MONEY Ask the Expert

Why You Might Want More Than One College Savings Account

Robert A. Di Ieso

Q: I have college savings for my children in both education savings accounts (ESAs) and 529s. Is there a difference in the way those accounts are calculated for potential financial aid? Would there be any benefit to consolidating into one type of account? — Mike Spofford, Green Bay, Wisc.

A: The good news: There is no difference in how Coverdell ESAs and 529 savings plans factor into your child’s student aid, says Mark Kantrowitz, publisher of Edvisors.com, a website that helps people plan and pay for college.

Both of these education accounts are considered qualified tuition plans. So as long as they are owned by a student or a parent, the plans are reported as an asset on financial aid forms and have a minimal impact on your aid eligibility (federal aid will be reduced by no more than 5.64% of the value of the account). What’s more, your account distributions are not considered income, Kantrowitz adds.

Education savings accounts and 529s share other appealing features: Your savings grows tax-deferred and withdrawals are tax free as long as the money goes toward qualified education expenses. If you spend it on anything else, you will be hit by income taxes on the earnings as well as a 10% penalty.

One of the biggest differences is how much you can put in. ESA contributions max out at $2,000 per child per year, while 529s have no contribution limits. However, if you put more than $14,000 a year into your child’s 529—or $28,000 as a couple—the excess counts against your lifetime gift tax exclusion and must be reported to the IRS. You can get around that by using five-year tax averaging, which treats the gift as if it were made over the next five years.

Coverdell ESAs give you more investment options—from certificates of deposit to individual stocks and bonds to mutual funds and ETFs; you’re usually limited to a small number of mutual funds in a 529 plan. But you don’t need that much investing flexibility, Kantrowitz notes, since you want to keep risks and fees to a minimum over the short time you have to save for college.

Another key difference is that ESA funds can be spent on K-12 expenses; 529s must wait until college. ESAs also come with age restrictions. You can contribute only while the beneficiary is under 18, and to avoid penalties and taxes you must spend the funds by the beneficiary’s 30th birthday (with a 30-day grace period).

You can get around this age limit by changing the beneficiary to an under-18 close relative of the beneficiary. Or you can roll it over into a 529 plan with no tax penalty. (You cannot roll your 529 into a Coverdell ESA, however.) In fact, later-in-life education is one of the only reasons to consolidate plans. Otherwise, says Kantrowitz, there is no compelling reason to combine your two savings accounts into one.

MONEY College

12 Things We Wish We’d Known When We Were 18

Girl moving off to college
Eric Raptosh Photography—Corbis

Suze Orman and other experts share their financial advice for the Class of 2018. Follow these tips to keep your college experience from becoming a major money mistake.

Prepping for freshman year at college typically includes activities like shopping for dorm essentials, reviewing orientation packets, and Googling your new roommate.

Most students don’t spend a lot of time thinking about how they’ll manage their money in this new phase of their lives.

And yet, what you do in those first few years of parental emancipation can affect you for years—or decades—to come. Students graduated last year with an average $35,200 in college-related debt, including federal, state and private loans, as well as debt owed to family and accumulated via credit cards, according to a Fidelity study. Half of those students said they were surprised by just how much debt they’d accumulated.

To make sure the class of 2018 gets off on the right foot, MONEY gathered sage advice from top financial experts about the lessons they wish they, their kids, or their friends had known before starting school.

1. Limit your loans. “Do not take out more in student loans than what you are projected to earn in your first year after college. If you only expect to make $40,000, you better not take out more than $40,000. The chances of you being able to pay it back is close to nil. If you need to take a private loan, you’re going to a college you can’t afford. Remember, going to an expensive school doesn’t guarantee success. The school never makes you, you make the school.” —Suze Orman, host of The Suze Orman Show and author of The Money Book for the Young, Fabulous & Broke

2. Finish in four. “Many kids are finishing school in five or six years. But every extra year is potentially an extra $30,000 to 40,000 in expenses. Map out your coursework and figure out exactly what you’ll need to do each semester. Be vigilant about sticking to your plan. Try to catch up on any credits by taking classes at a community college over the summer.” —Farnoosh Torabi, author of You’re So Money

