Before students leave for college, families need to have a conversation about reasonable spending expectations. Parents need to be aware of the costs of books, clubs, activities and midnight pizza runs. But students shouldn’t assume there is a limitless debit card at their disposal. Most would agree that parents owe it to their children to discuss their financial commitment.
Parents need to make their academic and financial expectations clear. Do you expect that your children will have some “skin in the game” and be responsible for some of the expenses? Are they taking out loans? Are they responsible for their personal expenses? Do you plan to provide them with a monthly allowance? Writing the checks without having these conversations is not conducive to financial success.
Part of what makes this conversation even more challenging is that money is almost a virtual concept for many students. They use gift cards, credit cards, debit cards and apps such as Venmo and PayPal. Money, the green stuff, is not a meaningful part of many teenagers’ lives.
Here are some tips for getting that financial conversation going:
Be straight about the costs of tuition and room and board. Most students can’t comprehend the idea of laying out $50,000 or more per year. Help them understand the investment by comparing it to something more tangible – equal to the cost of two cars, perhaps.
Be specific about what you’re willing to pay for and even more specific about what you’re unwilling to subsidize.
Discuss the hidden costs at college. Some fees are not included in the list of required fees. For example, class-specific fees may include charges for materials, studio or practice room time and laboratory fees. The same is true for per-use fees (such as the athletic facility, pool or weight room). According to Advisors, most students will spend $250 to $500 per month on these hidden costs.
Consider putting your expectations in writing. For example, if your student will be responsible for paying back any loans, ask them to sign a contract. Some parents tie in academic expectations as well: “you must have a 3.0 GPA to continue.”
Make sure your student is cautious before setting up multiple credit and debit card accounts. Be clear with them about what you’ll pay for and what is their responsibility.
Schedule a financial check-up with them about a month in. If they’ve done a good job, loosen the leash a little.