MONEY College

College Textbooks Cost 1041% More Than in 1977

Higher Learning
Nathan Blaney—Moment Editorial

No wonder more students are renting them instead.

Everyone knows college tuition has increased much faster than people’s ability to pay for it, but that’s not the only cost of college that’s growing like an untamable weed. Textbook prices have gone up 1,041% from January 1977 through June 2015, according to NBC News’ analysis of Bureau of Labor Statistics data. A single new textbook can cost a few hundred dollars, an expense the student may or may not be able to partially recoup by selling the material.

A student going to a public college is projected to need $1,225 in textbooks this year, NBC reports. For many students, the high cost of textbooks means they need to take out more student loans. This expense is often concentrated at two, three or four points in the year — the start of a term — and that’s several hundred dollars a student may not be prepared to pay out of pocket. Additional student loans or credit cards (here are some of the best student credit cards) may be necessary to cover the already expensive materials, not to mention how much they’ll generate in interest charges. Interest can suck thousands of dollars from your potential net worth, and it only gets pricier the longer you take to pay off debt. See how much money credit card debt costs you (or how much you can save) by using this free credit card payoff calculator.

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Though the sticker prices on course materials keep going up, students have found ways to counter that increase. In 2014, the average student spent $638 on books and class materials, down from about $700 in 1998, according to a survey from the National Association of College Stores. Renting textbooks or buying them used has helped students cut their out-of-pocket expenses in recent years, though $638 on books you’re likely to not use again is still a lot of money.

To minimize the impact of course materials on your finances, first explore cost-cutting measures like renting or buying used textbooks. If you need to buy new, shop around as much as you can to find the best price, and keep the text in good shape so you can re-sell it quickly and for a decent price. No matter how you navigate book shopping, try to think ahead to the next time you’ll need to buy books and save up for the expense, so you don’t need to add to your debt to make it work. Every little bit you add to your student loan debt or credit card balances means you’ll be paying more for a longer period of time, which can hurt your ability to reach other financial goals, like buying a car, owning a home or saving for retirement.

Check out MONEY’s 2015-16 Best Colleges rankings

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MONEY College

Students Are Totally Clueless About Financial Aid and It’s Costing Them a Lot of Money

Text books and money
Getty Images/iStockphoto—Getty Images/iStockphoto

A new report says better outreach and simpler financial aid information would help students choose the right college and know how to pay for it.

Planning for the unknown is hard. But when the “unknown” is how much college will cost and how to pay for it, experts say some students become so discouraged they never even apply.

That’s why the findings in a report out today from the New America Foundation are concerning: Nearly a quarter of prospective students surveyed said they were unsure whether they’d receive financial aid, even though nearly nine out of 10 said the cost of college or availability of aid were important factors in deciding which school to attend.

The report, “Familiarity with Financial Aid,” is part of a series of papers based on a survey that looked at various aspects of college decision making, including how students choose a school and pay for their education.

RELATED: MONEY’S Best Colleges

The survey found that students were most familiar with scholarships they receive from a college (82%), student loans (79%), and state scholarships or grants (61%). Less than half, however, knew much about Pell Grants—the federal grant worth $5,775 this year that’s given to low- and moderate-income students—and only about a third knew other ways to make college costs more affordable, including tax deductions and federal work-study.

Of the undergraduates who filed for federal financial aid, 92% with family adjusted gross incomes of less than $50,000 were awarded a Pell Grant, according to data from the U.S. Department of Education. Yet in this survey, 48% of students in the same income bracket weren’t familiar with the Pell Grant, including more than a quarter who’d never heard of it.

Knowing about the “free money” that’s available to them could change where low- and moderate-income students apply to college or whether they apply at all, said Rachel Fishman, a senior policy analyst at New America and the paper’s author. Pell Grant status also is used as a qualifier for many state and school aid programs, so receiving a Pell Grant often opens the door to a lot more money for school.

The paper supports allowing families to use older tax information when applying for financial aid, a policy proposal that’s gained significant support among college access advocates and some lawmakers in the past year. That change would make it possible for families to complete the Free Application for Federal Student Aid (FAFSA) earlier.

