Where Students Can Cover College Tuition with a Part-Time Job: Study

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Affordability was a major factor when 19-year-old Bintou Kabba was considering colleges to attend after high school.  She enrolled at CUNY Lehman, a four-year public university in her native Bronx, N.Y. The 10-minute commute from her home, where she lives with her parents and six siblings, was part of the allure. But the low cost of tuition was essential for Kabba, an ambitious student with dreams of becoming a neonatal gynecologist but without the financial means to afford a pricey university. Most CUNY Lehman students pay just $2,374 out of pocket for a year of schooling.

But before she began classes, Kabba needed a job. “I was broke and I needed money so badly,” she told MagnifyMoney. So, she joined the ranks of so-called “working learners” attempting to counter the costs of college with part-time jobs. About 40 percent of undergraduates and 76 percent of graduate students work at least 30 hours a week throughout the school year, according to the Georgetown Center on Education and the Workforce.

As college costs have skyrocketed in recent years, the old adage “Work your way through college” has become increasingly out of touch with reality. Students who work rarely earn enough to truly cover the costs of their education.

MagnifyMoney sought to find out which colleges are still affordable enough for working students to afford on part-time wages. In a new study released Nov. 9, we found a student earning the federal minimum wage ($7.25/hr) would have to work full-time — nearly 44 hours per week — to afford the average annual net tuition at a four-year public institution today.

We then wanted to see how far a student working 20 hours per week at their state’s minimum wage could get toward covering their net tuition. Their post-tax annual earnings were compared with the net tuition price at more than 2,500 public and private non-profit institutions.

Key findings:

  • We found it is impossible to cover the tuition gap at most four-year schools, both private and public.
  • Students can afford to cover their net tuition costs with a part-time job at only 50 out of 645 (7.75%) of four-year public institutions. Students can feasibly cover net tuition costs with a part-time job at just 24 out of 1,208 private nonprofit four-year institutions (2%).
  • Two-year public institutions were significantly more affordable — it was feasible for part-time working students to cover net tuition at 287 out of 656  two-year public schools (56.25%). On average, a student earning the federal minimum wage would only need to work roughly 25 hours per week to cover net tuition costs at a two-year public institution.
  • Less than 5% of private two-year and private four-year institutions are affordable enough for a part-time working student, MagnifyMoney found.

The cost of going to college has outpaced the rise in wages by a staggering amount over the last decade. When faced with a gap in college costs and earnings, families typically have just one place to turn – student loan debt.

Kabba wanted to avoid student debt at all costs. That drove her decision to enroll at CUNY Lehman. The school is the fourth most affordable four-year public college on our list. Earning the New York state minimum wage of $9/hour, a part-time working student could pocket more than enough to cover their expenses.

Still, working long hours to cover college expenses is far from the ideal college experience.

Research has shown demanding work schedules can all too easily conflict with student’s academic performance. Georgetown’s Center on Education and the Workforce warns against any job that demands more than 30 hours per week from a full-time student.

On a tip from her high school counselor, Kabba landed a $10/hour gig soliciting telephone donations at a midtown-New York charity. During her freshman year, she worked 20 hours most weeks. With a full course load to juggle as well, it wasn’t long before Kabba started to feel the pressure of conflicting responsibilities.

“It was just too much,” she said. To get to work each day, she took a 45-minute train ride from the Bronx to midtown. Rather than working around her class schedule, she had to work her class schedule around her job, because the charity had strict guidelines on when workers could call donors. By the end of her freshman year, her grades started to reflect her strain.

“I decided I’d rather be unemployed and actually do well in school,” says Kabba. She quit before her sophomore year.

Not long after leaving her inflexible charity job, Kabba found another solution. Through a special program offered at CUNY Lehman, she landed a job on campus that paid $9/hour and only required 10 hours of work per week. Reducing her hours and pay meant smaller paychecks, but a better chance she’ll earn the grades she needs to achieve her goal of going to medical school. “It’s on campus and it’s convenient,” she said.

Behind the data

To make our findings more exact, we used the minimum wage of the state in which each school resides to determine the annual earnings of working students. Next, we analyzed data from the National Center for Education Statistics to determine the net tuition costs of each school. The net price is more accurate than a college’s sticker price because it factors in financial aid, scholarships and grants. The net price is what students and families actually pay out of pocket.

We stuck to a 20-hour part-time work schedule because we thought it was unrealistic to assume students could juggle a full-time course schedule and a full-time job. In fact, Georgetown recommends students work no more than 30 hours per week in order to maintain good grades in college.

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Tips for working college students

It is virtually impossible to “work your way through school” anymore. The old adage just doesn’t apply to today’s college students, who are paying more than ever for college tuition and can’t feasibly cover their expenses with part-time income alone.

However, there are still benefits to working while in college. Here are some tips on how to maximize savings as a working student.

How to save on college costs with a part-time job

  1. Start small. Try going to a lower cost community college and transferring your credits to a larger institution later. As our study shows, it’s possible for students working part-time to cover net tuition at the majority of two-year public institutions (56.25%). By covering tuition and fees with a part-time job at a two-year school, you can reduce your need for financial aid by half and still graduate from a four-year institution.
  2. Work part-time at a campus job or through a work-study program. Jobs tied to campus are more likely to work around your course schedule and be flexible during unusually demanding times of year, such as quarterly exams and finals.
  3. Stay close to home. Not only will you save on tuition by enrolling at an in-state school, but if you are close enough to continue to live with your family while you’re studying, you could save big on housing expenses. If living at home means commuting by car or public transit for classes, factor in those additional costs.
  4. Don’t rely on student loan debt for expenses you can cover with part-time work. Save the student debt for tuition and other fees that are usually required in one lump-sum payment at the beginning of the semester. When it comes to extra expenses, like your trip to Key West for spring break, or moving to an off-campus apartment, lean on income earned from a part-time job. If you move off campus, you might find it is possible to afford rent (with support from roommates) with income from a part-time job.
  5. Choose your job wisely. If possible, find work in your area of study, which can give you an early jump start in the job market before you even graduate. If you have several years of job experience under your belt at graduation, you’ll be light years ahead of your peers graduating with a comparatively thin resume. Another study by Georgetown’s Center on Education and the Workforce found college students who worked or took internships while in college were more upwardly mobile after graduation and more likely to move into managerial positions.
  6. Take advantage of in-state tuition rates even if you are not a permanent state resident. Each state has its own residency requirements for students looking to qualify for in-state tuition rates, which can be significantly lower than out-of-state rates. Some states will allow students to qualify for in-state tuition if at least one of their parents has been a resident for at least one full year before the student enrolls. If the student is independent — meaning they do not receive financial assistance from a parent to attend college — most states require at least one year of residency in the state. There are other documentation requirements, which can be found at FinAid.org.
  7. Don’t sacrifice your studies for a paycheck. At a certain point, the financial benefits of working part-time might not be worth the additional stress and attention a job might demand. The majority of working students ages 16-29 work 20 hours or less per week. However, research has shown both working and non-working college students graduate with similar levels of student loan debt — 34% of working college students graduate with $25,000 or more in student loan debt, compared to 37% college students who don’t work while in school.
  8. Graduate early (or on time). Dragging out your time in college is a quick way to add thousands of dollars to your student debt load. And it happens more often than you might think. Only 40% of students graduate within four years of enrollment across all types of institutions, according to the Department of Education. Less than one-third of college students graduate on time at public institutions. Save additional tuition expenses by completing your degree in four years or less.

