08/11/2014 01:06 pm ET Updated Oct 11, 2014

The Talk: College and Money

It's time for another honest talk with your college-age children. It won't be a shock to them that you want to discuss money - unless you've failed to have a "junior" version of this conversation before they became teenagers. But heading off to college demands a much more in-depth look at the financial responsibilities they are taking on - and the "traps" that are likely to tempt them as they embark on their new found freedom.

The topics may be obvious to you, but at the bottom of the priority list for a student who is worried about seemingly more important matters - such as furnishing a dorm room or apartment, meeting a roommate, choosing classes that allow them to sleep in, or blending athletic schedules with classes. So, take the money talk step-by-step. And don't leave the discussion till the car is packed for the trip, or you're on the way to the airport!

This advice presumes that you've already covered the biggest expenses -- tuition, room and board. By this point you already know the burden of student loan debt, have discussed who will be responsible for repayment, and how much your repayment costs will be. If you haven't done so yet, go to and use their repayment calculators. Student loan debt may be essential - but all should understand the repayment costs.

As significant as those major costs are, it's the small stuff that can really overwhelm both student and family.

Student Budget: Might as well hit the tough stuff first. Sit down at the kitchen table and sort out who is paying for what - and how much money you can afford to send every month. The school will give you a rough idea of charges for room and board. But what about the extras - ranging from dining out if they hate dorm food to laundry and smart phone costs? All those things can add up, making money go out faster than Mom and Dad can replenish it.

Credit Card and Checking Account: These don't necessarily have to be from the same financial institution. But a local checking account will make life easier, so access to money won't be delayed. Ask the school finance office which local banks offer free checking, or see if the parents' bank has a branch in the college town. That makes it easier to transfer money that will be immediately available. And it allows for use of a debit card to manage expenses.

There will be dozens of credit cards offered to new students. And who can resist pulling out a card with the school's logo? But that may not be the least expensive card, and if it is not paid in full every month these cards tend to have the highest finance charges.

It's time for your student to establish credit in his or her name, as well as taking responsibility for building a credit record - so I don't recommend just adding the student to your own card. Instead, go to and find a low annual fee card. Compare finance charges and explain the importance of not carrying a balance.

Credit Report: This is the perfect time to go online together to - the government-mandated, totally free site where you can get your own credit report from any of the three major credit bureaus. Your student may not have a credit report yet - but you can be sure that once he or she has a credit card, those bill payment habits will start building one.

One way to get started is to use a "secured card" - funded with a deposit in a savings account. The amount of the deposit becomes the student's "credit limit." Paying promptly and in full starts building a credit report. Soon new offers for credit will arrive in the mail - something you should warn against. Find secured card deals at

If you're funding this new credit card, parents should be given the password and login, so they can track spending online, just as they should encourage the student to do - over a secure connection, and not at the Internet café.

Insurance: Your school should offer dorm property insurance. It costs extra, and may have a deductible, but look into what's available. Often parental insurance will not cover property owned by students at school. When you add up the cost of clothing, computers, smart phones and dorm appliances, it makes sense to insure against loss or fire.

As well, you need to take a close look at the medical insurance offered by the school. While your student is still listed on parental insurance, it may make sense to purchase this additional coverage that will likely make things go more smoothly (and be less costly) at the student health service.

Similarly, if your student is commuting, or taking a car to campus, do an insurance check-up to see if additional coverage is required.

Identity Theft: Your student may be smarter than you about protecting their online identity - or maybe not. At college they will be signing up for new social networks, opening new financial accounts, and using new passwords and PINs for everything from class registration to sporting tickets to financial accounts. This might be an ideal time to sign up for identity theft protection to keep unauthorized people from opening new credit in their name. But no protection is as good as checking accounts and balances regularly, a habit that should be encouraged.

It's all common sense - to you. But if this is the first time your student will be completely responsible for his or her own finances, it pays to set aside time to have a comprehensive discussion. What happens now - beyond getting good grades -- will have a long-lasting impact on your child's future. That's the Savage Truth.

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