3. Study money 101. “Sign up for an economics or personal finance course. This way, when you graduate, you’ll be better equipped to manage money for the rest of your life.” —Brittney Castro, CEO of Financially Wise Women

4. Leave the car at home. “Everyone feels like they need a car, but with the combination of sharing services like Uber, Lyft, Zipcar and public transport, that isn’t always the case. If you’re living in a major metropolitan center or on campus, consider leaving your car behind. It’s much cheaper to use one of these car services than it is to pay for insurance, gas, parking, car maintenance and car payments.” —Daniel Solin, author of The Smartest Money Book You’ll Ever Read

5. Lead rather than follow. “Especially in college, you’re going to be surrounded by people doing dumb things financially. You’ll see people financing their lifestyle with student loans or their parents’ money. Don’t feel bad if you can’t afford the same things as others. I knew a student who was financing his whole college experience with debt and he was always asking people to go shopping with him. If I’d tried to keep pace, I’d have ended up in the same debt-ridden place as him.”—Zac Bissonnette, author of Debt-Free U

6. Find free fun. “You can still do fun things at school, without spending a lot of money. You’re paying an activity fee in your tuition, so you ought to make sure you’re taking full advantage of whatever the school offers for free—be it concerts, trips, lectures. The school I went to provided grants to help students travel abroad and offered free plays and trips through different clubs.” —Farnoosh Torabi

7. Be purposeful with plastic. “The idea that you need to build credit in college is wildly overrated. It’s not a bad idea to build credit, but having built up a bad credit history will hurt you more than having no credit history. You don’t need to feel pressure to get a credit card. You can get by just fine with cash and a debit card; no one is expecting you to have a ton of borrowing history when you’re getting your first apartment anyway.” —Zac Bissonnette

8. Put your budget on autopilot. “Keep track of the money you’re getting in from loans and your parents, as well as your expenses. Use an app like Mint.com, which lets you link your debit and credit cards to your online account to track your spending and easily help you keep on budget.” —Daniel Solin

9. Enlist Mom and Dad. “Check in with your parents once a month and review your spending with them. Talking about this will help you to avoid what I call ‘budget creep,’ where all of a sudden you’re spending $30 a day on food and entertainment. All those little extras add up and you could be spending over a hundred a week… on what?”—Neale Godfrey, chairwoman of Children’s Financial Inc.

10. Protect your stuff. “College students may not think they have a lot of valuable possessions. But think about the value of electronic devices alone, not to mention textbooks, clothes, even that ratty futon. The good news is that renters insurance is typically inexpensive and can protect you from fires, theft and other incidents. The even better news is that students’ stuff may be covered by their parents’ homeowners insurance. Check the policy prior to hitting the books.”—Kara McGuire, author of The Teen Money Manual

11. Establish rules with roomies. “If you’re renting an apartment with friends, be sure everyone and their parents sign the lease. Try to have everyone’s name on the utilities bills as well. Kids will take advantage of other kids, and you don’t want to be the one who is stuck being responsible for everything. If you can’t attach everyone’s names to all the bills, have them prepay. Also, make sure everyone chips in for general expenses like cleaning supplies and toilet paper, so you don’t end up paying for all of that as well.” —Neale Godfrey

12. Share with discretion. “Social networks are a public record. Your future employers will look you up on your social sites and judge you based on what they see. So something that you thought was cute in college could keep you from getting the job. Know that every move you make on those sites could have a direct consequence on your ability to land a job.” —Suze Orman

 

MONEY College

How to Save up to 70% on College Textbooks

Carrying textbooks
Image Source—Alamy

While the cost of class materials is going up, students are spending less on average. Here's how they're cutting their costs—and how you can, too.

Ask Sandra Kerley how important it is that she’s able to get textbooks for free, and she’ll you that this seemingly minor benefit is “life changing.”

“It helps us pay the electricity bill; it helps us put food on the table for the kids; it helps us buy other supplies for class,” says the 35-year-old Kerley, a third-year business administration student at Tidewater Community College in Virginia. Her school’s “Z Degree” program relies solely on free, open-source textbooks to eliminate a substantial part of what’s driving up the cost of college: the often prohibitive expense of class materials.

