Sending a recent high school graduate off to college can be quite a nerve-wracking experience for both the child and the parents.
It is a time for young adults to stretch out and grow and learn independence away from their parents’ protective arms. And that is usually accompanied by the inevitable growing pains.
And parents have to learn to entrust their kids to do so in a reasonable, responsible manner.
When it comes to finances, it can be particularly vexing as negotiating the oft-times confusing world of money can be a true hurdle to success.
As a matter of fact, one of the leading reasons students do not finish their education is finances, says Robin Brule, chief community engagement officer at Nusenda.
And sometimes those numbers can be relatively small but can loom large to a student feeling financial angst.
“This could be as low as a few hundred dollars and that is causing a student from not being retained,” Brule says. “There are financial aid offices on campus. There are ways to work through these things and they try to work with them to figure it out. It’s much harder to get them back in once they’ve left. There are options.”
Last week, Gov. Michelle Lujan Grisham proposed a New Mexico Opportunity Scholarship, which would cover the tuition gap left after a student receives financial aid, including the New Mexico Lottery Scholarship. Most students would qualify for essentially free college when staying in state.
Parents have to be careful to not come across as lecturing the young adults, Brule adds, but should rather try to find some commonalities to make discussions easier to digest.
“You have to have an awareness factor without judgment,” Brule says. “Often times they’re struggling for independence, transitioning from being with their parents to independence and money becomes a problem but they don’t want to admit it to mom and dad that they’re having struggles. You want to be able to talk to them without your child feeling, ‘Here they go again.'”
When it comes to financial literacy for both parents and the college student, Alan Shettlesworth, Main Bank president and chief operating officer, recommends doing some research.
“For college-age kids, just learning to manage a budget and/or cash flow is important,” he says. “Simple things like each month they have this much money and they have to pay rent and buy food. Understanding a simple budget and cash flow.”
There are numerous financial literacy websites online, Shettlesworth says.
And parents can open a joint account with the student so it’s easy to deposit money at home, while the student can access it at college.
Some parents look into joint, co-signed credit cards – students can’t qualify for their own until they are 21 – but Shettlesworth recommends against that since it is too easy to build up debt.
Instead, he says, get a debit card that can be loaded with money for the student to use as needed.
Two important aspects of keeping college affordable is not to overdo it on campus housing or meal plans.
While some colleges require campus housing for incoming freshmen, keeping those expenses to a minimum is a good way to manage potential debt, says Annitte Lujan, State Employees Credit Union vice president of operations.
“One of the priorities is not to overspend on housing,” she says. “We do see that a lot.”
Staying in dorms is often more expensive than living off campus. If they do live in a dorm, “people can look to have a double occupancy room or where they have suitmates that’s a lot cheaper,” Lujan adds.
Likewise with the meal plan.
“Sometimes the general meal plan is required when you’re a freshmen, but it can be really expensive if you get the 24-7 plan,” she says. “We recommend instead that you get the very basic required, then you can purchase cheaper meals on your own. Your snacks, raman, mac and cheese.”
An easy way to stay on budget is to avoid the little extras that can add up, like the fancy coffee from the shop or withdrawing money for a fee from a different bank’s ATM, Brule says.
“They need to ask themselves how many times are they eating out or buying a cup of coffee,” she says. “You get that cup of coffee four or five times a week and over a month, that’s $50. You don’t think about it but over the course of the (school) year, that’s over $500.”
Those little things can turn into big expenses if not managed, Brule says.
“It’s the things that you don’t see that aren’t substantial, but that are substantial when you add them up,” she says.
More college campuses are providing support for students about how to manage finances on campus, Brule says.
Nusenda is working with the University of New Mexico to offer help provided by students who have been trained to deal with financial issues that students face.
“They’re more likely to talk with a peer who understands what they’re going through and can give them advice that they can relate to,” Brule says. “It’s important for them to know there are networks and places where they can get more information in a way that doesn’t sound like another lecture.”