Other initiatives that Fishman says could improve students’ familiarity with financial aid include early commitment programs, which would tell students what type of aid they’d qualify for as early as 8th grade, and an improved system of net price calculators to give them an estimate of how much they’d have to pay at a particular college based on their family income.

Only 14% of students said they’d used a net price calculator, and half of survey respondents said they’d never heard of the calculators before. While the Education Department has net price data on its College Navigator website, Fishman said it would be more helpful to provide a more personalized formula, rather than the broad income brackets that the federal information is based on now. Likewise, colleges are required to publish a net price calculator, but finding it often requires digging through multiple pages of a website. Fishman suggested creating a single website where students could submit their financial information once and then see cost estimates from all the colleges they’re interested in.

“For lot of these resources, students have to have to the savvy to go out and find them,” Fishman said.

Interestingly, while the majority of students in the survey said that they’d found high-quality information regarding financial aid, 63% of respondents also reported feeling lost at some point during their research.

Fishman thinks that’s indicative of how complex financing higher education has become, with grants, different types of loans, and seven loan repayment plans.

A simple web search will return a ton of information, Fishman said, but “students still leave confused because it’s such a complex, confusing system.”

For help navigating that system, check out MONEY’s College Planner, which has news and advice about applying to and paying for college.

MONEY Student Loans

3 Things to Know About Paying Off Student Loan Debt

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DNY59—Getty Images

Not all debts are created equal.

Americans have a total of $1.2 trillion in student loan debt, and the average new 2015 graduate with loans will leave college with a tab of more than $35,000. Student loans are different from many other forms of debt, with special rules and programs having to do with repayment options, loan consolidation, and even how they’re treated in bankruptcy. If you’re among the millions of Americans with student loan debt, here are three things that our experts want you to know.

Dan Caplinger: One of the most confusing elements of having student loan debt is how the rules about consolidating different loans work. The benefit of consolidation is that it can simplify your life by giving you a single monthly payment to make, and it can offer lower monthly payments by allowing for longer-term loans than many federal programs provide. At the same time, though, extending the life of your student loans means that you’ll take longer repaying them, and you’ll often pay more in total interest than you would if you repaid your loans on a timelier basis.

Yet the biggest downside of consolidating a student loan is that you can lose any benefits that your original loan offered. For instance, some lenders offer rate discounts or principal rebates if you repay your loans on time, but your consolidated-loan lender won’t necessarily have the same provisions. Even worse, if you’re not careful, you can lose eligibility for loan cancellation or forgiveness provisions in your original loans if you consolidate. Because those earlier loans get paid off in the consolidation process, there’s no debt left to forgive in the eyes of the original lenders.

Consolidation can be smart, but you have to consider all the factors. Otherwise, you can end up making mistakes that you’ll regret for a long time.

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Brian Stoffel: No one likes to consider the possibility of bankruptcy. It can be emotionally trying, while creating a lasting black eye on your credit report. But the flip side is that your debts are discharged and you have a chance to start anew.

But that’s not the case when it comes to student loans. Starting in 1976, loans offered by the federal government or non-profit colleges and universities had to be repaid, no matter the circumstances. This made sense, as these organizations were often loaning the money out at lower interest rates than one could find on the open market, backed by private companies.

Starting in 1984, private loans for student tuition were added to the list of non-dischargeable debts. This means that even if you file for bankruptcy, your student loan lender can have your wages garnished from your paycheck until the loan is paid off in full.

That’s important for students to remember before signing on the dotted line for tens of thousands of dollars in loans.

Matt Frankel: Brian makes an excellent point that student loan debt cannot be discharged in bankruptcy, but bear in mind that it’s also one of the most flexible types of debt in terms of the repayment options available.

For example, you may be able to choose a payment plan that dramatically reduces your monthly payments. If you don’t earn a high income, the “Pay-As-You-Earn” plan limits your payments to just 10% of your discretionary income, and the extended and graduated repayment options could also keep your payments low.

Let’s say that you have $40,000 in student loan debt at 6.8% interest. Under a standard (10-year) payment plan, you’d pay $460 per month. Pay-as-you-earn would reduce this to $270 for a borrower who earns $50,000 per year, and the “extended graduated” option would reduce the payment even further to $227.

