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Summer School: Lessons on Student Loans & Bank Accounts

Congratulations! You just graduated from high school and are looking forward to a carefree summer before starting college. The last thing you want is another assignment. Trouble is, you have at least two: make sure you have enough money to pay for college, as well as a way to manage money while you’re there. Summer is the time many students take care of these tasks. Want some tips? Looks like school’s back in session.

Student Loans

What’s the first step to take when you’re considering borrowing money to pay for college? Check to be sure no one else will pick up the tab. Before applying for private student loans, be sure you’ve exhausted any options for scholarships or financial aid.

If you do need a private student loan to round out your college financing, look for one that offers flexibility:

  • Can you get a lower rate by applying with a creditworthy co-signer and/or establishing automatic debits from a bank account to make payments?
  • Can you make some payments (maybe interest) while in school to get a head start on repayment? This will also help you establish a credit history.
  • Is there a penalty for prepayment (paying off the loan ahead of schedule)?

Do your research (yeah, it’s not just for term papers), compare loan options carefully, and only borrow what you need specifically for educational purposes. The College Board offers information to help you evaluate student loan options.

Student Bank Accounts

 

You’ll probably need a bank account when you get to college, even though it may seem like you have no money to put in it. Here are some points to consider:

  • Choose a bank with branches and/or ATMs near campus. Get to know the people who work there. If you have questions about banking and money management, they can be a good source of help.
  • Check to see if the bank offers a checking account geared specifically for students, with no monthly service fees or minimum deposit required.
  • Does your bank offer free online, mobile and text banking services? Does it provide statements online, instead of on paper through the mail? Does it allow you to use other ATMs without charging a fee? These features make it convenient to bank anywhere, anytime – and they’re even more essential if you use a bank that doesn’t have locations near both your college and your family’s home.
  • Set up direct deposit so any paychecks are automatically put into your account. It’ll save you a trip to the bank to deposit or cash the check, and you may be less tempted to spend it immediately.
  • Learn how to manage your account and avoid overdrawing it (spending more money than you have available). For example, you may be able to set up an email alert if the amount in your account drops below a certain level.
  • Remember to keep all your account information confidential. Put your debit card and checks in a secure place; don’t leave them lying around in a dorm room.

Review the online or paper account statements you receive from the bank to be sure the transactions listed there match your purchases and withdrawals. This is one of the best ways to catch fraudulent transactions. Remind your parents to do the same thing. It’ll blow their minds. They’ll be so impressed with your responsibility that they may just give you some money for that new bank account!

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Posted in Financial Education.

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