Financial Tools for College
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 now
be challenged with? Do they have the financial tools
in their backpacks as they head off to one of more
than 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 they head off to college:
* As reported in the 2003 Almanac of The Chronicle
of Higher Education, more than 12.6 million undergraduate
students were enrolled in college -- that’s
one out of 20 people in the United States. So parents,
you’re not alone in making some tough financial
decisions.
* During the 2003 to 2004 academic
year, The College Board reports the estimated average
annual cost of attendance as being $29,541 at a four-year
private college, $13,833 at a four-year public college
and $10,981 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 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 $175 billion in 2003. 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 5 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 as
low as 2.77 percent for Stafford loans and 4.17 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, they can
have student loan payments deposited directly into
their account, and they can make everyday purchases
-- like books at the campus bookstore -- with a Visa
Check Card. 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 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 travelling abroad, home for
the holidays or for spring break?
6. Does the account offer special
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
Visa 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. Your
student can use the card everywhere Visa debit cards
are accepted, including online and at the ATM. The
U.S. Bank Visa Buxx Card is available at any U.S.
Bank branch or online at usbank.com/buxxcard1.
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
CDs, 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.