 

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Will You Get Real Value from an Online Degree?

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In search of higher education, lucrative careers and better credentials, nearly 6 million Americans are enrolled in some kind of online course, according to data from the Online Learning Consortium. Distance learning programs tout online courses as an efficient and low-cost way to complete a degree. But are they worth the time and financial investment?

Here’s what to consider before you enroll in an online learning program:

What it really costs

For students looking to complete distance learning programs at in-state schools, the cost probably won’t vary much from traditional students attending classes in person. However if you’re comparing for-profit online schools to out of state public universities, for-profit schools tend to have lower tuition costs on average ($15,610 vs. $23,893 per year). Before you enroll in a for-profit university you should note that it is more difficult to obtain scholarships and grants when studying at a for-profit school.

Degree mills (for-profit schools that aren’t accredited such as American Central University or Golden State University) offer the lowest degree prices, but these institutions offer little in the way of education, and they drag down the appeal of all online degrees. Check to see if your school is accredited here.

A lower sticker price for an online degree might not translate to a lower out of pocket to you as a student. Before committing to an online institution, consider cost saving measures such as attending a Community College for two years and applying for scholarships at an in-state, public school. In many cases, this will end up being your lowest cost option.

However, if distance learning is right for you, you will qualify for subsidized loans if you attend any accredited school (this includes some for-profit online schools). If the school you plan to attend is accredited by one of the national or regional accrediting commissions (see this list to learn more), you will be eligible to receive the Pell Grant and Stafford or Perkins loans.

Online Degree Completion

Students in online only programs complete courses and degrees at a slightly lower rates than students in traditional programs. This may be due to a lower level of student support for online students, or the fact that more distance learners have both career and family demands in addition to their education.

Because online degrees have lower completion rates, you should ask yourself whether you have the time and resources that you need to complete your degree; if you don’t, it’s not worth the money. If your primary goal is to learn and continue your education, you may that Massive Open Online Course (MOOCs) through Khan Academy or Coursera fit your needs with negligible out of pocket costs.

What you won’t get from an online program

If you earn an online degree through a traditional university, employers will perceive your degree as on par with traditional degrees from that school. For example, a Master’s Degree in Statistics from Texas A&M is equally valuable if you earned the degree through their distance education program or while attending class on campus. However, not every employer views online for-profit universities favorably. Top tier online schools are working to change sentiments, but you should research the acceptance in your field before pursuing a degree from a for-profit institution.

Distance education programs offer fewer networking opportunities compared to traditional schools. Online students do not have as much access to professors or peers as traditional students which is a drawback during the learning process and the job search process, but recently, high quality online schools offer new technology to help their students network and job search.

You also shouldn’t expect as much hands-on help in your coursework as an online student. Distance learners need to be self-directed, and able to pick up complex concepts on their own. Students may need to teach themselves computer programs, and they will be expected to do labs or other physical projects on their own.

Advantages of online degrees

Online programs from top-tier online universities and not-for-profit universities offer high quality education that may increase your marketability. You can earn your degree with greater flexibility than in a traditional education model, and you may be able to earn your bachelor’s degree even while you hold down a full-time job and raise your family.

Depending on the school you choose and your financial aid package, an online degree may have a lower out of pocket cost compared to a traditional classroom setting. Online universities accept more transfer credits than traditional universities which can help you complete your degree faster and reduce your costs.

Especially for adults hoping to complete a degree, distance learning and online universities offer advantages that traditional schools cannot.

Is an online program for you?

The value of an online degree depends upon how you want to use it. If a degree will allow you to advance in your company or your industry, and you want to earn your degree while working then an online degree offers value above what a similarly priced brick-and-mortar school offers. Distance learners have increasing opportunities to study in a field that aligns with their personal and career goals.  Popular degrees for distance learners include healthcare administration, business administration, information systems and psychology, but hands on fields like nursing and elementary education continue to make inroads for students pursuing their degree online.

On the other hand, if you’re not a self-directed learner, or your industry frowns on online education then the money will be wasted. Degrees from non-accredited universities aren’t going to be worth the money for most people.

If you choose to pursue an online degree, be sure to compare the out of pocket cost to you (including fees), consider whether you have the time and resources to complete the degree, and line up your funding ahead of time. It’s also important to weigh your expected increase in income against the cost of the degree. Online degrees aren’t a slam dunk in value, but you may find that it’s the right choice for you.

The post Will You Get Real Value from an Online Degree? appeared first on MagnifyMoney.

With $655 Malaysia Trip, This Student Proves Gap Years Don’t Have to Cost a Fortune

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Brandon Stubbs isn’t your typical 18-year-old high school graduate. In addition to graduating valedictorian from his Grass Valley, Calif. high school, he’s joined the ranks of a growing number of students embracing the concept of taking a gap year before starting college.

While other college freshmen began their first classes this Fall, Stubbs, who plans on attending Brown University, kicked off his gap year with a trip to Malaysia.

A gap year is usually more than just a nice break from calculus exams and book reports. Many students choose to focus on personal growth and incorporate travel abroad or participation in volunteer projects. That growth can come at a high cost. Some programs, like the $35,000 Global Gap Year offered by Thinking Beyond Borders, can cost more than what some students pay for a four-year college degree.

But, there are plenty of ways to trim costs and still have a great gap year. We reported on some here, which is how we met Stubbs.

We asked Stubbs to share his budget so far. Take a look at how he’s financing the first leg of his gap year in Malaysia:

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We caught up with Stubbs to see how his budget is holding up in Malaysia and how he intends to spend the rest of his gap year. Here’s what he said.

MagnifyMoney: Where are you now?