The price of new printed textbooks continues to rise—up more than 7% last year alone, according to the Bureau of Labor Statistics, and 82% between 2002 and 2012, as calculated by the Government Accountability Office.

Even as these costs soar, however, the average student is actually spending a bit less now than in the past. Between the 2011-12 and 2013-14 school years, the U.S. Department of Education reports, the average amount students spent on books and supplies declined by 2% at public, four-year universities and colleges and a little less than 1% at private non-profit institutions. The average outlay is now around $1,200 for students at both types of schools.

Here are three reasons why students’ outlays have come down—and how you can make sure yours do, too:

1. A burgeoning rental market. More and more students are renting their course materials instead of buying them, which can save hundreds of dollars over the course of an education. In 2009, roughly 300 colleges and universities had rental programs. Today, more than 3,000 do, according to the U.S. Public Interest Research Group.

That has pushed down prices throughout the rest of the market, says Richard Hershman, v.p. for government relations at the National Association of College Stores: “Textbook rental programs … [have] created a lot of residual competition and forced publishers to sell digital products at better prices.”

Your move: Investigate renting. A new copy of the 10th edition of Campbell Biology lists for $230, but a paper copy can be rented from Chegg.com for $67 (with a December 19 return) or $110 for an e-book (with a 180-day subscription). This option doesn’t make sense for a book you’ll need to refer back to later. Nor does it make sense if you’re tough on books or are likely to miss the due date—you could end up having to pay the list price minus any rental fees. In those cases, buying an ebook rather than renting it ($160 from Amazon for Kindle) or getting the book used ($179 on Amazon) may be a better option.

2. More advance warning. The 2008 reauthorization of the Higher Education Opportunity Act required publishers to disclose their prices to faculty or whoever is in charge of selecting course materials. Universities and colleges, in turn, have to list that information on their online course schedules so that students can start shopping around early.

Your move: Start comparison shopping as soon as the list is released, since you won’t have time to be as price sensitive if you begin the day before class starts. Check out all the different ways you can get your hands on the book. The electronic edition could be cheaper than the rental or vice versa. Buying it online could cost less than shopping at the campus bookstore, or vice versa. Keep in mind that stores sell out of used stock quickly, so you’ve got to get there early to get the pre-owned copy.

3. The open-source revolution. Groups like PIRG are advocating for more open-source textbooks, which would be free to students online and relatively cheap to download.

Tidewater isn’t the only school that has started to integrate these materials into their courses. The University System of Maryland ran a pilot program last spring at the behest of its student council. Eleven faculty members from seven institutions across Maryland participated. Roughly 1,100 students saved a total of around $130,000 in just one semester.

“Faculty are open to this, and they are eager to do what they can to cut costs for students, but they have to balance that against quality of the materials,” says M.J. Bishop, director of the Center for Academic Innovation. “That will be the biggest hurdle going forward.”

Your move: Lobbying faculty to move toward open-source texts is noble, but probably won’t realize savings this semester. Because there are those who believe all information should be free, you can find pirated copies of many texts online for free, but keep in mind that this is illegal. You can stay on the good side of the law by looking up books that have exceeded their copyright dates and are now in the public domain—most useful for literature courses—at sites like Project Gutenberg or Google Books.

4. Students opting out. The other reason for the decline in what students pay for textbooks is more troubling, says Nicole Allen, director of open education at the Scholarly Publishing and Academic Resources Coalition, an alliance of research libraries based in Washington, D.C. “There is a really alarming trend of a lot of students not buying their textbooks because the price is too high,” she says. “Overall student spending on textbooks may be down, but the question is how much of that is because students haven’t bought the books they were supposed to because they can’t afford them.”

That trend was confirmed by a report released last year by PIRG, which surveyed more than 2,000 students at 150 universities and found that roughly 65% had decided against buying a textbook at some point because it was too expensive.

Your move: Really can’t afford the book? Find a friend to share with: Either someone who took the same class last semester who still has their book or someone who’s in the class with you this term. You could also ask the professor if he or she has put a copy on reserve in the campus library, and if not, whether a previous edition of the book will suffice. You can save as much as 70% by purchasing even just one version prior. Campbell Biology 9th edition used, for example, will cost you only $69 used and $30 to rent on Chegg.com.