It’s worth noting, however, that these plans can result in lots of additional interest over the course of the loan. In this example, the standard repayment plan would cost about $15,200 in interest, while the extended graduated option would produce more than $50,000 over its 25-year repayment period. So, this needs to be taken into consideration before deciding on a repayment plan.

Finally, if you can’t find a payment plan that meets your needs, you could apply for a deferment or forbearance. A deferment can be obtained for up to three years during times of unemployment or financial hardship, and during the deferment period, you can suspend your monthly payments entirely. Plus, if you have any subsidized loans, the government may even pick up the interest payments. If you can’t qualify for a deferment, forbearance can be obtained for up to 12 months, and can postpone your payments (although interest keeps accruing) until you’re in a better financial position.

While it’s important to keep in mind that all of these options won’t get rid of your debt any faster and can result in thousands of dollars in additional interest, the point is that there are many steps you can take if you’re having trouble paying your loans back.

Check out MONEY’s 2015-16 Best Colleges rankings

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MONEY College

Smart Advice for College Freshmen

People on the streets of New York City share their wisdom for people headed off to college.

We asked people in Times Square, “What’s your best advice for a freshman going off to college?” The people we asked gave a mixed bag of answers. Going of to college is both scary and liberating, but there are some things you should know. One thing we heard over and over again was that college is incredibly expensive, and a lot of people’s advice flowed from there. With the College Board estimating the average college cost for a public school in America at $12,830 per year, it’s no surprise.

MONEY Workplace

Recessions Nudge More Women Into Science Jobs

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Westend61—Getty Images

Women's college majors are more sensitive to economic conditions than men's.

Encouraging more women to pursue careers in science, technology, education and math – the so-called STEM fields – is a worthy goal, given the potential payoff for our economy and for women who get jobs in these higher-paying fields.

One surprising way to make it happen: Suffer through a recession.

New research has found that increased unemployment leads both genders to move toward fields associated with better earnings and job prospects, and that women are more likely to shift their majors in that direction than men.

The switch to more math-intensive majors suggests that there is a large pool of students who are capable of succeeding in these fields even if they might choose other areas of study in better economic times, according to a paper published by Institute for the Study of Labor, a German research center.

This behavior contradicts the tiresome argument that women are less capable of success in STEM fields.

The researchers’ findings show that there is a talent pool, said Erica Blom, who worked on the research while getting her PhD in economics from Yale University. “The problem isn’t that there aren’t enough women with the talent or inclination.”

No one knows why women seem to be more sensitive to economic conditions than men, although previous research has shown women’s decisions to work and to invest in higher education are more closely associated with economic conditions than are men’s labor market decisions.

Still, policymakers should consider this sensitivity when trying to entice women to enter STEM fields. One way may be to focus on the economic payoff by framing education in STEM majors as an investment, the researchers said.

Read next: 7 Myths About Women Leaders Debunked

The study used the American Community Survey, an ongoing Census Bureau study, to examine what fields people have chosen over the past 50 years. The sampled population represents about 5 percent of all college graduates over that period.

The researchers found that recessions induce women to choose “gender atypical” fields and to choose more difficult, math-intensive majors, even after controlling for better employment and earnings prospects.

Among women, business fields upticked the most when unemployment rose. Other large increases in the share of women occurred in nursing, accounting, technical health fields, computer-related fields, engineering and economics.

Fields that lost the largest share of women included education, literature and languages, sociology, psychology and other liberal arts studies.

Among men, the largest gains during periods of high unemployment were in natural science, pharmacy, accounting, engineering, nursing and chemistry and pre-med. Majors in early education and sociology dropped by the most, followed by other education fields, literature and languages, leisure studies, history and psychology.

The study was not trying to show that business and STEM majors are “better” than liberal arts majors, researcher Benjamin Keys hastened to point out. Nor was it gauging which fields make people happier or more fulfilled, or which careers are best for society.

But the study did find that increased income from switching to better-paying majors helped offset some of the lifetime loss of income that happens when people graduate in a recession. The offset made recessions “10 percent less painful” for recession-era graduates, the researchers found.

“It is simply a fact that people taking a math-intensive course of study end up getting paid more down the line,” Keys said.