Brandon Stubbs: I’m taking two months of my gap year in Malaysia, one of the most diverse countries in the world. Right now I’m in Johor Bahru, the southernmost city of Malaysia, just across the bridge from Singapore.

MM: What drove your decision to take a gap year?

BS: After my high school graduation, I was definitely, to an extent, burnt out and, while I was excited to attend Brown University, I wasn’t as ready or enthusiastic to start college this fall as I will be next fall.  This gap year has provided me the opportunity to gain experience in the real world while simultaneously recharging my mental battery.  I’m learning a lot in an entirely different way than in the classroom.  And my enthusiasm and excitement for next fall has only increased as I’ve grown as an individual throughout this gap year.

MM: Why Malaysia?

BS: As a student going into archaeology, it’s really important for me to be getting this exposure to this blend of Eastern cultures as well as to the geography and climate. Tropical rainforests thrive here, so I’ve been able to go on some real Indiana Jones-esque expeditions into the jungle. I’ve also visited some incredible Buddhist and Hindu temples throughout the country that have proven to be very enlightening experiences.

MM: How did you you save up for this trip?

BS: I had $2800 saved up for this trip, which I earned working as a tutor throughout high school and as a music camp counselor during the summer. I paid for my flight through StudentUniverse [ a site that offers affordable fares to students]. I booked a flight on AirChina for $535.

MM: How do you stay on budget?

BS: My room and board is covered in exchange for my volunteer service [at the hostel where I am staying] so I only have to spend money on food and transportation.  Often, I’ll only spend money on brunch and dinner during a day, but I’ll spend a little more for excursions into Malaysia or Singapore.

MM: What are you doing for money out there?

BS: I’ve done some street performing in the past on my trumpet at the local “Cornish Christmas” celebrations and other outdoor festivities. On top of that, I am focusing on the style of New Orleans Dixieland jazz, which lends itself quite well to solo street performance. I intended to bring my trumpet, anyway, if just to practice, so the idea of playing it in public was natural.  So far I’m earning about 160 [Malaysian Ringgit] a week, which translates to $40 USD, for playing five nights a week. But the money is enough to cover most of my daily expenses in Malaysia.

MM: What’s your typical day like?

BS: I have two days a week off from my work at the hostel.  On those days, I’ll either go into Singapore and visit some of the attractions and districts of that amazing city or explore the nature and culture of Malaysia, hiking or visiting new towns.  On my work days, I’ll spend a few hours cleaning and checking guests in and out and on my downtime work on my second book or street perform on my trumpet.

MM: Did your parents help you with any expenses?

BS: My parents did help pay for some of the preparatory expenses, like my typhoid shot or general supplies – flashlight, mosquito repellent, etc.  Aside from that, I am covering all of my own expenses.

MM: When do you get back?

BS: I’ll return to the States toward the end of November.

MM: Will you have any funds left when you return?

BS: I expect to return with $1800 or $1900 remaining. I shouldn’t spend more than $1000 on the entire two-month trip, all expenses included.

MM: What will you do for the remainder of the gap year?

BS: Once I return to the U.S. I intend to spend several months publishing and advertising my first book, The King of Kamaahr.  My plans for the spring are still not set in stone, but right now I think I’ll go to Sydney, where I have some family and Australian citizenship, and spend a few months living there.  I’ll try to find work there as a musician and/or an actor as well as advertise my book outside the U.S.

Do you want to share your gap year story? E-mail us at info@magnifymoney.com. 

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TRUMP VS. CLINTON: Where the Candidates Stand on College Costs, Child Care, Family Leave, and Health Care

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With the election a month away, presidential candidates Hillary Clinton and Donald Trump have just a few weeks left to woo voters across the U.S.

If you’re still on the fence about which candidate to vote for, your final decision may hinge on how their policy ideas could potentially impact your wallet.

We have simplified and broken down each candidate’s stance on three key issues — college costs, child care and family leave, and health care — to help you understand exactly how each candidate’s proposals could affect your wallet.

Read more about their stances on job growth, taxes and housing here > 

College Costs

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Hillary Clinton’s college debt plan promises a “debt-free future” for college graduates. Clinton intends to use her New College Compact to erase college tuition at in-state colleges and universities for families earning up to $125,000 annually. The plan caps income at $80,000 to start off, then will rise by $10,000 for the next four years to hit $125,000 in 2021.

The New College Compact also promises to help students pay for the cost of college by protecting the Pell Grant’s funding and restoring year-round Pell funding so that students can receive the grant over the summer in addition to fall and spring. In addition, the plan will invest in Historically Black Colleges and Universities and other minority-serving institutions and grant a 15-fold increase in federal funding for on-campus child care among other factors. The Compact requires colleges to be accountable and pursue cost-reduction efforts, requires students to work at least 10 hours a week, and will reward those who create programs that provide credible education at a low cost.

Clinton has also pledged to provide debt-relief help to struggling graduates. Her plan outlines efforts to make sure all graduates can refinance loans, enroll in income-based repayment (no more than 10% of monthly income), get help from employers, defer repayment from debt incurred from starting a business for up to three years, and be rewarded for public service. Finally, she proposes a three-month moratorium on student debt collection to give debtors the chance to get on board with the resources she plans to provide.

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Donald Trump’s plan to address college costs begins with a proposal to get rid of student loans issued directly by the U.S. government, a system that has been in place since 2010. Trump would take the U.S. government out of the student loan business, leaving student lending up to private lenders.

He says he will work with Congress to enact reforms that will give tax breaks to colleges and universities that make a “good faith effort” to cut back costs and student debt. By doing this, Trump says he will make attending, paying for, and completing one’s education at a two- or four-year college or vocational or technical school more accessible.

Child Care and Family Leave

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Child care costs rose more than 122% over the past 10 years for American families.

Hillary Clinton’s plan to address the rising costs includes giving a raise to child care providers to incentivize high-quality and effective child care. She plans on using the Respect and Increased Salaries for Early Childhood Educators (RAISE) initiative with state and local governments to fund the salary increases. Clinton also plans to double federal funding for the Early Head Start and the Early Head Start–Child Care Partnership program to allow room for twice as many children in the program.

When it comes to family leave, Clinton says she will guarantee up to 12 weeks of paid family and medical leave to workers who need to care for a new child or sick family member. Individuals who fall seriously ill or are injured will also get up to 12 weeks of paid medical leave. The pay will be at least two-thirds of an individual’s current wages, but it won’t cost businesses anything extra. It will be funded by money generated through tax increases on the wealthy and tax reform.

