Finances critical for college students

This was originally published on Monday, April 22, 2019, in the Pacific Daily News.  Click here to subscribe to the PDN.

College students face many difficult financial decisions when it comes to managing their money. Often, they do not realize that their financial performance in college will impact them long after they graduate.

Decisions they make on using their credit cards, financial aid and spending can impact their job search, their credit score and their ability to pay back what they borrowed. As young adults they need to figure out how to pay for college, earn some spending money and still go to class and get good grades.

  • College is the best time to start thinking about being financially sound and getting into the habit of creating and using a budget. A student’s financial responsibilities are still simple and manageable. It will not take long to create a budget.

It’s easy to lose track of spending and having a budget ensures that they will know exactly where their money is going. Today’s technology makes it easier with apps that they can use directly from their smartphone.

  • Credit card debt.Credit cards are a convenient way to pay for college necessities and can play an important role in establishing a college student’s credit history. Schools sometimes allow financial institutions to come on campus during open house or orientation. The financial institutions usually offer credit cards for college students.

Because students may not have favorable credit yet or do not have income, these credit cards have high interest rates, unfavorable terms and allow students to spend more money than they earn. At times, the financial institution may require parents to be a co-signer.

If the student only pays the minimum monthly payment, they may be stuck paying their credit card debt years after they graduate. In worse scenarios it could affect their credit score and that of their parents, if they are co-signers.

Teach college students how to use credit cards wisely, paying the bill on time and only charging what they can afford to pay in full. Inform them of the consequences if they pay late or do not pay off their debt in full.

  • Peer pressure.Living on their own without parental supervision leaves students open for all sorts of peer pressure. With their newfound independence, some students can get into financial trouble trying to keep up with their friends, who may not be financially savvy or have a larger spending limit from their parents. They may be pressured into eating out more often, buying more clothing than they need, going out on the weekends or planning a costly vacation during their breaks.
  • Failing classes.For many years your child has attended school and followed a strict schedule. Even their after-school activities and homework are carefully monitored. College is very different from what they have been accustomed.

Some professors may not expect students to be in class every session and, depending on their course load, they may have a lot of time that they may consider free. Socializing is also a big part of the college experience. This new freedom could lead to academic troubles and financial troubles.

Dropping classes may result in forfeiture of the tuition and retaking classes is expensive and could prolong their time in college. If it becomes a trend, they may be put on academic probation or, worse, expelled. There may be fees associated with failing a class and loss of scholarships and/or grants. Being accepted by another college will become difficult.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 25 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at http://www.moneymattersguam.wordpress.com.

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College students need a budget

This was originally published on Monday, April 15, 2019, in the Pacific Daily News.  Click here to subscribe to the PDN.

College or career school costs can vary significantly and there are many schools with affordable tuition and generous financial assistance. Make sure to research all schools that may meet your academic and financial needs.

Set a budget and stick to it. Determining a budget will help you compare anticipated college or career school expenses against your potential available income and financial aid. You also can use a budget to compare costs between different schools.

  • Tuition and fees:Tuition is the cost of the classes and can vary depending on the school you attend and the number of classes (or credits) you plan to take each semester. The major you are perusing can also influence the price of tuition.

For example, resources and supplies used in engineering or computing may be more expensive than the needs of business majors.

Tuition fees may include student parking, library access, lab fees and other campus services.

You may be required to put a down payment to enroll you in your classes. Most colleges will offer a payment plan.

Tuition costs will also be higher if you are an out-of-state student.

  • Living expenses: Besides the costs of books, tuition, room and board, you will incur other incidental costs. You should enjoy your college experience, attend games, enjoy a night out on the town and take in the local attractions. Balance studies with fun.

Create a budget to help you stay on track. Whether you are living in the dorms or renting an apartment, you will have to purchase necessary items to furnish your new living quarters. Many rentals around the campus have fully furnished apartments to rent.

Other costs may include a computer, printer, microwave, small fridge, bedding and towels. You may also need other equipment for certain classes.

Don’t forget to add mobile phone and seasonal clothing.

