Dollars & Sense Local

College: an important step toward financial independence

Kevin O’Brien, director of Bishop Ward High School’s Academy of Finance, talks with The Leaven about finances as they relate to college — tackling everything from student loans to textbooks. Above, he talks with freshman Ruben Luna, left, and sophomore Luis Leon-Madrigal. LEAVEN PHOTO BY KATHRYN WHITE

As high school seniors close out their final semester in this most unusual year, families across the archdiocese now face a new raft of questions about college. The Leaven talks to Kevin O’Brien, business teacher and director of Bishop Ward High School’s Academy of Finance in Kansas City, Kansas, for a discussion of some of the basic issues.

Q. How do you see the pandemic changing the landscape students are entering as it relates to finances and college?

A. There is so much uncertainty in terms of what universities will be able to do in the future. Will colleges limit enrollment to ensure proper spacing in classes? Will they limit tuition funding in order to make those spacing issues realistic? Will students forego that dorm experience for a stay-at-home digital one to stay safe as vaccines continue to roll out?

I do not think students should take a year off, as that can affect scholarship funding. Also, many students struggle to return to college after a year away. Schools may offer digital alternatives, which could be an opportunity to get an education from a prestigious institution, but perhaps at a lower price. 

Q. Do you counsel greater caution in taking on student loans or suggest being open to community college?

A. Student loans often have negative connotations, but what kind of loans you get matters. Private bank loans are expensive, due to high interest rates. Consider applying for need-based federal student loans through the FAFSA application. Strive for a reasonable amount of college loan debt, as a college degree can add hundreds of thousands of dollars in lifetime earnings and open doors to career advancement. Paying 5-10% of your tuition through loans is reasonable, especially if they are federal Stafford Loans, which have lower interest rates and are more likely to receive loan forgiveness if students pursue service-based options (teaching, AmeriCorps, etc.).

Community college is a good option for students who are undecided on a major. Students need to research community colleges as well. They need to find a community college that best fits their transition plan. Students should research private colleges, too, especially if they have financial concerns. Students might see the “sticker price” at a Catholic college, for example, and not apply. However, Catholic colleges and universities offer a lot of robust scholarships and financial aid, unlike public universities.

Q. Do you recommend dorm decisions be made primarily on financial considerations, or are study habits, personalities, etc., more important? 

A. Strive for balance when choosing the right housing option. Financial concerns could prompt some to avoid living on campus. Yet, while living on campus may be a higher cost initially, it could help save in travel and food costs. Not having to drive to class or pay for food can pay off over time and alleviate stressors that distract from academic success. High school students should consider the “social” aspects of living on campus. Building new experiences is part of the college experience and teaches students how to balance life, study and play.

Q. How should students manage their money while away at college?

A. Budgeting is easier than ever, thanks to free budget apps like PocketGuard and Mint. Students should set a monthly budget for extra expenses and track every expense through one of the apps. It only takes seconds and can be automated when synced with their bank. Setting different savings goals can help students weather income ups and downs.

Q. Should students and parents share an account for the purpose of monitoring spending and money transfers?

A. I am not sure if having joint accounts is worth it since sharing money digitally is now easier and safer than ever. Responsible banking and budgeting is both an important and empowering process for students, especially when they begin college. Having joint accounts prevents students from growing into financial independence. Subconsciously, they know there is that “safety net” in the joint account.

Conversely, letting students have their own accounts, and having regular conversations with them about monthly spending in nonjudgmental and honest ways, can be a productive way for parents to help their students manage their money long term.

Q. Do you recommend a debit or credit card or both?

A. Knowing how to use a debit card is important for students. If they are using budget apps and setting regular monthly goals, it can be a safe, responsible tool. If students lose their debit card, or if it is stolen, it can be canceled. Not true for cash.

Credit cards are trickier. We hear horror stories all the time about college students abusing credit cards, accruing debt and ruining their credit scores before they graduate. However, having no credit can be limiting, as the student can’t establish credit.  Determining when students should begin using credit cards will be different in every case. Conversations should be ongoing between parents and students to determine when and what is best.

Q. Tell us about mobile payment systems such as Apple Pay, PayPal and Venmo.

A. Mobile payment apps eliminate ATM fees, which is good. College students have so many small transactions in their lives that it doesn’t make sense to pay a $2 or $3 fee to withdraw $20 at a time. Mobile payments are a good way for students to practice managing multiple accounts in a low risk way since apps often require low balances.

Q. What do you recommend for textbook and meal plans?

A. Cheaper doesn’t always mean better. Digital books are cheaper. However, students need to know how they best study and read. If they didn’t have much experience with digital books in high school, chances are, they may struggle with reading digitally.

The same goes for meal plans. Campus meal plans can pay off in the long run and help students keep their meal expenses lower. Some students may say they can live on ramen noodles, but after a couple of weeks, those ramen noodles sit in the cabinet and students are spending more on fast food than at campus dining.

Q. How should students prevent identity theft?    

A. It can be easy to autofill everything. Even adults are guilty of that.  Limiting which sites students autofill can be helpful, especially in college where safety and privacy are a concern. Students should vary their passwords and create “strong password” standards. Using the same passwords for everything can cause students to become vulnerable to identity theft. Students should update their passwords every two to three months.

Kevin O’Brien is a business instructor and the director of the Academy of Finance at Bishop Ward High School. He has a bachelor’s degree in business administration from Gonzaga University, a master’s in education from Rockhurst University, and is currently completing his master’s in educational leadership from the University of Notre Dame. He is a member of St. Mary-St. Anthony Parish in Kansas City, Kansas.

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The Leaven

The Leaven is the official newspaper of the Archdiocese of Kansas City in Kansas.

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