Hello Ben Hill Community,
We've been hearing on the news about student loan debt now at $1.5 Trillion and how high the Freshman College Drop Out Rate is (40%). Recently the U.S. Treasury Dept reported that they are working to make Financial Literacy Courses mandatory for college students. Finally!!! Actually Financially Literacy courses are a requirement for high school students in some states but it should be required throughout the U.S.
Saving up for college is like saving up to buy a house. Parents are the 1st teacher's. So, here are some recommendations and tips that I'd like to share with everyone to help better prepare your student for college and life beyond.
Budgeting: Check with your local bank or credit union about programs for pre-teens and teenagers. Often times, they offer Sat workshops for a couple of hours. Purchase a small journal book for getting your student to track their expenses. Show them your bills that you pay such as mortgage, rent, utilities, groceries etc so that they'll understand why you go to work each day to provide for the family and how your family budgets. If you use coupons for grocery, restaurant, car maintenance etc - explain to them why you use these items to budget and save money. Children learn from their parents, so why not teach them fruitful and life long healthy lessons. Open up a savings account for them and have them to put away funds weekly to go into their savings account. Have them set a goal of how much they'd like to save for the year and regularly check on how they're putting away money for funds coming in from allowance, babysitting, mowing the lawn, car washing, dog walking or any other part-time jobs that middle school through high school students. Be their accountability partner.
When they run out of their money, explain to them that when they borrow money from you, that you'll have to charge interest of about $5.00 and give them a deadline when you want to be refunded. Charging interest will make your student uncomfortable with borrowing money. You want to make this a teachable lesson for them to never get comfortable with loans and borrowing money if they don't have to. This is the importance of teaching them how to budget.
Many students are choosing colleges that are unaffordable and this is apart of the reason for the high Freshman College Drop Out Rate. The financial lessons should begin in the home. Many students are also attending colleges that cost 30, 40, 50k & up per year. In many cases, students are paying more for college than they're expected to make coming out of college. "Be sure to get a good return on your investment."
Purchase them a college notebook to begin going online to research 5 colleges that are on their top list for selections. Have them research the following things: College graduation rate and accreditation, if the college has their major, the GPA requirement, ACT/SAT score requirement, tuition costs, out of state and in state costs, room and board, dormitory, meal plan, administrative fee's. Have them write down all of the notes on these key details to introduce them to the cost in preparing for college.
Next, discuss with your student any particular savings plans that have been set up to help pay for college and then ask your student if they know how students and parents pay for college? Have them write down the question: How Am I Going to Pay for College and then underneath the question, have them write out their ideas for answers.
Talk to them about preparing to take some tours of college campuses and plan to visit some of your local colleges and other's while you're on vacation. Have your student to write down the things that they liked and disliked about the campus visit.
Based upon their grade, discuss with your student about Scholarships and how they help to pay for a students college education. Have them to sign up for some scholarship search engines and to refer back to their college notebook of expenses for college to see how they can use the scholarship process to help win funds for college. Explain to them that scholarships are a similar purpose how employment helps parents pay bills to maintain household expenses; it's all about budgeting. Help them to understand that the way to finish college is to have a plan set in place and to start saving and applying for scholarships to avoid having to take out student loans. Remind them that if they don't like being charged $5 interest on small loans from the parent, then they really won't like the high fee's tied into student loans.
"The budget is not just a collection of numbers, but an expression of our values and aspirations." - Jack Lew