Clinton also proposes capping families’ child care expenses at 10% of household income.

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Donald Trump would change the tax code to allow working parents to deduct child care expenses for up to four children and elderly dependents from their income taxes. The deduction would be capped at “average cost of care for the state of residence,” according to his plan. According to an analysis by the Tax Policy Center, higher-earning families would have the most to gain from Trump’s child care plan, as the poorest households rarely pay federal income taxes.

Trump also proposes creating special child care savings accounts where families can make tax-free contributions toward child care. Currently, families may contribute to similar accounts but only if those accounts are offered by an employer. His proposal calls for a federal match of up to $500 to families who use the special accounts.

On the issue of family leave, Trump proposes six weeks of paid maternity leave.
He hasn’t specifically said how his plan would be paid for, but in a campaign fact sheet he says most of his tax reforms would be paid for by “increases in economic activity that accompany pro-growth tax reform, better trade deals, regulatory and immigration reform, and unleashing American energy.”

Health Care

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Hillary Clinton largely plans to focus on continuing and expanding the Affordable Care Act (Obamacare). She says that she will work with state governors to expand Medicaid to the 3 million people who are uninsured because states chose not to expand the program. Clinton says she will allow the Secretary of Health and Human Services to block or adjust health insurance premium rate increases to make coverage more affordable. She also says she will cap prescription drug costs and limit out-of-pocket expenses for families.

Clinton says she will also make efforts to give Americans the choice of a public-option insurance plan, or a government-run health plan, in each state and to allow those 55 years or older to opt into Medicare. The qualifying age is currently 65.

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The first part of Donald Trump’s health care plan is to repeal the Affordable Care Act and replace it with Health Savings Accounts (HSAs) to help cover out-of-pocket expenses. HSAs are usually coupled with high-deductible health plans to allow workers to set aside pre-tax dollars for medical expenses. Unlike many existing HSA accounts, the ones that Trump is proposing will have no limit and will become part of an individual’s estate and will enable people to pass the sum onto an heir after death, tax-free.

Trump says he will also allow individuals to deduct their health insurance premium payment from their tax returns. Finally, his plan outlines an effort to work with states to identify individuals who have not had continuous health coverage and create high-risk pools to give them access to health care coverage.

Make sure to register to vote by Oct. 14.

Illustrations by Kelsey Wroten.

Click here to find out more about Trump and Clinton’s platforms on job growth, college costs, taxes and housing > 

The post TRUMP VS. CLINTON: Where the Candidates Stand on College Costs, Child Care, Family Leave, and Health Care appeared first on MagnifyMoney.

Does a Tuition Installment Plan Make Sense for You?

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If you’re a student who is short on cash, but you want to avoid student loans, you might be considering a tuition installment plan, but before you enroll, read the plan agreement and do a bit of math. In most cases, the tuition installment plan is a bad deal for you.

What is a tuition installment plan?

A tuition installment plan allows you to pay your tuition in monthly payments that last twelve months or less (sometimes as few as three installments). You can expect to pay an enrollment fee, but you won’t pay interest. Universities limit the amount of money you can pay through tuition installment plans, so the remainder of your tuition bill needs to be covered in cash or by student loans.

What are the installment plan fees?

Enrollment fees vary by university, but you can expect to pay anywhere from $25-$100 to enroll in a tuition payment plan. For example, Virginia Commonwealth University charges a nonrefundable $25 application fee to enroll in the tuition installment plan, while Howard University charges a $45 fee, and Rutgers charges a $60 fee for an annual plan or $50 per semester. If you pay your installment late or incompletely, you can expect to pay a late fee of $10-$35 per installment.

What happens if I don’t pay?

If you don’t pay your installment payments, the university will roll your payments into an “emergency” loan where interest begins accruing immediately, and payments are immediately due. You may be able to take out student loans to pay off the emergency loan, but you may be stuck with the loan going forward.

Once your tuition installment plan converts to a loan, creditors view it like any other loan. This means that failing to pay it will lead to credit problems. Additionally, your school may put a hold on your credentials or not allow you to enroll in classes until the loan is current.

Information about what happens if you don’t pay will be available in an agreement that you need to sign prior to enrollment. Read the agreement prior to enrolling in a tuition installment plan.

Will Tuition Installment Plans save you money?

You won’t save much money paying through a tuition installment plan compared with subsidized student loans. Sallie Mae offers a calculator that calculates the amount of interest you will accrue on a student loan if the loan goes completely unpaid. Compare the accrued interest to the the tuition installment plan enrollment fee to see if you have the potential to save money.

Tuition installment plans sound like interest free loans, but they tend to be a bad deal for students. You’re locked into payments during school, and you save little (or nothing) compared to subsidized student loans. Since enrolling in tuition installment plans requires filling out a FAFSA, you won’t save time enrolling in TIP(s) vs taking out loans.

When should I consider Tuition Installment Plans?

Tuition installment plans have a useful psychological value. If a required payment keeps you from wasting money or from taking on debt for lifestyle purchases, then you should consider it whether or not you save money compared to student loans. If you have a moral or religious objection to debt, installment plans allow you to cover a small gap without interest bearing debt (but be aware that if you fail to pay, you’re taking on a loan).

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Planning the Perfect Gap Year Doesn’t Have to Break the Bank

14397435_10153850115048483_1785139792_nThe gap year — taking a year off from formal education to travel, participate in social projects, or gain work experience — is growing in popularity among American students. Just ask Malia Obama. The first daughter announced back in May that she would be taking a gap year before attending Harvard University.

She’s among those contributing to a 22% increase in American students taking part in the practice already common among students in Europe and Australia, according to the American Gap Association. Some families spend hundreds of dollars on gap-year consultants.

Like Harvard, many higher education institutions encourage students to take gap years. The reason: a push toward experiential learning. Schools increasingly see value in the life experience, maturity, and other skills that gappers return with.

“We have more information in the palm of our hands than ever. So why are we teaching [students] information? They don’t need information,” said American Gap Association Executive Director Ethan Knight. “They need experience to know what to do with that information.”

Jamie Hand, 23, a senior at Middlebury College in Vermont, echoes the sentiment. She said her gap-year trip to São Luís, Brazil with Rotary Youth Exchange allowed her to “take a break from this rat race that I felt like I was in.” At the time, she was 18 years old and wanted to take time off before beginning her freshman year. Though she already had a high school diploma under her belt, the program involved taking classes at a local high school in Franklin, W. Va.

