Don't Forget the Books: Patch Chats about College Finances

By Grahame Turner

There are a few things about overdraft fees, savings accounts and credit cards students should know before they head off to college. 

On Thursday, Patch and some of our readers sat down with Rockland Trust's Executive Vice President and Director of Retail Delivery Jane Lundquist to ask some tough questions about college finances, and what college freshmen should do with their cash.

Should students have a bank account in their name? Lundquist says yes, and setting up a savings account is a good way to start learning to keep money aside for a rainy day. 

One of the biggest things families forget to budget for, she told us, is school books. Depending on the student's major, lab or other supplies are also easy to lose track of. 

If you want some more information, you can read a full transcript of her questions from Thursday's chat. 

Here are a few of the big questions Lundquist answered:

Marie (Patch Live-chatter): My daughter is heading to school for the first time this fall. Where do I start with budgeting? Is it monthly or by semester? What's been your best experience?

Lundquist: Marie, I really like that question as this is part of the learning experience from college.

I recommend that you develop a budget for the semester on what will be needed outside of tuition - it might include books (if not part of the tuition), clothes, food or fun activities. Tell your student that this is the amount you will give them for the semester for these items and that they need to monitor their spending to ensure it lasts for the entire semester or term. You have just started teaching your child about financial management and budgeting with this process!

Patch: How much money do I need to budget per month if I’m not planning on working while in school?

Lundquist: I think the best answer is that it all depends – does your tuition include an amount that is allocated for books and supplies where your student has a credit at the college book store or do you need to budget this amount on your own.

I recommend that you look at the information at the college regarding tuition and fees to understand what is included. They also usually give estimates of total costs including those not included in the tuition and fee bill. That information is needed to determine budget needs over and above what you pay for tuition.

Patch: How do I prevent from over drafting?

Lundquist: Today, there are great tools for everyone to use to avoid over drafting their accounts. 

I recommend setting low balance alerts within online banking where you can have a text message sent to your phone or an email sent to you to let you know you have hit the low balance level you set. 

Be sure to set an amount that leaves you enough funds to get by on before you call Mom or Dad to ask for more. For instance, set the alert for $50, $100 or $200 to know in advance you are getting low on funds.

Anne (Patch Live-chatter): if [A credit card is] in their name, but the parent is responsible, does it help them begin to build a credit history?

Lundquist: A great question! Unfortunately, if you give them a card that is an additional card on your existing credit card account, it does not build any credit history for them. 

Both of my college graduates had to wait until after college when they had jobs to obtain a credit card in their name and begin to build credit.

Tom (Patch Live-chatter): How can a college graduate reasonably expect to own a car, own a home or start a family when they are saddled with paying back huge college loans.

Lundquist: It starts with spending time doing a budget to ensure that you can comfortably live on what you are earning as well as pay your existing college debt. You may need to begin a savings plan to accumulate the funds needed for the major purchases you desire - a car or a home. I recommend that you set up a savings account to ensure you do not spend your savings on day to day expenses to help meet these large purchase goals. It really is all about smart budgeting and building financial acumen.

Want more tips? Have more questions about college finances? Read the full transcript from Thursday's chat.