This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet affiliated with Teachers College, Columbia University.

Related stories:

Free college idea picks up momentum
Colleges try to speed up pace at which students earn degrees
Testing your way to a degree is not only faster than taking the conventional route. It’s much, much cheaper
Want to refinance that student loan? It’s getting easier

MONEY College

The Important Talk Parents Are Not Having With Their Kids

College tuition jar
Alamy

The new Fidelity College Savings Indicator survey reveals that parents are only on track to pay a third of college tuition—and that they're keeping mum on the topic.

Moms and dads expect their children to pay for more than one-third of college costs—but only 57% of parents actually have that conversation with their kids, according to a new study out by Fidelity today.

The cost of college has more than doubled in the past decade, and parents are having a hard time saving for it, Fidelity’s 8th annual College Savings Indicator study shows. While 64% of parents say they’d like be able to cover their kids total college costs, only 28% are on track to do so.

That jibes with reality: For current students, parents’ income and savings now only cover one-third of college costs on average, according to Sallie Mae’s recently released report How America Pays For College. Kids use 12% of their own savings and income. Loans taken by students and parents account for 22% of the funds, while another 30% comes from grants and scholarships.

Experts urge parents to have a frank conversation well in advance with their children about how much college costs and how much they are expected to contribute, either through summer jobs, their own savings or part-time jobs while in school. “If children know that they are expected to contribute to their college funds, they are more likely to save for it,” says Judith Ward, a senior financial planner at T. Rowe Price.

A T. Rowe Price study released earlier this week found that 58% of kids whose parents frequently talk to them about saving for college put away money for that goal vs. just 23% who don’t talk to their parents about how to pay for school.

There’s also reason to believe that parents shouldn’t feel so bad about not being able to take on the full tab. A national study out last year found that the more money parents pay for their kids’ college educations, the worse their kids tend to perform. In her paper “More Is More or More is Less? Parent Financial Investments During College,” University of California sociology professor Laura Hamilton found that larger contributions from parents are linked to lower grades among students.

Apparently, kids who don’t work or otherwise use their own money to pay for school spend more time on leisure activities and are less focused on studying. It’s not that these kids flunk out, according to Hamilton. She found that students with parental funding often perform well enough to stay in school, but they just dial down their academic efforts.

Given all these findings, parents should feel less pressure pay the full ride for their kids—especially if it means falling behind on other important goals like saving for their own retirement. “Putting your kids on the hook for college costs is better for everyone,” says Ward.

MONEY 101: How much does college actually cost?

MONEY 101: Where should I save for college?

TIME Internet

The New Science of Pairing College Roommates

499869605
Students Working Together Moving Dormitory on University Campus YinYang—Getty Images

At one school using the new app RoomSync, roommate approval was up 40 percent

This article originally appeared on Rolling Stone.

Eight years ago, when Robert Castellucci worked for a housing complex at the University of Florida, his main job was to pair roommates based on a few simple lifestyle questions. But what had once been a straightforward task – matching smokers with smokers, separating early risers from night owls – was getting difficult thanks to social media. “We’d get 30, 40, 50 calls a day asking for a new roommate based on their Facebook profile,” he says. “They didn’t get the roommates they wanted, and I couldn’t get my job done.”

(MORE: Before Belle Knox: 8 College Sex Scandals That Got ‘Extra’ Curricular)

So in 2009, Castellucci launched RoomSync, a Facebook app where students fill out a finely tuned questionnaire. An algorithm suggests possible dormmates, and students themselves get to decide whose dirty underwear they’ll be stepping over for the next two semesters.

More than 60 schools now use RoomSync, with promising results. At New Mexico State, 50 percent of students used to ask to switch roommates the school chose for them. But among students using the app, that number dropped to 10 percent, according to Julie Weber, director of housing. RoomSync user GPAs were .25 points higher, at 3.05, and their re-enrollment was up 6.6 percent, to 96 percent.

