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Credit Unions Helping Students Prep for College

Credit Unions Helping Students Prep for College By Cyndi Cohen
Published August 21, 2012
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Many young credit union members are currently preparing for their upcoming venture to college, and as any college student or college parent knows, attaining higher education is a costly endeavor. In addition to the high price of tuition there are the associated expenses of college life including room and board, food and toiletries, dorm furnishings and accessories, books and school supplies, and a laptop. Throw into this mix, money for clothes, entertainment, and perhaps a car or other travel expenses, and we’re talking mucho dinero!

According to collegedata.com, the College Board recently reported that a "moderate" college budget for an in-state public college for the 2011–2012 academic year averaged $21,447 while a moderate budget at a private college averaged $42,224. The College Board also found that the average cost of room and board in 2011–2012 ranged from $8,887 at four-year public schools to $10,089 at private schools. In addition, the average cost for books and supplies for the 2011–2012 school year was $1,168 at public colleges and $1,213 at private colleges while personal/transportation expenses ran from $2,422 at public colleges to $3,148 at private universities.

Fortunately, one way (in addition to personal college funds, academic or athletic scholarships, and student loans) that today’s college students and their parents can manage the financial burden of a four-year education is to take advantage of some special student resources offered by your credit union. Many credit unions offer substantial products, services, and other tools for college-bound members from student accounts to local scholarships to student credit cards to education and guidance for college saving.

Funding Your Education, Credit Union-Style

Dominion Credit Union (Richmond, VA) offers a free checking account (with just a $5 deposit) to any eligible student in order to help him/her learn to budget and manage finances. There are no minimum balance requirements, no check-writing limits, no restrictions, and the first 50 checks are free to help young members get started. Natalie Baker, Vice President of Marketing says that the credit union works hard to encourage parents to educate their students on the benefits of getting an early start on saving. “We make it easy for parents to help their children save, by offering payroll deduction from the parent’s paycheck to the student’s account.”

In addition, Dominion offers two member-friendly credit card options to help students build a solid credit history. The cards have no annual fees and lower interest rates than many other financial institutions. “While industry regulations regarding marketing credit cards to youth have changed recently, it is still very important that parents teach their adult children about the importance of building credit, and of fully understanding credit cards rates and fees,” cautions Baker. “Not being aware of annual fees or why a few percentage points higher rate makes a difference can be a costly lesson.”

The credit union advises student members to start building their credit by applying for a low limit credit card. Parents can get a card with their child/student to help with expenses at school and in case of emergencies. “We encourage students to avoid charging more than 30% of their limit and, if they can, pay their balance in full each month,” says Baker.

To help members fund their education, Dominion offers multiple $2,000 scholarships, which are awarded each spring to students who demonstrate excellence in academics, extracurricular activities, work, and community involvement. According to Baker, the credit union also suggests the following tips for college students:

  • Open a savings account and add a little money to it whenever you can. Avoid taking money out of your savings - the more money you keep in there, the better dividends you’ll earn. It’s important to save for emergencies, unexpected expenses, and the occasional big purchase or vacation.
  • Before purchasing your textbooks from your school’s bookstore, consider renting or ordering your textbooks on Amazon.com. Textbooks really add up and this is an easy way to help you save a few bucks.
  • Consider applying for a low limit credit card to start building your credit now. Remember to use your card responsibly.
  • Rates matter and fees can add up. Be sure to educate yourself on what your financial institution’s rates, fees, and policies are so that you can choose accounts that are in your best interest and better manage your money.
  • If you’re not a credit union member, find one and join today. Credit unions typically have better rates, fewer fees, and more member-friendly terms. In fact, according to a recent study, at Dominion Credit Union their high-use member households save an average of $996 a year by using the credit union over a bank. (Source: 2010 CUNA Membership Benefits report)

Students can go to the education center on their website for many different financial tips and articles on how to budget their money and use their credit wisely. “Any student using Online Banking can use our free Money Manager product which allows them to set and track budgets, such as dining out and entertainment budgets, and track spending; they can also set and track goals, such as paying off their school loan,” suggests Baker.

Freedom Credit Union (Warminster, PA) offers Savings Accounts for potential Members 12 or older, Checking Accounts for potential Members 16 or older, and Money Market Accounts for potential Members 18 or older. In addition, the Freedom Visa Student Credit Card is designed for young people to establish and maintain a credit history. According to Krista Barry, Marketing Coordinator, the Card features a $1,000 credit limit, no credit history requirement, and rate as low as 11.9%, and the exciting new payWave technology that allows the Cardholder to simply wave the card to pay.

The credit union also offers 3 different newsletters and websites specially designed for young people with helpful articles on money management, fun games, and financial planning resources. “We have a referral code for potential Members 25 and under to earn $25 when they open a new Freedom Account,” says Barry.

Like Dominion, every year, Freedom members are encouraged to apply for one of four $2,000 Freedom scholarships. Applicants must be a graduating high school senior or equivalent, or an undergraduate college student taking at least nine credit hours per semester at an accredited college or university for the 2012-2013 academic year.

“At Freedom we feel it’s never too early to start a budget of what’s coming in and what’s going out of a young person’s Freedom Checking Account - setting limits on how much you can spend on eating out, getting new clothes, and that sort of thing will prevent you from having to call your parents to beg for money,” says Barry.

If you are a young person getting ready to plan for college or the parent of a student, why not check out your credit union’s website for Student Resources? You may be pleasantly surprised to find a helpful partner whose focus is your financial independence and future success!

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