“It felt like I was taking this big breath and I was free to excel but I didn’t have to excel,” said Hand. “It was one of the times when I learned the most in my life [because] I didn’t have to.”bike_ride_in_brasilia

The Cost of a Gap Year

Gap years may seem like a privilege only available to families wealthy enough to finance them. It’s true that some gap-year programs can easily cost more than a year’s worth of college tuition. Families pay over $35,000 — close to the average cost of a four-year degree these days — to participate in the “Global Gap Year,” a program offered by Thinking Beyond Borders, which offers gap-year and study-abroad programs. During their global year abroad, students split their time between homestays on three different continents.

But the gap-year experience isn’t just for the super-rich.

MagnifyMoney caught up with some current and previous gappers to find out how they made it work.

Go the DIY Route

Brandon Stubbs, 18, motivated by his interest in Southeast Asian archaeology, decided to defer his acceptance to Brown University for a year to travel to Malaysia for two months this fall.

Rather than paying for a trip through a travel agency, which could easily have cost several thousand dollars, he did some research on his own. Stubbs found a hostel in Johor Bahru, where he will be able to work in exchange for room and board.

To save on airfare, he booked a round-trip ticket to Malaysia for just $500 with StudentUniverse, a site that offers cheaper fares to students. When he’s not working, Stubbs plans to spend his free time sightseeing and exploring the city.

imgp9570“I’m most excited to explore an entire different area of the world,” said Stubbs, who said he grew up enthralled by the exotic locales in movies like Indiana Jones.

When he returns to the U.S. from Malaysia in November, Stubbs’ gap year will continue with a stop in New Orleans. He plans to take time off for the holidays and then move to the Big Easy, where he’ll work at a hostel in exchange for room and board.

“I feel like taking a gap year will sort of increase my momentum. High school wasn’t an easy experience mentally,” said Stubbs. “I feel like in a year I’ll be rejuvenated and ready to jump back into my studies.”

Get College Credit for the Program

A great way to save money and kill two birds with one stone during a gap year is to earn college course credits along the way. Some schools offer course credit to students who take gap years. Students may even be able to use financial aid dollars toward their gap-year experience.

Some schools have specialized programs or fellowships for gappers like UNC Chapel Hill’s fellowship, or Princeton University with its Bridge Year. Others, like Elon University, offer their own version of an experiential learning program for first-year students.

There are even some gap-year programs that will not only give you a stipend, but contribute to the cost of your college education like those offered through AmeriCorps or City Year.

Work Now, Play Later

Breaking up a gap year into smaller trips or working for part of the year can help to reduce overall costs. If you budget well, the money you earn could fund your travels.

Jericho, Vt., student Asher Small, 19, who will begin his first semester at Brown University this fall, also worked at a ski resort in Utah for part of his gap year.

“It was kind of like a dream job because I love to ski,” said Small. In addition to his $8/hour wages, the resort subsidized his room and board, leaving him with just $300 to cover each month.

Small worked at the ski resort for four months. Before making his way back home, he took a road trip through Southern Utah and California and participated in a 10-day meditation course retreat. To save on lodging, he used couchsurfing.com, a service that connects benevolent hosts with houseguests. He estimates he ended up saving about $2,000 from his work at the resort after the trip.

Working or interning during a gap year can also be a great way to build skills or experience for the subject you’re interested in majoring in once you get to school. Some programs will pay you for work abroad or offer perks like free room and board as an incentive. For example, if you have a green thumb, you could volunteer to work at an organic farm or winery through a program like World Wide Opportunities on Organic Farms during your gap year in exchange for food and accommodation.

Before he went to Utah, Small spent the first half of his gap year in Desab, Haiti, with Volunteers For Peace, a nonprofit volunteer organization. There, Small taught an English class to local residents. The trip cost him about $1,500 in total, which he paid with funds he saved from past summer jobs.

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Stay Close to Home

Keeping your gap-year experience stateside can be an easy way to minimize travel expenses, reducing the overall costs of a gap year. Staying in the U.S. doesn’t mean you’ll have any less of a cross-cultural experience.

Start Saving Early

Knight recommends planning your gap year at least six months from the date you want to travel, so you’ll have ample time to save up.

Stubbs worked all four years of high school as a junior college tutor and as a camp counselor at a music camp. Doing so helped him to save about $3,000 to spend on his trip to Malaysia and Louisiana.

Small worked over the summers prior to his gap year as well. Those funds helped him with his trip to Haiti.

Tap into Your Savings

If your parents have been saving up for college, you may be able to use some of that money to finance a gap-year program, although it may mean sacrificing going to a more expensive college.

Gabe Katzman, 24, was considering the University of Maryland, where he would pay in-state tuition, and other, more expensive out-of-state institutions at the time he was planning his gap year in Israel.

His parents presented him with the option to use some of his college savings to fund the trip, which cost about $16,000 to $17,000. Because the cost was close to a year’s worth of tuition at the pricey out-of-state school, his parents told him they could only help him finance his gap year if he decided to stay in state.

Ask for Free Money: Grants, Scholarships, Trusts, and Charities

Find an organization, trust, or charity that’s aligned with the focus of your trip and ask if they have any grants or scholarships that you can apply for and that would be applicable toward your gap year.

Local associations, businesses, schools, and charities such as the Rotary Club or Lions Clubs International award grants, or scholarships may even be able to sponsor students who meet certain criteria and goals.

When Katzman decided he wanted to spend 9 months in Israel with Habonim Dror’s Workshop, a gap-year program run through his childhood camp, Habonim Dror Camp Moshava, the first thing he did was look for scholarships and grants to help him cover the $16,000 the trip would cost.

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“I talked to my synagogue,” said Katzman. “I knew that if I connected with the synagogue they [would support me].” In the end, they gave him about $3,000.

Katzman then asked other organizations including one called Masa, an Israeli organization that advocates interning and volunteering in Israel, adding another $1,000 to his fundraising goal. Next, he went to the Jewish Community Center of Greater Washington.

After he got some funding through community organizations, Katzman turned to his family and friends to help out.

“I talked to all of my family. Instead of a Hanukkah or birthday present, I asked them to give me money for the trip,” said Katzman.

The rest of the funds came from his own savings from working as a lifeguard and camp counselor while in high school.

Get Creative

Katzman and the group he went to Israel with saved money by pooling their resources.

“We were living a socialist lifestyle with a group of 23. We had a shared bank account that we all put money into. Some of us put $2,000 and some put just what they could,” said Katzman.

The shared account allowed them to prioritize the group’s experience as opposed to the individual and kept them out of “a situation where someone felt excluded because they couldn’t afford it,” said Katzman.

