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Last Updated: Jul 2nd, 2008 - 21:15:22 |
(ARA) – Do you have a son or daughter leaving home for college this fall? Along with the requisite cell phone, CD/DVD player and wardrobe, are they prepared for the money needs they will be challenged with? Do they have the financial tools in their backpacks as they head off to one of over 4,100 colleges and universities in the United States? Here are some important facts to consider when assisting your student in making good financial decisions as he or she heads off to college:
* As reported in the 2004 Almanac of The Chronicle of Higher Education, more than 13.7 million undergraduate students were enrolled in college -- that’s one out of 21 people in the United States. So parents, you’re not alone in making some tough financial decisions.
* During the 2004-2005 academic year, The College Board reports that the estimated average annual cost of attendance was $30,295 at a four-year private college, $14,640 at a four-year public college and $11,350 at a two-year college. As the saying goes, paying for college is like buying a car every year -- the decision is whether it’s new or used.
* Student loans are critical for today’s college and university students. The American Council on Education reported in its 2003/2004 Survey Findings that two-thirds of students or their family members currently depend on these loans to pay college expenses.
* Teen Research Unlimited states that teens spent $169 billion in 2004. When they leave for college, making good financial choices becomes even more important.
As noted by these statistics, paying for their education and managing spending are critical to your student’s success in school.
Student Loans -- Covering the Big Costs
Student loans are some of the most commonly used financial tools. Student loans are funds borrowed from a financial institution or federal or state government. Education loans must be repaid. There are at least three types of education loans:
Federal Perkins Loan is a federal loan program administered by colleges. It’s available to both undergraduate and graduate students and is based on need and the availability of government funds. The annual interest rate is five percent. Repayment begins nine months after the student leaves school or is less than a half-time student.
Federal Stafford (student) Loans and Federal PLUS (parent) Loans are available through financial institutions, such as U.S. Bank, that participate in the FFEL program or through the federal government in the direct loan program. Currently rates are 4.70 percent for Stafford loans and 6.10 percent for PLUS loans, with maximum annual interest rates of 8.25 percent and 9 percent respectively.
Financial institution (or “supplemental”) loans are for students (or their parents) who attend participating colleges and graduate schools. They are not based on need. This type of loan can be used as a supplement or replacement for Federal loans. U.S. Bank offers a number of supplemental loans where students can borrow up to the entire annual cost of attendance, minus other financial aid received, at competitive interest rates.
Information on the U.S. Bank’s student loans can be found on the Web at usbank.com/studentloans or by phone at (800) 242-1200. One more thing -- even if you think you won’t qualify for college financial aid, try anyway. You might be pleasantly surprised and receive financial aid.
Checking Accounts -- Paying Everyday Bills
Moving in, finding the dining hall, the first week of classes. Students have enough to worry about without having to worry about their finances. That’s why it’s important for students to set up a checking account as soon as they arrive on campus.
A checking account, combined with a check card, is the most convenient way for a student to manage finances at school. Managing money on a daily basis is convenient and easy with a checking account. Not only can students pay bills, but also student loan payments can be deposited directly into their account and they can make everyday purchases -- like books at the campus bookstore -- with a Visa (R) Check Card. When a check card is used for purchases, the money will always come directly out of their checking account, so debt cannot be accumulated. When students learn to manage finances with a checking account, it offers a valuable education that will serve students well in college -- and beyond.
There are important features to consider when choosing a student checking account:
1. Does the bank offer a student checking account? Typically, banks that have a student checking account offer special features that meet the unique financial needs of a student.
2. Does the checking account have no minimum balance and no monthly service fee?
3. Does the checking account provide a free check card, free internet banking, free Internet bill pay and free online statements?
4. Does the checking account offer the student their first box of checks for free?
5. Does the checking account provide free ATM transactions at foreign ATMs (ATM machines outside of the student’s bank network) to help students while traveling abroad, home for the holidays or for spring break?
6. Does the account allow the student to earn rewards, just for using their check card?
7. Does the bank have a strong branch office network? Many students feel more comfortable with one-on-one customer service to answer questions or to talk about banking options after they graduate. Choose a bank that has branch office coverage in the state in which you live as well as the state in which the college is located.
8. Does the bank offer 24-hour customer service, 365 days a year?
For more information, visit usbank.com/studentbanking.
Plastic Cards -- Controlling Spending
College students need money for many things in their busy lives -- books, gas, clothes, travel and emergencies. A reloadable, prepaid card is the perfect tool. For example, the prepaid U.S. Bank Visa (R) Buxx Card has benefits for both students and parents. It's safer than cash, plus there's no risk of debt because students can only access the funds preloaded to the card. Also it is a great tool to help students develop positive financial skills they'll use throughout their life. Parents load the card, track purchases and balance information online and can even set up an automatic allowance schedule. Students may use the card everywhere Visa debit cards are accepted, including online and at the ATM. For more information, visit usbank.com/buxx1 or any U.S. Bank branch.
Shopping for everyday needs will probably be a new experience for college students. Finding a conservative, low-cost credit card may now prove to be a necessity. Watch out for low introductory rates that often increase soon after the cards are used. Instead find cards with reasonable interest rates and low maximum balances and spending limits. Even more helpful, encourage your student to pay off their balance monthly, and incur no interest charges. Newer cards now allow students to earn rewards for all purchases. The U.S. Bank College Rewards Visa Card allows students to manage their own finances, while earning points towards free entertainment and merchandise -- as they can earn one point for every net purchase dollar charged -- with points good for CD's, media rentals, movie tickets, electronics, restaurant certificates and much more. Online access is also important in order to view account balances, and manage and redeem reward points. For more information, check out usbank.com/collegevisa.
Given students’ unique needs while in college, it is critical to assist them in making good financial decisions before they set foot on campus. Courtesy of ARA Content
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