Read next: 5 Ways Women in Tech Can Beat the Odds

MONEY

New Common App for Colleges Goes Online This Weekend

Monmouth College campus
Courtesy of Monmouth College Monmouth College campus

This year's Common Application has some significant changes students should know about.

Summertime may still be in full swing, but rising high school seniors take note: College application season starts—unofficially—this weekend.

The Common Application, accepted by more than 600 colleges and universities, will be available on Saturday. Sixty-nine new colleges joined the nonprofit consortium of schools for the upcoming year.

The Common App was created more than three decades ago to simplify the application process by allowing students to answer a single core set of questions, including essays, for multiple colleges. Last year, 857,000 students submitted more than 3.7 million applications.

Everything You Need to Know About Planning for College

This year’s Common App has a number of changes. For example, not all colleges will require an essay and teacher recommendation in their application. Officials say the website will make clear which colleges require essays and that students will still have the option to submit essays to all colleges.

Applicants also will see a new writing prompt intended to make them demonstrate analytical reasoning and intellectual curiosity. The new essay asks students to describe a problem they’ve solved (or would like to solve) and how they went about doing it.

Although the application is common, the deadlines aren’t. Each school sets its own, but in general, regular admissions applications come due in January, and the Common App website tells you the deadline for each school you’re applying to.

For advice on applying to and paying for college, including how to make your application stand out, check out MONEY’s College Planner.

Read next: MONEY’s Ranking of the Best Colleges in the U.S.

MONEY College

Will a Trust Fund Mess Up Our Financial Aid?

Ask the Expert - Family Finance illustration
Robert A. Di Ieso, Jr.

Q: My father has put money into a trust for my daughter; she gets access to it in November 2015, when she will be a senior in high school. How will this affect her financial aid for college in 2016? Should we put the money into our name? — Sheila B., Maryland

A: Trust funds must be reported as an asset on the FAFSA; as a result, this will likely hurt your daughter’s financial aid eligibility.

That’s because financial assets belonging to a student have a far greater impact on financial aid than parent-owned assets do, says financial adviser Fred Amrein, author of Financial Aid and Beyond: Secrets to College Affordability. Colleges expect a family to use 20% of a dependent child’s funds each year to pay for college, Amreim says, while parents are only expected to use 5.6% of their own assets to pay for college expenses. So for example: If your daughter is the sole beneficiary and the total amount held in the trust is $25,000, her aid eligibility would be reduced by $5,000.

And there’s a double whammy: Annual income from the account must also be reported as part of your daughter’s income on the FASFA form. This could reduce her aid eligibility by as much as 50% of the amount of income.

If your daughter cannot access the funds within the trust until a later date — when she is 30, for instance, or after her grandfather passes away — Amrein says you can make an argument to the financial aid office that those unavailable trust assets should not be factored into the aid equation. But there is no guarantee this will work, because each college’s aid office uses its own discretion.

As for whether to move the funds into your name: It may not even be possible, depending on the type of trust and the wording of the documents. But even before you go through the hassle of attempting it, Amreim suggests, calculate your Expected Family Contribution to see if your income and assets as a parent are already too great to qualify for financial need. (You’ll also need to know the cost of the schools your daughter will be applying to.)

If so, it won’t matter what assets are in the child’s name, he says.

For more information on how your assets will impact your financial aid, see our Saving for College guide.

MONEY College

6 Things Every Parent Should Know About 529 College Savings Plans

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Henrik Sorensen—Getty Images

Earnings on 529s are tax-free, so long as you use them for qualified expenses.

If you’re saving for your child’s higher education, you probably have a lot of questions besides “When did college get so incredibly expensive?” One popular savings tool that might puzzle you the most is the relatively new 529 plan. Here are the most popular questions.

The 529 college savings plan – begun in the late 1980s and now operated by states or educational institutions – offers tax-advantaged ways to save for various costs of higher education. What else should you know?

Common questions I hear from my clients:

What can my child use 529 money for? The money can pay for qualified expenses such as tuition, fees, books, supplies, computer-related costs and room and board for someone who is at least a half-time student. Pizza, burritos and beer don’t qualify, unfortunately.

How much can I contribute? The answer is not as straightforward as with an individual retirement account or 401(k) retirement plan. Generally, contributions to a 529 max out at $350,000 per beneficiary.