Two of the members in Katzman’s group were co-treasurers of the shared account and managed the group’s budget. If some or all of the group’s members went out to eat or someone in the group needed to replace a pair of shoes, the money to pay for it came from the shared account. At the end of the trip, they had a little left over to donate back to the camp.

Stubbs, who already has his room and board covered with the hostel, also plays the trumpet. He plans to finance some of his living expenses while in Malaysia this fall and New Orleans in the spring with money earned from street performing or “busking.”

Some Final Advice: You have to want it.

“Sometimes coming up with the money for something like this can be really discouraging because it’s really expensive,” said Katzman.

But setting aside time for a gap year was well worth the added cost and effort. After he graduated from college, Katzman decided to move to Haifa, Israel, full-time, where he is working part-time to lead this year’s Habonim Dror gappers and taking Hebrew classes.

“I grew more in one year than I think the average college student would have grown,” he added. “It affected what I did in college, it affected my choices during college and afterward [when I decided to] live here.”

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The post Planning the Perfect Gap Year Doesn’t Have to Break the Bank appeared first on MagnifyMoney.

Debt-Ridden ITT Tech Students Grapple with Uncertain Futures

Kevin Jackson, age 34, graduated from ITT Tech's Newtown, Va., campus in 2007. He is paying off $40,000 in private and federal student loan debt.
Kevin Jackson, age 34, graduated from ITT Tech’s Newtown, Va., campus in 2007. He is paying off $40,000 in private and federal student loan debt.

The news that for-profit university chain ITT Tech would shutter 137 campuses across the country this week amidst a federal investigation into predatory lending, recruiting practices left thousands of students’ futures uncertain. They have big choices to make and, in many cases, few options.

Roughly 35,000 of the school’s 45,000 students are eligible to have their federal student loans discharged, which could total as much as a half billion dollars alone, according to the Department of Education. But if students decide to continue their education at a different school, they may disqualify themselves from loan forgiveness altogether.

“We may be underestimating the potential impact of this and students filing for forgiveness of loans,” said Mark Kantrowitz, publisher and vice president of strategy for Cappex.com, a college and scholarship comparison site. “This isn’t the last we’ll see of this situation.”

Students who were still enrolled when the campuses closed — or withdrew in the last 120 days — can apply for a federal loan discharge. Those who graduated or withdrew several months ago or have private student loans, however, are likely still on the hook for their debt. Their only recourse is to file a borrower’s defense claim, a difficult process that would require them to prove they were defrauded by ITT Tech in some way.

“In a properly regulated environment, we don’t have 45,000 students left holding the bag and 8,000 staff members becoming unemployed,” said Barmak Nassirian, director of federal relations and policy analysis at the American Association of State Colleges and Universities. “If there’s any silver lining, it’s that this operation won’t be able to pull in any new victims.”

ITT Tech officials were unavailable for comment; however, the company pushed back against regulators’ allegations in a statement this week.

“We had no intention prior to the receipt of the most recent sanctions of closing down despite the challenging regulatory environment that now threatens all proprietary higher education,” the statement says.

MagnifyMoney reached out to ITT Tech students to find out how they are moving forward in the wake of the school closure.

ITT Tech Tyler

Unmet expectations

Like many people who enroll at for-profit universities, for Kevin Jackson, age 34, it all started with a commercial.

When Jackson, who studied computing at ITT Tech’s Newtown, Va., campus between 2003 and 2007, saw the iconic ITT Tech commercial, the timing was perfect. He was looking for a nontraditional college experience and a program that would prime students for jobs in their field. The first three semesters went smoothly. The administrators seemed to care, and teachers even called to check on him when he had the flu and missed class.

By the fourth semester, however, he noticed teachers were leaving, and eventually the campus dean departed. New teachers didn’t seem to know the class material, he said. One particularly troubling incident occurred in 2003, halfway through his program. He was called to the financial aid office and thought his paperwork was incomplete. Instead, the financial aid counselor asked him to cosign a student loan for someone in his class. He balked.

Tyler McCormick, age 34, graduated from ITT Tech’s Bessemer, Ala., campus in June 2015. He’s considering filing bankruptcy to relieve part of his $70,000 in federal and private student debt.

“I knew I would have problems paying my own loans, and I wasn’t going to put his education in my hands,” Jackson said. “They spent 45 minutes trying to twist my arm but finally dropped it and asked another student. When I said ‘no,’ that’s when they began to treat me differently.”

Jackson enrolled with ambitions of working in IT support. He graduated with $40,000 worth of federal and private student loans and no offers of employment. In job interviews, employers would question his decision to attend ITT Tech, he said. He took administrative jobs over the next decade until he finally landed a job in 2014 with Xerox. He processes applications for new Medicaid enrollees.

“[The loans] are constantly weighing on me now,” he said. “They’ll allow you to pile forbearance on top of forbearance, but that interest builds up.”

Tyler McCormick, age 34, graduated from ITT Tech’s Bessemer, Ala., campus in June 2015. He’s considering filing bankruptcy to relieve part of his $70,000 in federal and private student debt.

About 100 miles away in Norfolk, 31-year-old Michael Ragsdale says he has little to show for the $20,000 in student loans that piled up during his years at ITT Tech.

Ragsdale enrolled in ITT Tech in 2005 when he attended a recruitment fair at a mall near campus. What drew him in was a sign that offered a free laptop. His computer had recently died, and he couldn’t afford a new one. He signed up to visit the campus that day.

“[The laptop] wasn’t free, of course. That cost is rolled into your student loans,” he said. “They suckered me in then, and it’s tough to relive it all now.”

Ragsdale, who uses a wheelchair, applied for the game design program but was put into network design classes, which he stuck with at the time. After a year, Ragsdale withdrew from the program and decided to attend a local community college. He later transferred to a four-year college. He now works for the college’s Residence Hall Association.

Professionally, he tries to pretend like ITT Tech never happened. “Like many ITT students, I now only put my community college and four-year college on my resume,” he said. “I don’t work in my field of study, but I’m happy where I am.”

Ragsdale hopes to help others like him find a good career despite ITT Tech.

“You can turn your life around,” he said. “The world doesn’t end with the collapse of ITT.”

ITT Tech Brandon

Waiting for answers

Brandon VanVorst, age 30, signed up for computer networking classes at ITT Tech’s Albany, N.Y., campus in 2009 because it offered him the option to continue working his full-time job in the restaurant industry and take both day and night classes. For the first few semesters, the arrangement worked. His employers knew he was taking classes, and his guidance counselors helped him find the best classes to fit his schedule.

