College Preparation Starts Now
Recently, Credit Advisors Foundation was asked to prepare for parents of young adults, a learning opportunity regarding the financial situations and concerns faced by students heading off to college for the first time. Our response? Of course we will!
Surely, there is plenty of information out there; books, pamphlets, and websites with insight into this specific topic – after all, some of us here have kids heading off to school next fall, too. So with a little research we figured we would quickly be able tap into the latest trends in credit and the campus experience. Our result? We have two words for parents.
We discovered that many of the “informational” websites on credit, debt, and credit cards for students on the Internet are sponsored by, none other than the credit card companies themselves, all with handy links for students to apply for credit cards.
While some of the information available, although written from an eerily, perky creditor perspective, is useful, most lightly touch the surface of the realities of the adult credit and debt world. For example, one website discusses how delinquency on your student credit card “could prevent you from qualifying for other types of loans, such as a home loan, auto loan, or payday loans” (yes! they seem to be including payday loans as commonly used standard financial practice), yet, there is no mention of the potential immediate impact of being unable to qualify next school year for student loans – or the possibility that a student would still qualify for future credit but at grossly inflated interest rates.
Students – cool it on the late night pizza runs
Rarely on these websites is there any discussion of just how easily the balances of credit cards can increase from “necessities” like pizza delivery, a funky new shirt, or a night out with roommates. (The cost of true necessities like text books could max a credit card in one semester – and how much more expensive do these books become when paying interest on balances carried from month to month?)
Remember parents, before you co-sign on a credit card with your student, make yourself aware of what other options are available besides basic credit cards. You might consider prepaid cards – these cards function much like prepaid phones – you or your student deposit an amount and only that amount may be accessed. Consider also debit or check cards attached to a checking account. In addition, contact the school where your student will be attending. Some schools offer charge cards attached to student I.D.s that can be used at the book store, student union or campus center, and local companies affiliated with the school. (Understand, as a charge card these accounts must be paid in full on a monthly basis or will be deactivated).
What parents can do now, to protect your students later
Our best recommendation? Parents, sit down and talk to your college student. More than once!! Together, determine what financial requirements and needs your student will have. Stay tough. Recognize your student will be bombarded with credit card offers once they reach campus. This isn’t the time to let them ‘wing it’. Whatever decisions you and your student come up with during these conversations, communicate your expectations to your student often.
Finally, if your student “learns” best from the insights of fellow students, share the careprogram.us website with them. This website, founded by the U.S. Bankruptcy Court, WDNY, and the Bankruptcy Committee of the Monroe County Bar Association has some excellent peer teaching materials. Have your student take a look at the Credit Card Chronicles, periodic reports from students at Georgetown University and Boston College about their finance and credit card college experiences. Or take a look at the “Things I learned the hard way” video, created, conducted, and directed to young adults.
College is a wonderful opportunity for young adults to try and learn new things, stretching their wings and through diligent preparation you can greatly improve the odds that your young adult will make smart consumer choices.