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Posted: 12:35 p.m. Monday, July 28, 2014

Going To College: Your Guide to Campus Life and Money

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By Clark Howard

ClarkHoward.com


If you're about to head off to college or are the parent of someone who is, you might be wondering, "What should I do about money?" Being on campus offers you a lot of opportunities to blow money. But it doesn't have to be that way; there are also ways you can save money and avoid being ripped off.  Read on and protect your wallet!

 

What should I do about spending money?

When you first get to campus, the first thing you want to know is how should you handle your money. I have an outside-the-box solution for you that's fee-free.

Walmart, the nation's largest retailer, is now in a new alliance with American Express for a partnership called Bluebird. After first launching in fall 2012, this service has now been named the best banking alternative by Consumer Reports.

With Bluebird, you get an essentially fee-free alternative to debit and checking accounts in the form of a stored value card that has the American Express logo.

To fill it up, you simply deposit money online, via a smartphone app, or at any Walmart cash register in the United States. You can also write checks like you would from any regular account. About the only thing you don't get is limited banking hours; Walmart retail locations are becoming 24/7 banks almost all over the country!

Another nice benefit of Bluebird is that it comes with no foreign currency transaction fee, so that makes it an ideal card for international travel. Study abroad, anyone?

How to obtain credit when you're going to college

It used to be a fall semester rite of passage: College students coming back to campus would be welcomed by marketers in student centers offering free T-shirts, free sandwiches, free anything just to get students to sign up for credit cards.

But then in the aftermath of the financial crisis, new rules went into effect that essentially banned students from getting their first credit card when they turned 18. Now a young person typically can't get a credit card on their own until they turn 21. (A parent must expressly sign as guarantor on that account if you're younger than 21. Certain waivers apply for economically independent teens.)

That's both good and bad. Good because it limits the harm a student can do from irresponsibly running up a line of credit. And bad because it makes it slightly more difficult for a young person to establish a good credit history.

But with any of a number of college student credit card programs, you can get a card once you're past 21, but before you graduate—and you don't have to show income. My favorite place for you to do this is at a credit union. Visit FindaCreditUnion.org to locate one near you.

Rent your textbooks instead of buying them

I got my first introduction to the high-price world of college textbooks when my eldest daughter was a freshman several years ago. At the time, I had to pay $135 for one book for one class!

Unfortunately, the cost of college textbooks is up just under 25% over the last 4 years. That's 4 times the rate of inflation in the U.S. economy over the same period. The average student spends $1,200 to use his or her books for about 12 to 15 weeks before they become yesterday’s news at the end of the semester.

Thankfully, the Internet has come to the rescue by offering a number of websites like Chegg.com and CourseSmart.com that rent college textbooks. The latter even gives you digital access to textbooks on an iPhone or iPad.

In addition to Chegg and CourseSmart, other popular textbook rental sites include BookRenter.com and eCampus.com. Others like CheapestBookPrice.com, AllBookstores.com, Biblio.com, BookFinder.com, ValoreBooks.com and Textbook411.com are all good sites for this purpose too.

Then there are some newer sites that came to my attention from an article in The New York Times. They include Affordabook.com, Amazon's Kindle Textbook Rental program, LocalTextbook.com, and SwoopThat.com.

The sooner you find out what textbooks will be used in your classes this fall, the sooner you can order them online and await delivery. You may also want to try teaming up with a friend in the same class and sharing a book instead of shouldering the money all by yourself. That's what I did in at least one class when I was in school.

 

Be careful you're not getting ripped off…by your student ID card!

You might thinking getting a student ID card is one of the most benign parts of going to college. But there are some dubious practices taking place on campuses across the country related to student cards.

The reality is many colleges are in cahoots with banks to dupe students into thinking there is a benefit to getting a combined student ID and refund card.

I've told you before that many schools get kickbacks to have a certain bank be the "official bank" on campus. Such financial institutions offer outrageous terms and conditions on their credit and debit cards for students. The universities do this to get money under the table money from the banks. These arrangements are technically "partnerships," according to the schools. But the fees on the cards are almost double those available in the general marketplace.

Now we have the same thing going on with the new student ID cards. The University of North Georgia is just one of many schools doing this, so read up and be warned. These kinds of cards generally do not have consumer protections if lost or stolen. And they typically pile fee upon fee too.

So this is yet another thing for parents to worry about when packing their kids up for college at the end of the summer. Just remember that, in most cases, you can decline the rip-off combo ID/refund card and get a standard issue student ID with no bells and whistles.

 

Beware of identity theft on the campus

College students and young people in general are among the most-targeted groups by identity thieves.

A quarter of all identity theft cases are among college kids, according to the Better Business Bureau. Meanwhile, the Federal Trade Commission says young adults age 18-29 represent the largest segment of people hit by identity thieves.

Here's another surprising stat: A great deal of identity theft on campuses takes place at the dumpster.

College kids will just dump financial paperwork right in the garbage at the dorm, creating a treasure trove of data for thieves looking to steal someone's identity.

There are lots of reasons why college kids and the young become targets. One of the most common is moving. I moved nine times in four years during when I was younger. Mail goes to wrong address and anyone with sticky fingers can take it.

In addition, freshmen in dorms tend to just leave their doors unlocked all the time. All it takes is one dishonest person on the floor to do real damage. Financial records should always be locked up.

So what's the solution? I have 3 for you.

  • First, use a shredder for papers that contain financial info before recycling. I've had many listeners suggests you should mix up your shredded financial papers with a dirty diaper if you have young kids. That will definitely deter an identity thief any day of the week!
  • Second, use OptOutPreScreen.com to remove your name from the mailing list of the credit card companies. That way won't get the credit card apps that are so central for identity thieves. With OptOptPreScreen.com, you will have to disclose your Social Security number because that's how the credit bureaus build a dossier on you.
  • Finally, freeze your credit if you're really concerned about identity theft.



The ultimate college choice: Pizza and beer...or saving for your future?

As a closing thought, I just want to put this idea in your head: Let's say you have a job while you're at school -- the kind that is just for extra money, not because you need it or you won't be able to eat or make tuition.

Did you know that because of the power of compound interest, it's entirely possible to put away a little each year and have it grow to be close to $1 million by the time you hit retirement age? This very popular chart on my website spells it out for you.

There's an investment vehicle I love called the Roth IRA. As long as you have earned income, it's an individual retirement account that you can contribute after-tax income of up to $5,500 per year while in college.  Earnings on the account are tax-free, and you can pull out the money you contributed -- but not the earnings -- if you run into a tight spot. That makes it the ideal rainy day savings account too. See the beginner's section of my investment guide for more info.

The younger you start this and keep at it, the sooner you'll be able to retire on your terms. Now that's something to think about when you're contemplating that late night pizza run!

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