After six months, however, staffing dropped, and the campus cut back on class offerings. The available classes didn’t fit VanVorst’s work schedule, but the guidance counselor signed him up anyway. To continue qualifying for federal financial aid, he had to take at least three classes. He failed several due to poor attendance, racking up $40,000 in student loan debt in the process.

Kandi Canales, age 46, was halfway through a two-year nursing program at ITT Tech's Norfolk, Va., campus when the school announced it was closing for good.
Kandi Canales, age 46, was halfway through a two-year nursing program at ITT Tech’s Norfolk, Va., campus when the school announced it was closing for good.

“They would sign me up for classes that I couldn’t take and wouldn’t work with me on flexibility,” he said. “The selling point of ITT is that adults can better their careers, but in reality, it doesn’t work for those who have real jobs.”

VanVorst put his federal loans in forbearance two months ago and filed a defense to repayment application in hopes that he can receive loan forgiveness. He’d like to be reimbursed for the classes that he couldn’t attend based on the scheduling, which shows up on his transcript as failures due to attendance.

“I do have a job in the IT world, and I’ve climbed the company chain because of my work ethic,” he said. “So many people have said they believe their degree is worthless, but to me, the person holding the piece of paper makes it worth it.”

Tyler McCormick, age 34, graduated from ITT Tech’s Bessemer, Ala., campus in June 2015. His $70,000 in federal and private student loans were in deferment through the end of August. Just days before ITT Tech announced its closing, McCormick received a bill for the entire amount of his loan. Now he’s seeing loan consolidation ads online for ITT Tech students.

“The vultures are trying to swoop in and take advantage of students,” he said. “I’m trying to take a breath and pause for a second.”

McCormick is contacting lawyers in his area for professional advice before making decisions and considering Chapter 7 bankruptcy as an option. He’s heard through several ITT Tech student groups on social media that lawyers have been reluctant to take cases because everything is still up in the air.

“I learned about computers, not bankruptcy,” he said. “I think we all need to step back and see what professional student loan experts say.”

ITT Tech Kandi

Finding a way forward

Kandi Canales, age 46, was shocked when she opened her email to find news about ITT Tech’s closing last Tuesday. Canales completed her first year in the nursing program at the Norfolk, Va., campus and planned to start the next quarter on Sept. 12. Instead, she no longer had a school to attend.

“I got sick to my stomach because I’ve worked very hard to get where I am,” she said. “I started crying and even threw up. It took me back to how I felt in 2011 when my 20-year marriage ended.”

She heard rumors about trouble at ITT Tech but hadn’t paid much attention to the media coverage. It was her psychology instructor who told her about the new student ban in late August.

“None of us thought anything about it, just that we wouldn’t have new students coming to the school,” she said. “But on Tuesday morning at 8 a.m., an email went out that ITT closed, effective immediately. That’s the only notice we received.”

Canales is one of many nursing students across the country struggling to figure out the next step. In the ITT Tech Warriors group on Facebook, several students are turning to their state nursing boards for permission to complete programs at other schools or sit for licensing exams. Canales scheduled an appointment to visit her local community college on Friday, take a placement exam, apply for new financial aid, and start again next semester.

“At my age, there is no option to sit back and say, ‘Woe is me.’ I have to keep moving forward,” Canales said. “I have to start from scratch all over again, but I’m going to get this degree.”

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ITT Tech Students: Here’s How To Get Your Student Loans Forgiven

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The school year is over for 45,000 ITT Tech students before it even began. Less than two weeks after it was banned by the federal government from enrolling any more pupils for the coming academic year, the school’s parent company announced it will shutter all 137 ITT Technical Institute campuses in the U.S.

The closure is the final chapter of a two-year-long regulatory saga for Carmel, Ind.,-based ITT Educational Services, Inc. ITT Tech has been under investigation by government officials for underperformance, alleged fraud and deceptive marketing tactics since August 2014. It’s not the first for-profit to buckle under increased federal scrutiny. Last year, now-defunct Corinthian Colleges, Inc. shuttered over 100 campuses under similar circumstances.

ITT’s fate may be sealed, but its students’ futures are far less certain. The vast majority of for-profit students take on large sums of student debt to fund their tuition. Roughly 35,000 of ITT’s 45,000 students will be eligible for some form of student debt relief, according to the U.S. Department of Education (ED). If each and every student were to file for discharge, the ED could be on the hook for as much as $500 million, ED Under Secretary Ted Mitchell said on a call with reporters Tuesday. And most of that burden would fall on taxpayer’s shoulders. The ED only required ITT Tech to set aside $123.65 million to cover loan restitution.

“I have no doubt that our decision to take action was the right one in service of these goals,” Mitchell said. “But I also recognize that today’s news may cause disruption, confusion, and disappointment to many of ITT’s current students.”

Students of schools that abruptly shut down have few different routes they can take to continue their education and have their student loan debt forgiven.

Here are the three best options:

Option 1: File for Federal Loan Discharge

Who’s eligible: Students are eligible for a federal loan discharge if: Their school closed while they were enrolled and before they were able to complete their program, or if they withdrew from their school’s program at least 120 days before the school closed.

Photo by Dwight Burdette/Wikimedia Commons
Photo by Dwight Burdette/Wikimedia Commons

What a federal discharge means:

A federal loan discharge would wipe away any federal loan debt incurred while attending ITT Tech. If students think they qualify for loan discharge, they should contact their loan servicer. To find your loan servicer’s information, along with information about your loans, log into your student loan account at studentaid.ed.gov.

You should continue making payments on your student loans while your discharge status is being determined, the ED recommends. If you miss payments, they could go into default and negatively impact your credit history.

If your loans are approved for a discharge, you will no longer have to make payments and you should receive a refund for past payments. All negative information on your credit history related to those discharged loans should be removed.

Option 2: Transfer credits to a new school

It’s likely some students will want to transfer their ITT Tech credits to another institution and continue their education. But it’s important to know that transferring credits can impact their eligibility for potential student loan relief.

“If a student goes to the same program, then there wouldn’t be any discharge,” Mitchell said. “But if a student were to transfer into a different program then they are likely eligible for a discharge.”

For example, if a student chooses to switch majors from business to public health, then some or all of their federal loans used to pay for business credits obtained at ITT may be discharged.

On the other hand, if the student chooses to pursue the same program, their loans will most likely not be discharged — even if the new institution does not accept some of their ITT Tech credits. Unfortunately, many students may run into this problem.

