Money Talks are quick hitting posts on a topic that will help your students manage their loans and finances. With links, tools, and visuals, you can easily digest and regurgitate the info so your students can one day fly from your nest financially healthy and strong.
In 2013, Citi and Seventeen Magazine surveyed 1000 students and found that nearly 80% worked while in school averaging about 19 hours per week. The money earned helped them get through their college years.
However, experts vary on the right amount of paid work a full-time student should do, but most agree that it should be a maximum of 15 hours per week.
Spending hours working can have a negative impact on a student's academic performance, and frankly, their ability to persist in their education.
Despite changing demographics and more students working part-time and going to school part-time, summer continues to be a time when students earn income, gain work experience, and have the opportunity to potentially save money while working 40 hours a week.
You can help students create a financial bridge that carries that summer cash through the traditional academic year. Doing so will help them minimize student debt, accelerate graduation, and improve retention rates simply because they'll be able to say NO to working more than 15 hours a week of paid work.
Here are 4 ways to help your students best utilize their summer income so they are not tempted to work more when they should be hitting the books.
Let's say it's the end of August and a student earned and saved $5000 over the summer. Putting a portion of that money in a 529 Plan has a number of benefits, but one obvious benefit is that it's harder to waste on burgers and blue jeans when it's locked up in a Plan.
Another benefit: once the money is in the plan it's less likely to impact the student's ability to get need based-aid. Read more about that here if you believe your student's summer income is impacting their ability to receive the best aid package.
Budgeting for college students is an exercise in irregularity.
Two-thirds or more of their work income could come during the summer months and many of their expenses, like tuition and books, are also not normal monthly expenses (like rent and groceries).
Crunching the numbers for an "irregular budget" takes more work. However, if a student can pinpoint what their summer money is covering, (for example, groceries, transit, entertainment, and books) they can track those expenses and see how their summer income will stack-up.
Typically in the "invest, spend, share, and save" model, the share means sharing (donating) a portion of income. While that may be possible for some students, in this case, sharing means splitting costs across several people to save on expenses.
According to College Board, the estimated cost for 2014-15 room & board could nearly equal (or surpass) the cost of tuition.
Sharing these rising costs is the key to savings. Carpooling, roomating, and book rentals are a start.
With college students, it's important to preach frugality. If students can get through college with less debt and settle into a job, there'll be plenty of time for champagne wishes and caviar dreams. Frugality is not something they need to embrace for life, but it should be something they embrace now while investing in their future.
Stretching that summer dollar across 8 months is a practice in hard-core fiscal-restraint.