Before and During College: A Car on Campus Can Create Colossally Causeless Costs

IMG_8107Most colleges and universities have vast student parking lots, sometimes unpaved areas on the outskirts of campus, generally poorly patrolled and supervised. Apartments near campus may also feature parking lots or nearby on-the-street parking.

The automobiles students bring to college quickly fill such parking places. And what could be more natural? Any young person anticipating the freedom of being on his own will also look forward to the convenience that comes with having a car.

But a vehicle at school also needlessly inflates college-related costs and educational debt. Consider:

  • Parking Fees: One large university near us charges its students as much as $796 per year to park on campus. Increased borrowing to pay this fee for four years at today’s federal college loan interest rates can inflate the total amount repaid by more than $4,000.
  • Maintenance and Upkeep: Gasoline, oil changes, and other auto-related expenses add up as the academic year goes along. Such costs can be deferred, if not skipped altogether, when your student’s car stays at home.
  • Damage and Vandalism: Cars sitting on the street and in remote, under-supervised lots are more prone to damage — from hailstorms, slashed tires, frozen batteries, collisions if others carelessly reverse or cut corners too closely, etc. Sometimes your student may need to pay for a tow job to the nearest repair shop just to get his car working again.

Most campuses are either small enough to cross on foot or have shuttle bus systems that are free to their students. And the municipal transit systems in many college towns also allow students to ride free or at reduced rates.

IMG_8108Your student may ask, how will I ever get home if I don’t have my car? This may be valid. But reasonably-priced bus services and trains often run between your state’s major colleges and large metropolitan areas. And if public transportation isn’t available, your student can probably get a ride straight to your door by offering to share gasoline expenses with a fellow student.

Now if a student commutes from home or to a job at an off-campus location not served by public transportation, a car may be necessary. Otherwise, a vehicle at college is an expensive and unnecessary luxury. So counsel your student to cut his college costs by leaving those wheels at home!

College Affordability Solutions offers guidance on a wide array of strategies to keep higher education costs, and higher education borrowing, as low as possible. Email collegeafford@gmail.com or call (512) 366-5354 for such guidance.

Before College: Prepare Your Freshmen to Manage Those First-Year Finances

Ever noticed college campuses and their surroundings? All those apartments, bookstores, dormitories, shops, and restaurants. They’re run by people called IMG_8045“landlords” and “merchants” — responsible, solid folks who make good friends and neighbors. But, at work, their job is to separate students from their money, and at this they’re exceptionally talented.

Dropping 17-19 year olds amongst these skilled professionals is almost unfair. For all their academic ability and digital literacy, young people on their own for the first time often aren’t savvy about considering, much less comprehending, the consequences of their financial decisions. Result? They can easily become the victims of slick marketing campaigns and peer pressures.

IMG_8046In the short run, this contributes to stress, frantic calls home for more money, skipping meals, borrowing too much, working too much, and even dropping out. In the long run, it’s one reason why 40% of college students don’t get degrees, 45% of college graduates live with their parents two years after commencement, and 50% of college graduates need financial help from their families.

Fortunately, today’s students and parents are generally close, so your students often want your guidance. This allows you to use your experience from decades of managing (and mismanaging) your money to help them avoid mistakes in managing theirs.

They’ve probably learned some things by observing you. Still, there are important matters you should make absolutely sure they understand — through frank discussions before they go to campus, by “just in time” phone counseling while they’re at school, or both. Here are some of these issues:

Budgeting: How and why to map out monthly income and expenses, track spending, routinely review and modify budgets.

Checking Accounts, Credit and Debit Cards: How to write checks and use debit/credit cards. Associated fees. Avoiding impulse purchases. When credit card interest kicks in and when to make credit card payments.

Comparative Shopping: How and why to comparatively shop for everything from checking and savings accounts to credit/debit cards to apartments, books, and clothes.

ID Theft and Scams: Securing their checkbooks and credit/debit cards. Avoiding scams. Protecting their critical personal information. What to do if their ID is stolen.

Saving: Why and how to save, even if only a little for a short time. How to open and manage savings account

Teaching your students about these first-year financial issues can protect them, and you, this year and for years to come!

Before College: Make Sure Your Freshman’s Loans Are There When Needed

IMG_7991Soon you’ll be taking your new freshman to college. If you or she are borrowing Federal Direct Loans for the fall term, and if those loans’ proceeds are needed to help cover start-up costs that accompany the beginning of school, make sure they’re ready in time to do this.

How? Use your respective Federal Student Aid (FSA) IDs to make sure the following steps are complete on the government’s studentloans.gov website:

1. Your student should open “Complete Entrance Counseling” and get the 20-30 minute online briefing that’s full of information she needs about her rights and IMG_7990responsibilities as a borrower. If you’re a parent borrowing a PLUS loan, you need
to not do this.

2. Your student should then open the “Complete Loan Agreement for a Subsidized/Unsubsidized Loan (MPN)” link and fill out its online promissory note — the legal document through which she promises to repay all the federal subsidized and unsubsidized loans she borrows for 10 years. It’ll ask for her permanent and email addresses, her phone number, and for this information on two “references” — U.S. residents who’ve known her for at least 10 years.

3. If you’re borrowing your first parent PLUS loan for your freshman, open the “Parent Borrowers” page and provide the data requested under “Apply for a PLUS Loan.” Then open “Complete Loan Agreement for a PLUS Loan (MPN)” and execute its online promissory note, which’ll cover the PLUS loans you borrow for her for 10 years.

When everything described above is complete, each loan’s proceeds will arrive at the school within school 5-8 days. The school may apply them to tuition and other amounts owed 10 days before classes begin, then turn whatever’s left over to your student.

What if you or your student haven’t done everything and have enough funds to not need federal loan dollars until later this fall or even next term? Then delay the steps described above until about two weeks before the loan money is needed.

Why? Washington doesn’t charge interest on unsubsidized and PLUS loans until the school applies their proceeds. At today’s unsubsidized loan interest rate of 4.45% and PLUS loan interest rate of 7.00%, postponing this event from, say, mid-August until early January reduces the amount of interest to be paid on $1,000 of unsubsidized and PLUS loan by as much as $33 and $15, respectively. Small savings, but if you can do this every year, they’ll add up!

College Affordability Solutions is back for the 2017-18 academic year! Look here every Wednesday for a new post about strategies you and your student can use before, during, and after college to make higher education as affordable as possible! And check out what we can do for you by opening the “Services Offered” link on this website!