To offset some of your living costs, you may want to get a part-time job. Many local restaurants around the campus hire college students. You can also find part-time employment on campus.

  • Health care: Most young adults can stay on their parents’ family health plan until they turn 26, even if they are married or not living with their parents. Some schools offer a student health plan which can be an affordable way to get basic insurance coverage.

According to the healthcare.gov web site, a student health plan will count as qualifying health coverage. This means you are considered covered under the health care law and won’t have to pay the penalty for not having insurance. Be sure to check with the plan to be sure.

If you are under your parents’ family plan, be sure to find what local hospitals and clinics will accept your insurance and how much will be your co-pay.

  • Travel:You may want to include a yearly flight back home. If mass transportation isn’t available, you may also want to think about how you will get around. If you purchase a car, remember to add insurance, fuel and maintenance to your budget.

If you live off campus and public transportation is available, you will want to add that into your budget as well.

Bicycles are a great mode of transportation while in college. The added benefits using a bicycle is you get a little exercise, you can lock your bicycle near your classroom and you avoid parking fees.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 25 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at http://www.moneymattersguam.wordpress.com.

Costs associated with college

This was originally published on Monday, April  , 2019, in the Pacific Daily News.  Click here to subscribe to the PDN.

Paying for college is expensive and many families are feeling the pinch as tuition costs soar. Converting dollars into knowledge isn’t cheap these days and it gets more expensive every year.

College tuition prices are a lot higher today compared with two decades ago. According to U.S. News data, the average cost for tuition and fees among national universities has risen significantly since the late 1990s.

Increases aren’t limited to universities; costs at other four-year institutions and community colleges have also risen.

SAT/ACT: Taking the SAT and the ACT tests cost money. For both tests, you can send your scores to four colleges for free. However, if you are applying to more than four schools, you will need to cover the cost to send the additional scores.

A waitlist fee can also be assessed if you register after the late registration deadline and are seated on the test day. If you change the test date or the location of the test, that too will cost.

Both tests have an optional service that sends you the test questions and the correct answers for a fee. There’s another fee if you need to expedite sending your scores.

Transcripts: You will need to send your high school transcripts to the schools to which you are applying. If you are going directly from high school into college, speak with your guidance counselor to understand the cost and process for doing this.

If you graduated from high school a while ago, you will have to contact your high school. Be aware that there may be a cost for each transcript request. Some colleges may require the transcripts go through a third party that will add extra costs.

Books and supplies: College students pay an average of $607 per year on books and course materials. Some new textbooks can cost more than $100. The cost of the class varies with each term.

To cut costs, utilize gently used books, electronic texts or rent your textbook. You can also sell your books when you are done with your class to recoup the cost of next semester’s book costs.

Application: For each school to which you apply, you’ll likely be responsible for an application fee and maybe a processing fee. According to a study by U.S. News and World Report, the average application fee is about $42.

Room and board: Once you are accepted to the school you wish to attend, you will need to start thinking about where to live. Some universities require out-of-state students to live on campus their first, and sometimes second, year. If you will be living in the dormitories you will likely need to make a deposit to hold your place in student housing.

Some room-and-board costs include a meal plan. Many colleges offer different meal plans to fit your budget. If you are living off campus, you can save money by not opting into the meal plan.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 25 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog atwww.moneymattersguam.wordpress.com.

Start planning for college

This was originally published on Monday, May 28, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

College is an exciting time for many. It’s important to start thinking about college as early as the high school freshman year. As you get ready to apply, start getting organized and be sure to be mindful of deadlines. Missing some of these deadlines can be costly or even cause you to postpone your start date.

It is important to prepare for the years to come and have a plan for how are you are going to complete your degree. Regardless what you plan to study and where you plan to attend school, you need to have a plan.

Junior year

This is the time where the choice of school has narrowed. Get on the colleges’ mailing lists for catalogs and other materials that can help you make your decision.

Taking your SAT or ACT is also a good idea. Numerous people take it several times to achieve a score they desire or just to shake off the nerves.

Start researching for scholarships or grants.

Senior year

This is the year where deadlines really come into play.

