Hey there! It's Talk About Money Tuesday, my favorite day of the week!π€
Parents of first-time college students, here's one more thing for you to think about as move-in day rapidly approaches: Your 18-year-old freshman could log into their bank account during the first week of class and see several thousand dollars there.
What would they think that money is for?
If they're like many students, they might assume a financial aid refund is extra cash. In reality, it's money that has a specific purpose.
It may need to cover textbooks, groceries, transportation, rent, and other living expenses throughout the semester. And depending on your student's financial aid package, part of that refund may also come from student loans that eventually need to be repaid.
How to responsibly spend that mega deposit in their account is one of the first major financial decisions many young adults make without a parent standing nearby.
Before move-in day, (for lots of folks there's still time!) explain where refund money comes from and what it's meant to pay for. And be sure to underline how spending every dollar right away can create problems later.
Helping your college student connect their refund to its purpose is one of the easiest ways to build intentional spending habits before classes even start.
Money Stat
85%
Most students get financial aid to pay for college, which makes talking to them about that aid as important as talking about college itself. According to the latest data from the National Center for Education Statistics, 85% of first-time, full-time students received financial aid of some sort in 2023-24.
That percentage of aid recipients has remained roughly the same for the last decade or so, a nod to how central financial aid has become toward making college affordable for students and families.
Money in the News
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The news: Student loan chaos is creating an easy opening for scammers to exploit borrowers' confusion with fake promises of debt relief and forgiveness. The takeaway: Don't pay for help you can get for free from your loan servicer or the federal government.
What it means for young people: College students β often managing money independently for the first time β can be attractive targets for scammers. Fake student loan forgiveness offers and requests for personal information can put a young person's finances and identity at risk. An important part of becoming financially independent is learning how to spot red flags.
Tips for parents & mentors: An important part of becoming financially independent is learning how to spot red flags. Encourage your student to slow down before responding to any message about student loans, financial aid, or repayment.
Also, remind them that legitimate organizations won't pressure them to act immediately or ask for sensitive information through unexpected calls, text, or emails. And make sure they know where to find official loan information so they'll know where to turn for trustworthy answers.
Get in the Zone
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Money skill: How to read a financial aid award letter
Why it matters: Some students only glance at their financial aid award letter, but it usually contains dollar figures that call for them to take a longer look. Learning to identify grants, scholarships, work-study, and loans helps students understand what is free money, what is earned money, and what money comes from loans.
Try this: β‘οΈ Print your student's award letter and highlight each type of aid with a different color. A visual breakdown of grants, scholarships, work-study, and loans makes it much easier to understand than just reading rows of numbers.
β‘οΈ Ask your student, "Can you tell me where this money is coming from?" If they can explain it to you clearly, they probably understand their aid letter.
β‘οΈ Don't forget to plan ahead with them for an expected refund by giving every refund dollar a job!
Loose Change
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βοΈ Some of the nation's elite colleges are cutting settlement checks to students who filed a 2022 lawsuit accusing them of participating in a "price-fixing cartel."
π Financial aid awards have academic eligibility requirements. Make sure your student knows what their college expects.
π¨ Financial aid scammers have targeted California's community colleges for years β and using AI to detect and weed out fraudsters hasn't stopped them.
Do you know of a school, college, community group, or organization that could benefit from a financial educator who teaches young people about money using the everyday choices they already make? Send them my way so we can talk!
I also teach grownups how to talk to kids and teens about money. Book a free discovery call with me to learn more.
Thanks for reading! If you want to read some of my past newsletters, click here. And if this newsletter was forwarded to you, please subscribe βhereβ.
'Til next time,
Audrey
βFounder &
Certified Financial Education Instructorβ
The FinLit Zone
600 1st Ave, Ste 330 PMB 92768, Seattle, WA 98104-2246
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