(MORE: Confessions of an Ivy League Frat Boy: Inside Dartmouth’s Hazing Abuses)

For decades, universities believed that acclimating to the quirks of a complete stranger was an essential part of college. That’s still the case at schools like NYU and Stanford, where the 1,700 incoming freshmen are hand-paired by two upperclassmen. “Education’s about putting people in uncomfortable situations so they start to learn about themselves,” says NYU housing head Thomas Ellett. “[Programs like RoomSync] are a good customer-service tool, but there’s a big difference between customer service and education.”

(MORE: 50 Things Millennials Know That Gen-Xers Don’t)

But in the past half-decade, universities have moved to more modern systems – by 2012, about 70 percent allowed incoming freshmen to select roommates, according to one informal survey. Besides RoomSync, there are similar programs like Roomsurf and RoommateFit; some schools have proprietary systems, like Oregon State, which lets incoming freshmen use a school-only social network to choose future bunkmates.

But as all are quick to admit, one reason these programs work so well is that students are less likely to complain when they get to pick their own roommate. “That way, they are more invested in who they have selected,” says Weber. “They can’t blame us for it.”

(MORE: In Pics: Millennials’ Most Earth-Shaking Sexual Moments)

 

MONEY College

5 Signs Your College is in Serious Financial Trouble

Academic building with "Going out of Business" sign on door
Gregory Olsen/Getty Images—iStock (sign)

An increasing number of schools are unable to balance their books. Make sure yours is not one of them.

When Corinthian Colleges Inc. agreed in July to sell off or close nearly all of its 107 campuses, it left 72,000 students wondering about their futures—and whether they should have seen the writing on the wall.

Today, with more colleges and universities than ever having trouble making ends meet, experts are urging students to pay closer attention to warning signs. “In this day and age, when there’s so much at risk, it doesn’t hurt to do some legwork and investigate,” says Mike Reilly, executive director of the American Association of Collegiate Registrars and Admissions Officers (AACRAO).

When colleges close, students face the wrenching process of having to find another place to continue their higher educations, often in the middle of semesters; plus, they may wind up tangled in the red tape of student loan paperwork and the often unsuccessful effort to transfer academic credits. If credits won’t transfer—and they often don’t—those students face the prospect of repeating course work they’ve already completed, which prolongs the time they spend in college and the amount it costs them. Alumni, meanwhile, see the value of their hard-won degrees decline.

Measures to protect students take different forms, depending on the nature of the school. A for-profit college like Corinthian, for example, must disclose serious issues to investors and the federal government. In January, Corinthian filed a regulatory report acknowledging that the federal government was preparing legal action against the company.

“But colleges are very far down the vortex of the funnel by the time problems are publicly acknowledged,” Reilly says.

So you’ll want to keep up with the early warning signs. Here are five to watch for:

1. The accreditors are circling. Most reputable colleges and universities are overseen by regional accreditors, which keep an eye on schools’ academic and financial health.

When City College of San Francisco’s budget fell apart, for instance, the Accrediting Commission for Community and Junior Colleges, stepped in and ordered the community college to close. That decision is on hold while a court battle proceeds.

Accreditors give schools several rounds of warnings before taking the rare step of ordering them to close. It’s important for students to know the difference between an early warning and more serious sanctions, says Mary Ellen Petrisko, president of the Western Association of Schools and Colleges (WASC), which accredits four-year schools in California and Hawaii and other Pacific islands.

“Students should not panic when they see there’s some sort of challenge to the institution,” Petrisko says. “Institutions go through challenges all the time.”

Accreditors like WASC post warnings and other actions after each meeting. The documents can be helpful for students who want to keep track of their schools’ financial health.

2. The credit rating agencies are raising flags. Another resource to pay attention to is the credit-rating agencies, such as Moody’s, which warn bond investors about at-risk schools. Among the schools that have failed Moody’s smell test is New York’s Yeshiva University, which was downgraded to junk-bond status after a series of financial problems.

Rabbi Kenneth Brander,Yeshiva’s vice president for university and community life, says some students had expressed concerns about their financial aid. But he added that there was no threat to scholarships or academics.

