As students start flocking to college campuses, they and their parents could use some guidance, especially when it comes to financial matters. College is expensive, and missteps can make it even more so.
Here are tips to help you both navigate the college journey.
- Strategize: Talk to your child about his or her expectations of that first year in college, including extracurricular activities that might carry hefty participation fees. This can help in setting priorities for how to spend time and money on extras, says Joe Markey, Hudson Valley and metro New York market president at KeyBank.
- Think twice about credit cards: College students who are 21 or younger and don’t have proof of income or employment will need a parent to co-sign to obtain a credit card, says Leslie Tayne, an attorney in Melville who specializes in financial issues. “Be prepared to take on the burden of responsibility of one day having to repay any outstanding credit card debt if your children fall behind or become unable to repay their debt on their own,” she warns.
- Watch out for saving in a student’s name: It can backfire to put assets in your child’s name, says Jack Schacht, founder of MyCollegePlanningTeam.com. When calculating a family’s Expected Family Contribution to tuition, most colleges assess savings in a student’s name at 20 percent or 25 percent, while those in the parent’s name ring up at less than 6 percent. So if Grandma gives your child $30,000 to put in his own college savings account, you have just added at least $6,000 to your expected contribution.