting a job in a restaurant makes her feel like she really lives there, so much that she wants to stay during her vacations to work and be with friends.”
Many students do not work during the academic year, or work minimally, and there are good reasons for that, too. Scott says, “We’ve taken the position that our daughter’s job is school…. In general, we’re trying to give her four years of experiences that will help her grow as a person and find a direction for her career. She’ll be working for a long time after college!”