You also need to remember federal gifting tax laws. A gift of more than $14,000 to a single person in one year incurs gift tax. A 529 allows an individual to potentially contribute up to $70,000 (married couples up to $140,000) tax-free in one year to an account for a particular beneficiary.

To do this, you elect to treat the entire gift as a series of five equal annual gifts when you file Internal Revenue Service Form 709, “Gift and Generation-Skipping Transfer” with your annual tax return. The IRS can tell you more.

There are no age or income restrictions to contribute.

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What if our relatives want to contribute? Family members can either open a 529 account and name your child as the beneficiary or kick into an existing 529 that they don’t own.

If your family members contribute to a 529 account that they do own, they receive a state tax benefit if their state offers such a deduction. Opening just one account for the beneficiary and letting your family help fund it can be simpler.

Why use a 529 over a regular taxable account? These accounts defer taxes; your contributions grow tax-free as long as you use the funds on the qualified expenses mentioned above.

This beats paying the government for an after-tax account – but the latter does offer complete flexibility on where and how you can spend the money. A 529 doesn’t.

What if my child gets a full scholarship? You will not lose money.

You can withdraw from the 529 without penalty, though you do pay taxes on the earnings at the scholarship recipient’s tax rate. You can also use your 529 to pay for expenses that the scholarship doesn’t cover, such as room and board, books and other required supplies.

You can keep the 529 open with your child as beneficiary if he or she plans on graduate school, or you can also change the beneficiary and name another college-bound child.

What if my child does not want to go to college? You can change the beneficiary to another family member (a sibling, first cousin, grandparent, aunt, uncle or yourself, for example), and the money goes toward that person’s education. Most plans allow you to change your beneficiary only once a year; if your child has a change of heart and does decide to attend college, you can rename that child the beneficiary.

Remember too that these funds can help pay for two-year associate degrees, as well as for trade and vocational schools.

A final option: Withdraw the money, or cash out the plan. You pay income tax and a 10% penalty on the earnings, but not on your contributions.

If unsure that your child is in fact headed to college, sit tight on cashing out. One thing you learn fast about young adults: Life can always change.

Andrew Comstock, CFA, is president and chief investment officer of Castlebar Asset Management in Leawood, Kan.

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MONEY

10 Liberal Arts Schools Where Grads Earn the Most

You don't have to be a business major or an engineer to make a good salary right out of college.

We all know the tired cliché of the liberal arts graduate: the starving artist, the unemployed classics major, the English graduate who’s waiting tables. They’re exaggerations and stereotypes, to be sure. And yet, employment and salary data consistently show holders of liberal arts degrees toward the bottom of the pay scale for college graduates.

Supporters of liberal arts colleges argue that salaries don’t tell the whole story. The liberal arts teach students skills that will benefit them in a variety of careers, such as how to reason and write, they say. Plus, a report last year found that liberal arts majors tend to close the salary gap after several years in the workforce. And if nothing else, the liberal arts pay off in an intellectual way, making the “inside of your head an interesting place to spend the rest of your life,” as one former college president puts it.

But what if you don’t want to choose one or the other—an interesting internal life or a comfortable paycheck? Here are the liberal arts schools in MONEY’s Best Colleges rankings where graduates report the highest average salaries within five years of graduation, according to Payscale.com.

  • 10. Colgate University

    Ashlee Eve&mdash— Colgate University

    Average early career earnings: $52,900

    MONEY Best Colleges rank: 34

    Location: Hamilton, N.Y.

    Read more about Colgate.

  • 9. Virginia Military Institute

    Kevin Remington—Virginia Military Institute

    Average early career earnings: $53,400

    MONEY Best Colleges rank: 48

    Location: Lexington, Va.

    Read more about VMI.

  • 8. Washington and Lee University

    courtesy of Washington & LeeWashington and Lee University

    Average early career earnings: $53,700

    MONEY Best Colleges rank: 24

    Location: Lexington, Va.

    Read more about W&L.

  • 7. Hamilton College

    Hamilton College
    Bob Handelman

    Average early career earnings: $54,500

    MONEY Best Colleges rank: 41

    Location: Clinton, N.Y.

    Read more about Hamilton.

