Aug 5, 2009 6:50 pm US/Eastern
Credit Cards Offer Debt For College Students
Experts Say Parents Should Have "The Money Conversation" Before Sending Kids To College
NEW YORK (CBS) ―
As millions of college students flood the nation's campuses, they will be greeted by swarms of credit card marketers. But the free giveaways used to entice students to sign up may end up costing them a whole lot more.
More than 75 percent of college students have credit cards, and that, experts say, has many kids majoring in credit card debt.
Recent college graduate Emily Yamanishi quickly learned the price behind the responsibility of having a credit card. Her card charges piled up pretty quickly, and her parents refused to foot the entire bill.
"When things got tight, I had to pick up another job outside of that," Yamanishi says. "In college, because there's that sense of freedom, I think kids can overspend."
Certified financial planner Phil Cook says Yamanishi learned a valuable life lesson that many need to know even before stepping foot on campus.
"The budget for a student is the holy grail they must live with, day in and day out, and if they don't and they blow the budget and miss two or three days of meals, they'll probably take that lesson to heart," Cook says.
To avoid falling into debt, Cook says parents need to have "the money conversation" with their kids before college even starts.
"Make sure the child understands the bank of mom and dad will be shutting down over the next few years and that they're going to have the responsibility of handling their own finances," Cook says.
First, experts say parents should teach them how to make a budget and then set up a checking account with a debit card, instead of a credit card so they don't spend what they don't have.
Students can also get part-time jobs. As long as they don't interfere with studies, part-time jobs present great opportunities to earn spending money.
And if the plan is for the parent to chip in for things like apartment rent, consider sending monthly checks instead of a lump sum to cover an entire semester.
"That way if there are any issues, you can identify them early on and work to correct them," Cook says.
Other ways to save: don't send your kid to school with a car. Quick trips to the off-campus supermarket, beach, and friends' homes all add up when it comes to the price of gas.
There are also a number of Web sites to buy or swap used books and dorm furniture. For more information, check out the following resources:
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
World's Most Useless Facts
Click to enlarge
BLIZZARD WARNING IN EFFECT 1 min ago 
NYers Hunker Down In Face Of Blizzard Warning 14 mins ago 
Stumble It!
Reporting
Comments