Making a college financial checklist

How to manage your money while at school

Off-to-college checklists are filled with items such as extra-long dorm sheets, surge protectors, headphones, shower caddies, boots, lots of underwear and plenty of shampoo.

But it’s also good to pack up some financial tips before heading off to college. What kind of things should a freshman know about banks, budgets and borrowing on the road to getting that diploma?

Sign up for bank alerts

Should you take time to figure out a way to get an alert that your checking account now has less than $100? You bet.

There are a variety of ways to get this done — banking apps, text alerts, push notifications — and they’re worth doing to spot fraud and potential trouble spots that can trigger overdraft fees, said Mark Schwanhausser, director of omnichannel financial services for Javelin Strategy & Research.

“The apps are the simplest way to get things done,” he said.

Parents might want to get the alerts as well, if possible.

Matt Schulz, senior industry analyst for CreditCards.com, said such alerts are important with credit cards, too, as a way to avoid late fees on payments.

It’s important to warn college students that identity thieves do pretend to be a bank or credit union when they’re sending emails or text messages, too. Don’t respond by handing over your account number information or other key ID information.

The Consumer Federation of America suggests that if you’re shopping for a bank account for a college student look for ATMs that would be convenient or free to use for the student. You don’t want huge ATM fees.

Avoid scholarship scams

The Federal Trade Commission warns that some sketchy operators will ask that you provide a credit card number to “hold” a scholarship in your name. Never fall for that one.

Don’t pay an advance fee to apply for scholarships. Don’t fall for phrases like “the scholarship is guaranteed or your money back.”

A ‘welcome to reality’ talk

My husband likes to use the term “welcome to reality” when he talks to our teen son about all sorts of things. But it’s a great intro for talking about just how much things can cost. It’s tough to stick to a budget if you’re not paying attention to the real cost of filling the gas tank, going to the movies, eating out and paying other bills such as car insurance, cable, Internet and utilities.

Many students work for spending money, but many do not try to create a budget, according to a U.S. Bank survey on college students and their money. About 21% of the students surveyed said they are barely keeping up on day-to-day expenses, and 44% said they have little or no knowledge of creating and maintaining a budget.

When working during the summer, save as much as possible to cover costs at school. Skimp on spending and skip high-cost habits.

“Don’t spend your financial aid on luxury items because you have ‘extra’ money available. It will cost you more in the long run,” said April M. Clobes, president and CEO of the Michigan State University Federal Credit Union.

Build a small emergency savings fund, too. So if the transmission goes on the car, you might have enough money to pay for it.

A credit card? Maybe

While no one wants a son or daughter to go out and get a string of credit cards, some financial experts say it’s not an entirely bad idea for college students to open one lowrate, low-cost credit card. It’s possible to start with a low limit as well, such as $500.

Gerri Detweiler, at Credit.com, said college students need to put limits on how much they buy with credit. “Don’t use your credit card as if you’ve already graduated,” Detweiler said.

Pay off that balance every month so you don’t add credit card debt on top of student loans.

Credit.com and other sites list credit cards that can be good for college students. You want to keep an eye on fees and make sure you understand how high the interest rate will go after any promotional rates end.

Keep debt low

Go to college to get a diploma — not to dig a deep hole of debt.

There are various calculators to help you figure out the eventual monthly payment for college loans. But a very general rule of thumb is: If you borrow $35,000 for college, you’re going to pay about $350 a month to repay student loans over a 10-year time frame.

The monthly loan payment is roughly 1% of the total student loan balance at the time of repayment, said Mark Kantrowitz, college debt expert and senior vice president and publisher for Edvisors.com. So $50,000 could translate into a roughly $500 a month bill on a 10-year repayment plan.