Student Finances: Reality Check
When it comes to financing college education, all families have unique circumstances and approaches. Students may be expected to contribute anywhere from zero to 100 percent of their tuition, room and board, and living expenses, or to assume the repayment burden of student loans. A recent informal survey conducted at the University of Minnesota found that as tuition expenses have gone up, parents are assuming a greater share of overall college costs.
The UW’s Parent Program recently conducted an online survey, asking parents how they much they expect their student to contribute toward overall college costs.
Of the nearly 230 responses, 65 percent answered zero to 25 percent. Eighteen percent answered 26-50 percent, and another 18 percent answered more than 75 percent.
UW parent Nancy Funcinato says that her family’s philosophy is to pay for tuition and room and board, and discuss spending-money needs.
“I would encourage periodic discussions between parents and students,” she says. “Our approach was to ask our daughter what she thought she needed and why. We said what we thought was reasonable, and if she was not able to stay within the budget, to let us know. Wiscard accounts are great because they can be monitored from afar.”
Michelle Stanley, who has two daughters at UW–Madison, has a similar approach.
“My expectation is that the student will have a summer job and be responsible for all or most of their ‘recreational/incidental’ expenses,” she says.
“Because of my own experiences as a Badger, I really value extracurricular activities and strongly encourage the girls to be involved in student activities, especially in the first two years; I haven’t encouraged working during the school term,” she adds.
“I have tried to always be fairly open about family finances, so talking about money now isn’t so difficult—although it does tend to make everyone somewhat defensive,” she notes. “In general, I review with each kid their expenses about twice a year, and try to get them to project a year in advance based on the classes that they are likely to take, both for time commitment and ‘extra expenses’ and as a basis for deciding on jobs.”
Stanley advocates giving students a credit card with a fairly low credit limit and discouraging them from getting their own credit cards, at least initially.
“They are less likely to charge dumb stuff when it is clear that a parent is monitoring each expense as a line item,” she notes. “They have the ‘emergency’ access and practice handling the credit card without so much temptation.”
Campus experts urge open lines of communication between students and parents, and the upcoming end of the semester is a particularly good time to assess how financial arrangements worked for the first year, and whether or not they should be adjusted for the future.
“Summer should be a time to review spending during the first year and discuss ‘how it all went,’” says Wren Singer, director of UW–Madison’s Center for the First-Year Experience. “It’s an ideal time for families to set expectations and budgets for Year Two.”
Sandi Cechvala, assistant director in the Office of Student Financial Aid, says that if an increase needs to be made in available finances for fall, start planning early in the summer.
Start by asking your student questions like these:
- Did the finances provided make it a struggle to get through the year?
- What changes, if any, need to be made for next year?
If finances fell short, the Financial Aid office is an excellent resource to help students and families plan differently.
Another topic to discuss is whether your student held a job freshman year. If not, talk with your student about how a weekly 10- to 15-hour job commitment can help by providing income, offering a valuable out-of-class learning experience, and teaching time-management skills.
If the student did work, how were his/her grades? If grades were lower than expected, could it be due to working too many hours?
Another great resource has just become available through the Wisconsin Alumni Association (WAA). WAA has recently partnered with The National Endowment for Financial Education to launch a new Web site that provides financial education to UW–Madison students and families. For additional information, visit the WAA Web site.
Singer also says that it is helpful to view the college years as a curve, on which many students move from financial dependence, early on, to being more financially independent as they approach graduation.
“Families should take incremental steps during the four years to get closer to financial independence without jeopardizing a student’s ability to engage in the college experience,” she says.
In reality that might mean students get jobs and begin covering their own “fun money” in the freshman or sophomore year, and work over the summer to begin covering some living and/or tuition expenses in the junior and senior year.
“Obviously this formula needs to be individualized to each family situation, taking resources and values into account,” she adds.
For more information about financial matters and resources on campus, visit the Parent Program Web site or contact Parent Program staff.