  • Fall. Meet with school guidance counselors to ensure you are on track to graduate and will meet college admission requirements. Also, ask them about college financial aid and learn about opportunities for scholarships and grants.

Start asking teachers, principals, coaches and other appropriate people for letters of recommendation. Start requesting for transcripts and begin applying to colleges and submitting applications for scholarships and grants.

Request for financial aid packages from colleges. If you are using a federal grant, your FAFSA, Free Application for Federal Student Aid form is available starting Jan. 1 of each year.

  • Spring. If you are going to need a private loan, start applying. Compare the financial aid offered from your chosen institutions. You may also want to check with your high school and chosen colleges if other scholarships or grants are available.

Payment options, clothing expenses

Decide on which college you want to attend and start discussing payment options. Many schools have a May 1 deadline to submit tuition deposits.

  • Summer before attending. Create a budget that includes expenses outside of your tuition and room and board. Include clothing, school supplies, transportation costs, and entertainment.

If you are living away from home, shop for room furnishings and décor. If you are going to a seasonal location you may need to consider clothing for the upcoming season.

You may want to get a summer job to help pay for expenses.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Many options to pay for college

This was originally published on Monday, May 21, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

Many students enrolled in college are using some form of financial aid — from a relative or a scholarship or grant. Many different entities, including the federal government, local government, schools and private nonprofit organizations offer scholarships or grants.

Scholarships often are awarded based on one’s accomplishments, merit and need. Grants tend to be based on financial needs.

  • Pell Grant. Depending on financial needs and school costs, undergraduate students may receive up to $6,095 for the 2018-2019 award year. You don’t need to pay back the Pell Grant and it can only be used to earn your first bachelor’s degree. Part-time students can utilize the Pell Grant, but they receive less than full-time students.
  • Federal Supplemental Educational Opportunity Grant.This grant is given to undergraduates with exceptional financial needs, the award ranges from $100 to $4,000 per year. This campus-based aid is administered by a college’s financial aid office, but isn’t offered at all schools.
  • Teacher Education Assistance for College and Higher Education Grants. This program provides grants of up to $4,000 a year to students studying to become teachers. Recipients of this grant must agree to teach certain classes, such as math, science, special education, foreign language or bilingual education, at a school that serves low-income families for a designated period of time.

Educational savings accounts

Other ways of paying for college are educational savings accounts. They differ from regular interest-earning savings accounts because they usually aren’t taxed.

  • Coverdell Education Savings Accounts.Formerly called an education IRA, this account allows families to set aside $2,000 per child each year to be used tax-free for educational purposes.
  • 529 plans. These allow you to choose from a selection of investment options, including mutual funds, stocks or fund portfolios, and earn interest on these investments tax-free.
  • Brokerage accounts. Brokerage accounts allow you to purchase and sell investments, including stocks, bonds and mutual funds, through a brokerage firm. You can take money out for educational expenses, but you’re taxed on any investment profits.

Student loans to help meet financial gap

Sometimes scholarships, grants and savings may not cover your complete costs. Taking out a student loan may help meet the financial gap.

  • Federal student loans.These loans are backed by the federal government and offer a low, fixed interest rate. Federal loans provide protection for borrowers, such as the ability to postpone or reduce payments during periods of financial hardship. A Free Application for Federal Student Aid form must be completed.
  • The William D. Ford Federal Direct Loan Program. This loan is funded by U.S. Department of Education and is one of the largest federal student loan programs. Loans may be subsidized — the government pays the loan interest while you attend school — or unsubsidized, in which the loan interest is deferred while you’re enrolled in school and later added to your loan balance. There is a PLUS loan that is awarded to graduate and doctoral students, or parents of undergraduates, to pay for college costs not covered by other financial aid.
  • Federal Perkins Loan Program.Not all schools participate in this loan because the school is the lender. Your payments are made to your school or their loan servicer.
  • Private student loans. These are offered through banks, credit unions, financial institutions, state agencies or schools. They’re a good way to pay for educational expenses not covered by other means. The interest rates depend on the borrower’s credit score and usually come with a higher interest rate.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

 

Consider upfront costs of a higher education

This was originally published on Monday, May 14, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

Higher education is a goal for many, whether they are graduating from high school or have been working for some time and want to position themselves for a promotion.

