For college freshmen looking to manage their finances, often for the first time, heading to college can mean a lot of unexpected expenses and new debt.
Surprising stats on student debt
A recent survey of college students and parents uncovered some information on debt:
• Almost half, 44% of parents polled, said that their child’s education was more expensive than they expected
• The majority of parents, 63% of those polled, rated themselves confident or very confident in their children’s ability to manage their finances in their first year of school
• Despite this, more than a third of students polled said they incurred unexpected debt in their first year of school
• One statistic that may help explain the disparity between confidence and stumbles. Almost one in three students said they hid the debt they incurred from their parents.
• Credit cards and banking fees add up fast. Credit cards can be a slippery slope for a newly minted adult. Forty percent of those who signed up for credit cards during their first year of college say they regretted the decision.
• Even navigating a bank account can be expensive. Nearly a third of college freshmen incur banking fees in their first year of college. How much in fees? Thirty-seven percent said they incurred more than $300 in fees, and one in 10 incurred $1,000 or more.
How to avoid debt
Here’s how parents can prepare their kids:
• Avoid the free T-shirt. While college students are often wooed by credit card companies with the allure of swag and perks, signing up for credit cards can be a slippery slope.
• Be careful with recurring fees. It can be tempting to get that free month of streaming music or premium television for signing up, but forgetting to cancel can lead to unexpected charges on a monthly basis.
• Plan for expenses. Managing day-to-day expenses is just the beginning; preparing for, and setting aside money for, big twice-yearly expenses such as books and class fees is critical.
• Take advantage of student perks. Everything from flexible college meal plans to discounts on local stores, movie theaters and software are available to college students who take the time to do their research.
• Keep a budget and check it regularly. Creating lifelong habits around financial management starts now.
– Courtesy of NAPSI