Before Your Kids Start College, Teach Them a Lesson About Money

Angela Wethor learned about money the hard way. She graduated from college $50,000 in debt.

Today, at age 32, she's counseling parents about the importance of talking to their kids about money before they pack up for school.

"I'll be paying on student loans until I retire. I cry about it daily," says Wethor, manager of LifeMap Financial Planning at Lutheran Brotherhood, a fraternal financial services company based in Minneapolis. "But if I can deter anyone from going through what I'm going through, it will be worth it to me."

The challenge of graduating economically whole has never been greater, says Jack Joyce, a spokesman for the College Board, a New York-based academic association. Financial aid, which used to be made up mainly of scholarships and grants, is now primarily in the form of loans, leaving more students heavily in debt. Moreover, college campuses have become prime recruiting grounds for credit card companies. The result: Today's average college graduate leaves school $18,000 in debt.

"I've seen cases where the dean of students is trying to caution kids about all these things, and at the same time there is somebody in the student union handing out coffee mugs and credit cards," Joyce says. "Credit card applications are literally falling out of kids' book bags before they've even started classes."

This fall, as approximately 2.6 million families send their young adults off to their first year in college, they may want to think about Wethor's message. Spending a few hours going through financial basics before your child goes to school may save him or her from a lifetime of economic woe.

What do you need to talk about?

* A personal budget. While parents tend to focus on the cost of tuition and fees when they contemplate the cost of college, other expenses such as room, board, books and transportation can be even more financially crushing. The average cost of tuition and fees at four-year colleges was $3,243 for the 1998-99 academic year. But the cost of room, board, books, transportation and miscellaneous expenses was more than twice as much, $7,215.

In other words, even if you've already handled the tuition, your student is going to have to manage his or her income--from you, loans, grants and work--and expenses. This requires not only knowing how much is coming in and going out, but also when. Discussing how to budget carefully may save you numerous collect calls for emergency cash later.