The ED has been “working hard with community colleges and institutions to help encourage them to be as flexible as they can be with ITT students,” Mitchell said. “For students who choose to restart or continue their education at another college, we encourage them to carefully consider factors like program quality and cost.”

Option 3: File a Borrower’s Defense Claim

Who’s eligible: Anyone who feels they have been defrauded by ITT Tech (for example,you felt their recruiting practices were deceptive) . This may be the only option for ITT Tech graduates who are left with student loan debt but are not eligible for federal student loan discharge.

What it is: When a student files a borrower’s defense claim , they are asking the ED to forgive student loan debt incurred while attending a higher education institution. A student can file a borrower’s defense claim even if their school has not been closed.

In order for a claim to be successful, the student must prove the institution committed fraud.

The ED is still investigating ITT Tech for evidence that it defrauded students in some way. But until those findings are finalized, the burden of proof will be on students, who will have to come up with their own evidence of fraud in order to file a claim.

As it stands, the process for filing a borrower’s defense claim has yet to be streamlined online, but there is a full list of required materials that you can find here. Once the ED receives your documents, eligible loans will be placed in forbearance and any ongoing collection efforts on defaulted loans will cease. (Note: Interest will still be accruing.)

Lastly, be sure to bookmark this website (studentaid.gov/itt) to stay on top of updates from the ED on how ITT Tech’s closure will impact students.

Have you been impacted by the ITT Tech closure? E-mail us at info@magnifymoney.com 

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3 Big Money Mistakes Your Freshman is Likely to Make

College is a time for adventure, growth and learning, but it can also be a time for silly financial mistakes if your freshman isn’t careful. This will likely be the first time your kid is out in the world on her own, so it makes sense that she’ll want to try new things. But her actions might come with some serious and long-lasting financial consequences unless you can help point her in the right direction first.

Here are five mistakes college freshmen often make when it comes to their finances — and how you can help your child avoid them.

1. They choose a college without considering the price tag

While it’s true that going to a good college is important these days, that doesn’t necessarily mean that your kid needs to go to the most expensive college to score his dream job after school. If your kid has always dreamed of going to a specific, but expensive, school, sit down with him at least a year or two out of applying to talk about how he’ll pay for it. The U.S. government recently launched the College Scorecard, where you can easily search for a school and see how its students fare financially after graduation. It might change his mind if he sees most students graduate from his dream school with tons of student loan debt. If your kid is willing to be a little flexible, you might want to point him towards one of these 20 most rewarding colleges for student loan borrowers, which ranks the best schools for generating the highest income after accounting for loan expenses.

2. They apply for credit cards before they learn how to use them

Luckily it’s gotten much harder for banks and credit card companies to market credit cards to students on college campuses. But the temptation to apply for credit will still be there. The second your kid applies for a credit card, she starts building a credit history that will follow her for at least the next seven years. A smart way to give her experience with some supervision is to add her as an authorized user on your credit card account. You can keep track of her spending habits and she can start building credit while she’s still in school. But don’t just pay the bill off each month without question. Talk to her about her credit score, what a credit report is for and how interest works. If you think it’s a good idea for your kid to dip her toe into the credit card world independently, consider starting her out with one of these best credit card options for college students. 

3. They never learn how to budget

The road to financial security starts with one simple building block: a budget. Unfortunately, budgeting isn’t something that comes naturally to everyone — especially for college freshman who may be trying to balance a job, classes, parties, and outings with friends. While your college kid probably won’t have a ton of disposable income to work with, it’s still a good idea to talk to him ahead of time about how to set up a budget, even when it’s just a limited amount of money he’ll be dealing with. If they can stick to a budget, they can also avoid costly mistakes like overdrawing their bank account, which can lead to all kinds of painful fees. During that conversation you can discuss the importance of an emergency savings account (because even college kids need an emergency savings account), how to divvy up income into necessary expenses and fun money, as well as how, once he graduates, he’ll likely need to put some extra money aside for retirement savings, as well.

The post 3 Big Money Mistakes Your Freshman is Likely to Make appeared first on MagnifyMoney.

3 Big Money Mistakes Your Freshman is Likely to Make

College is a time for adventure, growth and learning, but it can also be a time for silly financial mistakes if your freshman isn’t careful. This will likely be the first time your kid is out in the world on her own, so it makes sense that she’ll want to try new things. But her actions might come with some serious and long-lasting financial consequences unless you can help point her in the right direction first.

Here are five mistakes college freshmen often make when it comes to their finances — and how you can help your child avoid them.

1. They choose a college without considering the price tag

While it’s true that going to a good college is important these days, that doesn’t necessarily mean that your kid needs to go to the most expensive college to score his dream job after school. If your kid has always dreamed of going to a specific, but expensive, school, sit down with him at least a year or two out of applying to talk about how he’ll pay for it. The U.S. government recently launched the College Scorecard, where you can easily search for a school and see how its students fare financially after graduation. It might change his mind if he sees most students graduate from his dream school with tons of student loan debt. If your kid is willing to be a little flexible, you might want to point him towards one of these 20 most rewarding colleges for student loan borrowers, which ranks the best schools for generating the highest income after accounting for loan expenses.

2. They apply for credit cards before they learn how to use them

Luckily it’s gotten much harder for banks and credit card companies to market credit cards to students on college campuses. But the temptation to apply for credit will still be there. The second your kid applies for a credit card, she starts building a credit history that will follow her for at least the next seven years. A smart way to give her experience with some supervision is to add her as an authorized user on your credit card account. You can keep track of her spending habits and she can start building credit while she’s still in school. But don’t just pay the bill off each month without question. Talk to her about her credit score, what a credit report is for and how interest works. If you think it’s a good idea for your kid to dip her toe into the credit card world independently, consider starting her out with one of these best credit card options for college students. 

3. They never learn how to budget

The road to financial security starts with one simple building block: a budget. Unfortunately, budgeting isn’t something that comes naturally to everyone — especially for college freshman who may be trying to balance a job, classes, parties, and outings with friends. While your college kid probably won’t have a ton of disposable income to work with, it’s still a good idea to talk to him ahead of time about how to set up a budget, even when it’s just a limited amount of money he’ll be dealing with. If they can stick to a budget, they can also avoid costly mistakes like overdrawing their bank account, which can lead to all kinds of painful fees. During that conversation you can discuss the importance of an emergency savings account (because even college kids need an emergency savings account), how to divvy up income into necessary expenses and fun money, as well as how, once he graduates, he’ll likely need to put some extra money aside for retirement savings, as well.

The post 3 Big Money Mistakes Your Freshman is Likely to Make appeared first on MagnifyMoney.