Helping your college student thrive on a tight budget
Student loans are a part of life for most families and college students. But with the U.S. Department of Education reporting that over 13 percent of students default on their loans, college is the perfect time to teach your student how to make smart financial decisions. It’s good for their future. Plus, it’s good for your current finances especially when you are their sole source of income.
Show them the budget
Work with your future college graduate to determine who will pay for what. If grants or scholarships are covering tuition and books, then show them how much their room, food, transportation, entertainment, and other costs will add up to each month. Together, come up with a way to trim those costs as much as possible and form a plan for staying within the budget.
First Tech tip: Nearly 20 percent of a student’s budget often goes toward car expenses, including gas, insurance, payments, and maintenance. Leaving the car at home can save you a lot of money. Plus, most schools offer mass transit and are bicycle friendly.
Send your student a monthly paycheck
Instead of simply putting the money for the whole school year into an account for your student to utilize, or waiting for a call when they need more money, send them a monthly paycheck. It’s a great way to teach them how to budget and allows you to set strict limits on how much you will give them every month. If they need more money, suggest a part-time job to cover their extra expenses.
First Tech tip: Show your student how to make, maintain, and live within a budget before they leave for school. Also, see our article Living with a Strict College Budget for students.
Don’t forget about the student loans
It’s not the end of the world if you or your student are forced to take out student loans. But one of the smartest things you can do is pay the monthly interest on those loans while your student is in school. Just be sure to count that payment against their total college budget. This might mean a reduction in their other college expenses.
First Tech tip: Show your student the advantages of eating in the cafeteria or at home versus eating out at a restaurant. For example, three $10 meals out per week would add up to $120 per month. That same $120 could buy a lot of groceries and make a lot of meals.
Utilize Online and Mobile Banking
When sending their monthly ‘paycheck’, transfer the funds using First Tech Online Banking. They’ll have instant access to the funds. With a little practice, they’ll quickly understand how to login to their own account to view every transaction and closely monitor every purchase.
Get help with the college budget
We have plenty of online calculators to help you and your student plan for the college years, including those titled Should I Live on Campus or at Home and Is a Meal Plan a Good Deal. Plus, we’re here to offer helpful advice and introduce you to the right people who can help you save and pay for college. Need help with a student loan? We can refinance your student loan with terms of up to 15 years.