Q. My son is starting college. Should he get a credit card or should I make him an authorized user on mine? And will that help his credit score?A. This is always a tough decision for parents. Either approach can help your son build credit, if he uses the card responsibly. “Having his own account is the best way to build good credit, but only if he’s mature and financially responsible,” says Beverly Harzog, a consumer credit expert and best-selling author.
Harzog recommends talking to your son about how credit cards work and what the dangers are if he overspends and gets into debt. Also explain how his FICO score (measure of credit risk) is calculated and how that number relates to his ability to get good rates with a credit card — or even a mortgage later on.
However, your son may not be able to easily get a card on his own. The Credit CARD Act of 2009 requires people under 21 to show proof that they have enough income to repay incurred debt, Harzog says. If you think your son might still qualify, consider getting him a student card or a secured card.
Harzog says that if you don’t feel he’s ready for the responsibility of his own account, then start him off as an authorized user. As long as you have good credit, he’ll benefit from that, she says. But if he goes on a spending spree, that could damage your credit.
“If you go this route, let him know how his behavior will impact your credit. And for good measure, let him know you’ll be getting text alerts on his purchases,” she says. “Trust your child, but always verify that the card is being used responsibly.”
COLLEGE IS expensive. Very expensive.
If you have a child in high school — even a freshman — now is the time to prepare. It may be too late to save all the money you will need, but you still have time to strategize for scholarships.
A quick search on scholarship websites shows there are awards for just about anything.
Rather than shoot in the dark, you and your student should narrow the field.
Larry Winters, an Independent college counselor with Academy College Coaches in Morganville, advises parents to first concentrate on federal, state and school endowments.
“Scholarships offered on the search engines are often ethnic, (subject) major or religious-based and often require essays,” he says. The process is time-consuming and tends to generate small awards.
The best way to qualify for a scholarship would be to excel in an area — be it academics, athletics, community service or the arts, says Jody D’Agostini, a certified financial planner with AXA Advisors/The Falcon Financial Group in Morristown. “A high GPA is a great way to start.”
Students are most likely to get merit aid for academics if they apply to colleges where they are in the top quarter of the incoming class, says Rana Slosberg, a college admissions consultant with Slosberg College Solutions in Bridgewater. The more local a scholarship, the better your chances.
“For opportunities, look first at local scholarships listed by your high school guidance office or in your local newspaper,” Slosberg says.
Make a list that includes where you work, organizations to which the family belongs and places where you have a bank or credit union account, she says, and ask if they offer scholarships.
Next, hit the internet.
Our experts recommend these sites:
* fastweb.com/college-scholarships
* bigfuture.collegeboard.org/scholarship-search
* petersons.com/college-search/scholarship-search.aspx
Read the scholarship descriptions carefully and only apply for those for which you qualify, Slosberg says. “Leave yourself enough time to write and edit any essays needed and have someone proofread your scholarship application,” she adds. Then make sure your scholarship application is submitted on time.
Finally, beware of scholarship scams.
“No one can guarantee you financial aid or a scholarship,” Slosberg says. “Never give your credit card information or bank account information in order to get a scholarship.”
THE FRESHMAN HAIRCUT
If you already have a college freshman and money is tight, here are some tips to control the costs that don’t always make it into the college handbook:
1 | Banking: Avoid unnecessary ATM fees by seeing which banks are local to your student. If your bank is nearby, ask about linking your account to the student’s account, which will often lower or eliminate minimum balance fees.
2 | Books: Who says you have to buy new books? You can find used ones at bargain prices and some companies offer textbook rentals. Look online for these renters and resellers before hitting the campus bookstore.
3 | Food: Carefully review meal plans and get your student on board to eat in dining halls, rather than in places that will cost extra money. Also, invest in a coffee pot to avoid daily trips to the barista. Five bucks for coffee four times a week over eight months adds up to $640 worth of joe.
4 | Entertainment: Your student probably doesn’t need a monthly cable bill when services such as Netflix and Hulu are inexpensive, and other programming can be found online for free. And don’t forget that college IDs mean discounts at businesses of all kinds.
5 | Laptop: Students will probably need a laptop, but they won’t need one with all the bells and whistles. Review cheaper models and avoid the fancy-pants ones.
6 | Supplies: New school supplies can be fun, but they may not be a necessity. Wait for professors to indicate what’s really required.
7 | Needs vs. wants: Many students want clothing and other items bearing their college logo, but these things can be pricey. Better for your student to ask for them as presents for birthdays and holidays, or to request gift cards to stores they like to frequent.
Karin Price Mueller, the founder of NJMoneyHelp.com, writes the Bamboozled
consumer affairs column for The Star-Ledger, and the Money and Biz Brain columns for Inside Jersey. Send your money questions to her at Bamboozled@njadvancemedia.com.
