It's that time of year again. All over the country, people are loading up the family car, paying airline overage for heavy suitcases, or shipping boxes of stuff to a college dorm room that is not big enough to hold half of it.
They're making sure their darling frosh has enough clean socks, enough toilet paper, enough advice on how to avoid anything that might make college fun, enough snacks to heat up in the de rigeur microwave. And of course, enough spending money, likely in the form of a debit card and a credit card so they won't get mugged for all that cash.
But how to put a lid on? A lecture about fiscal responsibility is probably going to have about as much impact as those words of wisdom about sex, drugs, and rock and roll. We know this because the average college graduate accumulates over $4,000 in credit card debt, according to Jackie Burrell,'s About.Com Guide to Young Adults. We know this because we see those overdraft charges on the monthly debit-card statement.
The "higher" in "higher education" is not supposed to refer to banking charges; given the federal deficit and boomers' bad habits, savings-wise, perhaps the kindest thing we can do is to teach the next generation not to spend money they don't have.
Enter PayPal, which is introducing student accounts that turn off the faucet automatically when outlay exceeds resources. Yes, it's that simple: If you walk up to the cash register at the drug store with $30 of must-have hair product and your account only has $15 in it, the account basically locks your debit card out. You can't spend what you don't have. And you can't ever be charged an overdraft fee because you can't overdraw.
Now there's an obvious downside to this, in which you go out for pizza after an exam for which you killed yourself, and all you want to do is relax with your friends and enjoy something more substantial than the M & Ms and energy drinks with which you fueled your test prep. You're too exhausted to realize that you're maybe $3 shy of the pepperoni with extra cheese until you try to pay for it, at which point you could end up doing time washing dishes.
It's a bit Pavlovian; critics would say it's paternalistic. On the other hand, it gets the job done, and I'm willing to bet that one or two missteps are all it's going to take to build an upstandingly responsible spender. Someone who appreciates the literal relationship between cash in and cash out. Someone, that is, unlike most of the rest of us.
It's a little Big Brotherly, too, with mom and dad putting the money in and monitoring spending. On that other hand, again, freshman year is a big wake-up call, or have you parents forgotten? A friend's son who went away to school summed it up thusly, somewhere between the dirty laundry and the cleaning of his room: "I had no idea how much work was involved." Maybe it's not a bad idea to launch the offspring with a money plan that offers built-in monitoring, at least until daily life is somewhat under control.
And it's kind of nice, in a weird sort of way, to make the covert overt, to eliminate fiscal fallibility from the list of helicopter conversation topics.
Parents who prefer a hybrid option can strike a balance between the absolutism of the PayPal plan - the sad pizza scenario - and the kind of laissez-faire spending that gets us into trouble. It's called a budget. It's called estimating what the undergrad will need per comfortable month and depositing that amount plus an emergency cushion. Not a dirigible of a cushion, just enough of a margin to allow an eighteen-year-old a learning curve. Our kids are smart. They understand the concept of an emergency reserve.
Just think: If you invest the equivalent of, say, four overdraft fees a month with someone who doesn't promise a suspiciously consistent above-average return, you might end up making enough money to pay off some of the loans you had to take to pay for college itself.