  • 6. Hampden-Sydney College

    courtesy Hampden-Sydney College

    Average early career earnings: $55,300

    MONEY Best Colleges rank: 158

    Location: Hampden-Sydney, Va.

    Read more about Hampden-Sydney.

  • 5. Claremont McKenna College

    Anais & Dax—courtesy of Claremont McKenna College

    Average early career earnings: $55,500

    MONEY Best Colleges rank: 19

    Location: Claremont, Calif.

    Read more about CMC.

  • 4. Amherst College

    courtesy OfficeAmherst College

    Average early career earnings: $55,700

    MONEY Best Colleges rank: 9

    Location: Amherst, Mass.

    Read more about Amherst.

  • 3. Bucknell University

    Laurie JacksonBucknell University

    Average early career earnings: $56,000

    MONEY Best Colleges rank: 37

    Location: Lewisburg, Pa.

    Read more about Bucknell.

  • 2. Lafayette College

    Chuck ZovkoLafayette College

    Average early career earnings: $56,800

    MONEY Best Colleges rank: 54

    Location: Easton, Pa.

    Read more about Lafayette.

  • 1. Harvey Mudd College

    Edward CarreonHarvey Mudd College

    Average early career earnings: $76,400

    MONEY Best Colleges rank: 6

    Location: Claremont, Calif.

    Read more about Harvey Mudd.

MONEY College

Why Bank Accounts Are Better Than Credit Cards for College Kids

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ShutterWorx—Getty Images

Teens with checking accounts are better prepared to handle their finances than ones with access to plastic.

If you want your college student to learn money management skills, get him or her a checkbook instead of a credit card.

In fact, a recent survey of 42,000 first-year college students found that the earlier teenagers had access to credit cards, the less prepared they felt for managing their own money in college.

Those who had checking accounts, by contrast, were “markedly more prepared” to handle their finances than those who were unbanked before college, according to the study conducted by education technology company EverFi and sponsored by financial services company Higher One.

The findings match up with the experience of Janet Bodnar. The editor of Kiplinger’s Personal Finance and mother of three college graduates sees credit cards for college students as dangerous and unnecessary.

Young people need to have finite amounts of money to learn essential skills such as budgeting and monitoring their accounts, said Bodnar, author of the book “Raising Money Smart Kids.”

Ideally, students would start with a checking account in high school to manage income from their first jobs. Children who are not spending their own money often have a flexible definition of what constitutes a financial crisis, Bodnar said.

“An emergency is needing a dress for the sorority dance, or picking up the check for everyone at the pizza place because nobody has any money,” she said. “You think of plastic … as a convenience. Kids think of it as a direct line to your wallet.”

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Plastic Cautions

Personal finance columnist Kathy Kristof, who also writes for Kiplinger’s and who has sent two children to college, is on the other side of the fence. She thinks a credit card can make sense for some families.

“For parents who know their kids and have taught them how to handle money, it can make your life easier,” Kristof said.

College students typically can qualify for their own credit cards, without a parent co-signing or any credit history, when they turn 21.

If parents want to help a child build a credit history before then, they can add him or her to one of their own credit cards as an “authorized user.” (Parents should call and ask the issuer if it will export their account history to the child’s credit report, since some will only do so for a spouse.)

Kristof gave cards to both children, one a college graduate and the other still a student, to book flights home and cover emergencies.

“I’m happy to have the kids as authorized users because I can see what they’re doing and rip the card out of their hot little hands if they abuse it,” Kristof said.

So far, her daughter has always checked in before using the card. Her son, however, will sometimes use it without asking but will tell Kristof and pay her back before the bill arrives.

Kristof said she would not let her progeny get a credit card if she could not see the bills. Even a responsible college student can get distracted and forget to check the balance or make an on-time payment.

Just one skipped payment can devastate credit scores.

“What you don’t want to do,” Kristof said, “is put your kid in a situation where they could get credit dings before life really has gotten started.”

Bodnar cautioned that students who run through all their money should have to make a case to their parents about why they need more, not an excuse for what they already spent using a credit card.

“If they really need money, there are plenty of ways to get it to them fast,” Bodnar said, such as bank transfers or a system like PayPal or Venmo.
Check out MONEY’s 2015-16 Best Colleges rankings

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