3. The D.O.E. gives the school poor marks. The U.S. Department of Education also provides a measure of schools’ financial strength through its annual “financial responsibility composite scores,” on which a score of less than 1.0 indicates problems.

4. There’s talk of a merger. Several colleges and universities have tried to stave off extinction by merging with other schools. Some mergers work out, but others fail and leave students marooned and without transferrable credits.

A merger “to me seems like a very tenuous strategy,” AACRAO’s Reilly says. “That seems like a trigger in my mind. I’d get a copy of my official transcripts at that point.”

5. The administration won’t come clean. Students at shaky colleges should press their student leaders to keep a close eye on the school’s future, says Reilly. A school that is confident it’s on the right track should have no trouble communicating details to students, he adds.

“One of the things is for students to look at whether an institution is being realistic about its future,” Reilly says. “Once a school closes, your options become a little more limited. I would start asking questions about what the plan is for the institution. If they’re doing nothing but making assurances to students, I’d be concerned.”

This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet affiliated with Teachers College, Columbia University.

Related stories:
Higher education is headed for a shakeout, analysts warn
Colleges keep increasing discounts to keep students coming
Needing revenue, old universities open new campuses
Private, for-profit colleges see unaccustomed setbacks

MONEY Saving

Why Parents Should Procrastinate on Back-to-School Shopping

School supplies arranged in clock face formation
iStock

If you've been a slacker thus far in rounding up your kid's back-to-school supplies, there's good reason to keep on procrastinating.

The simple reason why this is so is that very soon, almost every store will be putting kids’ scissors, notebooks, glue, pencils, and other back-to-school merchandise on clearance. For that matter, clothing marketed for the back-to-school season will be deeply discounted starting around Labor Day as well if not sooner, in order to make space for the next big seasons for retailers—Halloween and Christmas.

Don’t tell your kids about this, especially not at the start of the school year when homework and exams are about to become painful realities, but the truth is that sometimes it pays to sit back and do nothing. Many consumers are utilizing this “strategy” this summer, though it’s unclear whether they’re doing so consciously—or, more likely, lazily and obliviously. The Integer Group estimated that more than half of shoppers wait until one to three weeks before school starts to buy school supplies, and that 36% of consumers won’t do any back-to-school shopping at all, up from 31% who skipped back-to-school purchases last year.

The most prudent, responsible, cost-conscious approach for back-to-school shopping is for a parent to dutifully browse for bargains throughout the summer and scoop them up when they’re optimal. Back-to-school promotions started even before the previous school year ended, and Staples, Walmart, dollar stores, and other retailers have periodically rolled out 1¢ folders, 25¢ rulers and protractors, and other loss-leader sales in order to rev up business. For that matter, truly savvy shoppers understand that kids tend to need more or less the same supplies every fall, so they strategically snatch up pencils, notebooks, and whatnot whenever they’re at rock-bottom prices throughout the year.

The ship has sailed on the chance to do the prudent thing and buy items whenever the optimal price appears. That approach is too time-consuming and requires too much attention for the average parent anyway. This late in the game, there are two options left: 1) Turn into a whirling dervish and hit one store to buy everything your student needs in the few days before school starts; or 2) make do with what you have for the first day of school, then complete your kids’ list sometime around Labor Day.

The first option is the more responsible one, of course, and ensures that your child will have all of the required supplies on time. Yet the Integer study found that price is the most important element in back-to-school purchases for roughly three-quarters of consumers, and with this first approach, shoppers will wind up paying more than is necessary for many school staples.

That leaves us with the second (slacker) option, which is attractive not only because you can do nothing for a little while longer, but also because of a bonus in the form of saving a bundle of money. By the time Labor Day arrives, the majority of what you need to buy will likely be marked down for clearance sales. You’ll get the cheaper prices on glue, notebooks, and such without having to shop around, monitor Sunday circulars, or hit multiple stores. All in all, you’ll save time, effort, and money, with the main tradeoff being that your kid might get dirty looks from the teacher if he shows up on the first day of school with an empty backpack—or perhaps no backpack.