Education isn’t cheap. Over the years, the cost of education has steadily increased. Even before you start classes there are several upfront costs you should consider.

Fees for getting into college

Testing. Many colleges require SAT or ACT test scores. It costs money to take both tests. For both tests, you are able to send your score to four colleges. If you send them to more than four, you will incur the cost for each additional institution.

Transcripts. Whether it is high school transcripts or college courses you previously took, you will need to send them to the institution to which you are applying. The cost to send them varies, but each school you are applying to will need an official copy. Some schools will accept an email version of your transcripts if they come from a third party, which means more fees.

Application fees. The average application fee is about $42, according to a study by U.S. News & World Report. This fee is used to process your application.

Deposits. Once you are accepted and decide which school to attend, you may incur some fees. A tuition deposit may be needed to confirm your enrollment. If you are going to be living on campus, you may be asked for a housing deposit to reserve a dorm room or other quarters. If you are living off campus and renting a dwelling, you may have to pay a security deposit and sometimes the first and last month’s rent.

Once you’re in college

Books. College books aren’t cheap. Some books can cost more than $100 and some classes may require more than one book. Consider purchasing pre-used books, renting or downloading an e-version. You can also sell your books once you are done to help pay for the next semester’s book costs.

Tuition and fees. Tuition can be the largest expense you may have to consider. Costs vary depending if you are an in-state or out of state student. Your area of study can also determine how much your tuition costs. Some additional fees are parking, library, computer, dining hall, medical insurance and other campus services. Many institutions have monthly payment plans for your tuition.

Other costs. There are other costs you may have to consider, including  a computer, the cost to furnish your room and food.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

 

College decisions impact financial future

This was originally published on Monday, September 11, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

Many college students do not realize that their financial performance in college will impact them long after they graduate. Decisions they make on using their credit cards, financial aid, and over spending can impact their job search, their credit score, and their ability to payback what they borrowed.

Getting a good financial start out of college will ease the stress of the transition and open many more opportunities.

Failing classes. For many years your child has had a structured learning environment. They go to school and follow a strict schedule. After school, parents enforce homework and studying times.

College is very different from what they have been accustomed. Many professors don’t expect students to be in class every session and depending on their course load they may have a lot of time that they may consider free. Socializing is also a big part of the college experience. This new freedom could lead to academic troubles and financial troubles.

Retaking a class is expensive and could prolong their time in college. If it becomes a trend, they may be put on academic probation or worse, expelled. There may be fees associated with failing a class and loss of scholarships and/or grants. Being accepted by another college will become difficult. Student loans still must be paid off even though they are not in college.

Scholarship and grants. Being a student in college doesn’t mean they cannot continue to look for other scholarships and grants. Most believe that scholarships and grants are just for high school seniors going into college. In fact, there are many scholarship and grants that are targeted to students who are currently in college.

Have them speak with their academic adviser or counselor about these opportunities. They can also do some research online. Even if the amount is small or pays for certain expenses such as books, these opportunities can be a huge help. There is no rule to how many scholarships or grants you receive.

The more assistance you get the less you will have to pay or borrow.

Inappropriate use of assistance. Most scholarships or grants are paid directly to the school. But some are not and many student loans are paid directly to the student. This is very tempting to use unwisely. This money should not be used to fund a spring break trip.

Many students do not understand that paying for these loans right out of college is difficult. Most college students won’t be earning six-figure salaries at their first job; many of us don’t reach that level of income during our careers.

Large student loans. College tuition has been on the rise for years and it does not look like it will be leveling off any time soon. Many parents can no longer afford college tuition, living expenses, books and other incurred financial education related expenses.

Student loans are becoming a more popular way to fund higher education with the students being solely responsible. With that in mind, students should consider the cost of their education. Choosing a more affordable college in an area with lower living costs will certainly lower their debt. Be sure to understand the terms of the loan be for accepting it.

Even though your child is still in college, advise them to make monthly payments to keep the accrued interest from growing too large. The sooner they pay on the loan the better.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.