When it comes to college and money, there’s not much that is a secret these days. Tuition is transparent — pricey, but transparent — and the costs of room and board are readily available with a few clicks of a mouse. Likewise, it’s no secret that our young people struggle to manage their money. Survey after survey (most recently, a joint one from the U.S Treasury and the Department of Education) has revealed that the financial literacy of millennials is at an all-time low.
So, if you’re sending Junior off to school this fall, you might think that you know everything there is to know about where your money is likely to go. Right? Wrong. After talking with a few recent grads and doing some digging, I’ve discovered there are a few things your college student doesn’t want you to know.
Money Secret #1: Books don’t really cost $2,000 per semester. According to CollegeBoard, books for classes cost an average of roughly $1,200 per year. That means $600 per semester. Now that’s an average, and if your budding engineer has taken on seven classes, the bookstore bill will likely be fairly high. But if your son or daughter is following a regular course load, he or she shouldn’t be spending two grand per semester.
So where is the money going? Sweatshirts. Ipods. Computers. You name it. Bookstores aren’t just bookstores these days, and college students know that. Some schools — like my alma mater, the University of Pennsylvania — allow students to charge their books directly to their bursar bill, but all that you see on the bill is the lump sum, so it’s easy to slip in a DVD here and an iHome there. “We learned about it as mere freshmen; we were told it was a convenient way to charge iPods to our unsuspecting parents,” wrote a student on a UPenn blog. Well, now you’re not so unsuspecting.
Money Secret #2: Your kid is spending the money you send for groceries on beer. Okay, maybe this isn’t the biggest secret in the world, but you might be surprised at how much college students are spending on alcohol. According the the U.S Department of Health, college students spend a total of $5.5 billion per year on booze. By some estimates, that breaks down to $50 per student per month just on beer. Maybe you should send a care package instead.
Money Secret #3: Out-of-network ATM fees add up fast! This happens because students don’t know any better. Many student centers and campus hubs now have ATMs, but unless that ATM is in your network, you’ll get hit with a fee. Make sure your child understands this. The best thing to do is open an account with an area bank that has plenty of branch locations near the campus.
Money Secret #4: Procrastination carries a high price. As I note in my new book, Money Rules, “Doing nothing can be very expensive.” Case in point: Your child forgets to buy a book for a class and has to rush order it before an exam and pay for express shipping. Or he has the list of course materials weeks ahead of time but only hits the bookstore the night before, when all the “used” options are gone and only new is available. As one mom ranted on CollegeConfidential.com, “Nothing beat the first term when she spent $1,200 on her books. She bought them all at the bookstore. She didn’t have any idea what she needed until the last minute. Not good!”
Money Secret #5: They’re not taking a full course load. This may be the biggest financial sinkhole (I mean secret) of all. Graduation rates vary depending upon the school, but in general, it’s taking kids longer and longer to finish their degrees — as many as six years, in some cases. At many schools, taking just three courses per semester is considered taking classes “full time,” and as a result, will cost you full-time tuition — the same amount you would pay for four or five courses per semester (which is what most students need to take to finish in four years). Make sure your child knows that the three-course minimum is unacceptable, and that you won’t be paying tuition for a fifth year of school.
With reporting by Maggie McGrath