“Like most seasonal items, the longer you wait to buy back-to-school items, the better your chances are of scoring a significant discount,” said Lindsay Sakraida, features director at the deal-tracking site dealnews.com. Normally, clearance aisles are a hodgepodge of random, undesirable leftovers, but this isn’t the case for basics like pens, notebooks, and calculators, which are more or less immune to trends and seasonality, said Sakraida. “While sorting through the clearance section can sometimes yield limited options, it’s less of an issue with school supplies, making this an even more appealing option for cash-strapped back-to-schoolers.”

She suggested starting to look for big back-to-school markdowns a few days before Labor Day weekend. Around that time a year ago, Staples and Office Max cut prices dramatically on many items, sometimes with discounts of more than 75%. Other retailers will surely be posting printable coupons good for 20% or 25% your entire purchase over the holiday weekend, said Sakraida.

And prices will only drop from there as retailers try to clear shelf space to prep for the next season’s goods. In terms of fall clothing and school supplies alike, “look for the deals to get pretty aggressive by mid-September,” NPD retail analyst Marshal Cohen told the Wall Street Journal.

Even if your kids are fully outfitted for this school year by then, it might be wise to hit the clearance section and round up some supplies for next fall. You know prices will be cheap. And perhaps by planning ahead you’ll show your children that even the laziest procrastinators can change their ways and become more responsible.

More Back-to-School advice:
Would You Spend $60 for Your Kid’s Lunchbox?
Parents Worry More About Back-to-School Shopping Than Bullying
4 Best Credit Cards for College Students

TIME Saving & Spending

One (More) Shocking Way Colleges Are Ripping Off Kids

Marking up movie theater popcorn is one thing, but jacking the price of a laptop by more than 100% is another, especially when the would-be buyers are college kids. As students get ready to head to campus, college stores are making laptop shopping a buyer-beware endeavor.

An investigation by DealNews.com found that college bookstores hike prices on the laptops and tablets they sell by an average of 35% over the regular sale prices of retailers like Amazon, Best Buy and Staples. DealNews looked at prices for the cheapest tablets and laptops, plus the most expensive laptops, available at the online stores of five public and one private college, then compared those to back-to-school deals offered by other retailers on identical or very similar machines.

Not every single one is a rip-off, but more than two-thirds are, and some of the markups are pretty egregious.

DealNews finds that the University of Virginia sells a first-generation iPad mini for a staggering 135% more than the $199 sale price the site found on more than one occaision over the summer. The $469 price the campus store is charging is so high that even if you wanted to buy the newer model iPad mini, you could get it straight from Apple for $70 less.

As a matter of fact, if you’re a college kid (or the parent of one), you should probably just steer clear of the campus store entirely if you’re looking for electronics.

“Another example that stood out… were these headphones,” says DealNews’ Louis Ramirez. Although they cost $130 on Amazon, the University of Berkeley Student Store slaps a $49 markup on top of that.

We found other examples in just a cursory browsing of the sites supplied by DealNews, so it’s likely this just scratches the surface of a bigger issue in electronics markups.

One school site is selling a 32G Sandisk USB thumb drive for about $45. Wal-Mart sells the same model for less than $17. A wireless mouse sold by one school for just under $30 sells for half that amount at Office Depot. One Dell laptop “deal” on a school site was no cheaper than the price on Dell’s own website, and two schools’ “sale” prices on iPads are still $30 more than you’d pay at Wal-Mart.

College stores’ problems with electronics sales don’t end with the inflated prices, says Ramirez. While some schools sell up-to-date technology, the site’s investigation found that “others were selling older previous-generation tech at current-generation pricing,” he says. If you think you’re getting a deal, make sure to clarify the model — you could be paying top dollar for last year’s closeout.

And don’t be fooled into thinking that “student discount” translates to the best deal. Just like regular prices, you have to shop around because all student discounts aren’t created equal. “Campus stores aren’t the only retailers that offer student promos,” Ramirez says. As long as you have an active student account (one that ends in .edu), a number of other retailers offer discounts.

MONEY College

4 Best Credit Cards for College Students

Mom helping her daughter move in to college dorm
Make sure she's packed one of these cards. Blend Images—Alamy

Send your kid off with one of these options this fall, and you'll sleep better at night.

