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5 financial pitfalls for college freshmen

Of college and graduations, Dan Rather says, “A college degree is the key to realizing the essence of the American Dream. It is well worth the financial sacrifice because it is supposed to open the door to a world of opportunity.” This is advice I wish I had taken heed to earlier than I did. For me, getting out of high school was so exasperating I jumped on the first bus to the military. It wasn’t until well into my twenties that I hit the preverbal glass ceiling without a degree. I learned quickly that life without a college degree was a cycle of hearing I had great skillset but not enough education for the promotion.

A few weeks ago I had the chance to see a stark contrast of my mentality. As I attending the high school commencement of my youngest daughter, I was filled with all types of emotions. At the top was extreme pride for her commitment and zeal to get into a good college. For her, college is an avenue to solidify a career, gain further independence and pursue her passions. For the past year our conversations have been a mix of cautious optimism and gentle warnings about the trappings of the “college life”. Right at the top was sharing how many freshmen around the world ruin themselves in a few months because they haven’t been properly trained for navigating the pitfalls of finances.

Here are a few things I have shared with her that may benefit you or your budding newcomer to academia:

• Your credit history begins NOW: For thousands, this coming Fall will be their first opportunity to get a credit card and access to bank accounts. That’s a scary thought because the average college freshman has no concept that their credit history can be ruined within a year. Add the compounded pressures of student loans after graduation and it’s a cocktail for disaster. Teach your freshman that paying even the smallest bill late will haunt them well into their thirties. It will take both responsibility and discipline to use this new found “credit” wisely and think long term.
• Get on a budget and take financial literacy classes: What’s been popping up on campuses across the country for the last several years are free financial literacy classes to help transition freshman. Most are funded by the educational facility and give students access to budgeting tools, accountability counselors and information on protecting your credit. What’s been reported is many freshman fail because they don’t even show up for the classes offered.
• Get a job: Your freshman will tell you they are too busy to hold down a job or this should be the time to enjoy their youthful journey. That’s bull! Nothing prepares our future leaders for the real world more than having to manage their time between school and work. Not to mention it will defray much of their on-campus expenses. A job will help build character and a sense of stability as they move from the educational world to the employment sector.
• Credit cards are for ‘real’ emergencies: And be sure to let them know pizza and beer are NOT legitimate emergencies! You remember what it was like to have the power of plastic in your hands for the first time. When you were happy, sad, excited or nervous your only thought was to “charge it”! Those fleeting moments of emotionalism had repercussions you didn’t feel until you were filling out mortgage paper work or seeking to buy a car. That’s what we have to help our freshmen with. The long term costs of careless charging can stick to them like Crazy Glue.
• Student loans are not FREE money: I struggled with understanding the concept of subsidized versus unsubsidized loans. Without proper guidance it is easy to fall into the trap of biting off more than they can chew. In the moment, the refund checks you receive from FAFSA seem like a miracle. You are ready to run off to the bank, cash it and pass the campus bookstore on your way to the mall. But again, this is a recipe for trouble. Many found themselves later in life running through forbearance after forbearance trying to stay afloat.

It seems I was just getting my daughter off to preschool and worried if she will make friends on the playground. Now I am dealing with the parental thoughts of her safety as she drives, navigates new places and deals with her professors. Times have surely changed. I have so many great expectations for her, and at the forefront of my list is for her to complete college successful; educationally and financially. I remember the dumb mistakes I made and I am wishing better for my freshman, and yours.