You’ve no doubt heard harrowing stories of college students applying for their first credit cards, then racking up thousands of dollars in debt. It’s the stuff of parents’ worst nightmares.

The CARD Act of 2009 lessened the potential trouble students could get themselves into. The law mandated that, in order to qualify for a card, applicants must be over 21, get an adult to co-sign or prove they earn enough money to make payments.

But it’s left many parents of underclassmen with a tricky decision. Do you sign on the dotted line for your kid—thus putting your own credit score on the hook if your kid doesn’t pay the bill?

Shielding Junior from having his own credit card may seem sensible, but it’s penny-wise and pound-foolish. Length of credit history accounts for 15% of one’s FICO score. So by protecting your son or daughter from plastic, you are inadvertently hurting his or her creditworthiness. You also miss out on the opportunity to handhold him or her through an important financial lesson.

Of course, striking a proper balance between the value of credit and the dangers of its excess is paramount. Revolving debt hurts a credit score, too, and can be very costly to a kid living on a ramen budget—with APRs averaging 15% and as high as 23%.

Three options for you to consider, depending upon how much risk you think your newly emancipated child can handle:

The Training Wheels: A secured card or a low-rate, low-limit unsecured card.

If you are worried that terms like “credit limit” and “due date” will be lost on your child, you might want to sign him up for a secured card, which uses cash as the credit limit collateral.

The benefit is that Junior won’t be able to spend beyond the cap, so it’s a good way to give him practice using a card of his own without doing a lot of damage to your finances or your credit score. The downsides: You’ll have to front the cash. And unless you set a large credit limit, he may use a high percentage of his available credit, which is bad for his credit score (ideally he should use no more than 20%).

Alternately, if you don’t want to put up your cash as collateral—or your kid has enough income to qualify on his own—you might start him off with an unsecured card that has a low rate and a low credit limit. This also pens him in until he demonstrates reliability.

Once he proves himself able to handle either of these cards, have him shift to one of the advanced cards in the next category.

The picks: MONEY’s Best Credit Cards winners Digital Credit Union Visa Platinum Secured or Northwest Federal Credit Union FirstCard Visa Platinum.

The APR on Digital Credit Union’s Visa starts at a low 11.5%. To apply for this secured card, you do have to be a member of the credit union, but that be accomplished with a $10 donation to Reach Out for Schools.

The FirstCard’s rate is even lower—a fixed 10% APR (most cards today are variable rate). This card, which has no annual fee, is designed for people who don’t have a credit history: It requires applicants to take a 10 question quiz on credit knowledge and has a credit limit of just $1,000.

The 10 Speed: A rewards card

Cards that offer rewards typically have higher APRs than those that don’t. So if you child revolves debt on one of these cards, he’ll likely erase the perks earned.

Thus, rewards cards are best reserved for those students who’ve already proven themselves capable of paying off a secured or low-limit card in full and on time for a year or so. These are also good choices for those students who are over 21.

The picks: Capital One Journey Student Rewards Card and Discover It for Students.

The no-fee Journey gets your kid 1% cash back on everything, but the reward is bumped up by 25% every month he pays his bill on time. “This is a good card for incentivizing students to have the right behavior,” says NerdWallet.com’s Kevin Yuann. There’s no foreign transaction fee (a plus for those studying abroad), but a late payment fee of up to $35 and a steep 19.8% APR should scare away parents who aren’t sure about their child’s bill-paying vigilance.

The It, which also has no annual fee and no foreign transaction costs, gets your kid 2% cash back on the first $1,000 at gas stations and restaurants each quarter, and 1% for everything else. Because of the extra rewards for gas, the It is a good card for commuters, says Yuann. Cardholders also receive a free FICO score, derived from TransUnion data, on monthly statements.

While there is no fee on the first late payment, your child will pay up to $35 after that; and after a six-month no-interest window, the APR ranges from 13% to 22%.

Whichever card you end up co-signing for your child, definitely make sure you ask to get account access—and sign up for balance alerts so that you know when you need to swoop in for a teaching moment.

RELATED:
Best Credit Cards of 2013
Money 101: How Do I Pick a Credit Card?

 

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