Kevin Waldron, from Merrill Lynch fills us in on common financial mistakes that college students make and some great advice for parents on how to proactively help their children avoid making these mistakes.

Mistake #1: Credit Card Debt. College students are inundated with credit card applications and without proper guidance credit cards can throw your college student into debt extremely fast. The average college freshman carries over $1,500 worth of credit card debt and by graduation that amount has nearly doubled.

Advice: Choose the right card and advise use for your student.

Mistake #2: Using a bank account from home. When college students go away for the first time, they have their own bank accounts and ATM cards from home. This leads to problems when students are taking money out of ATMs and being charged fees of up to $2.50-$3.00. These fees add up fast and cause bank accounts to disappear even faster.

Advice: Open a new bank account at a national bank.

Mistake #3: Not keeping track of finances. As soon as college students get on campus they have a freedom they have never had before. What they also have is more important paperwork being thrown at them than ever before. College students have trouble keeping track of all of this paperwork including monthly bills, loans, financial aid, bank account statements and the effect is missing payments, late charges and missing reference paperwork for the future. When they do not have a system or a place for all of this incoming paperwork and bills, they get overwhelmed and financial mistakes get made.

Advice: Set up a system and get organized.

In the tough job market, grads are finding it increasingly difficult to land a job post graduation, so new programs are focusing their efforts on lending a helping hand. BridgeSpan Financial introduced SafeStart this week, which helps grads who are either unemployed or have loan payments greater than 10% of their income to repay their student debt. For an upfront payment of $40-$60 per $1000 of student debt, students can get an interest-free line of credit that can be used to repay federal student loans for up to five years after graduation. 

http://www.usatoday.com/money/perfi/college/2009-08-13-unemployed-graduates-debt_N.htm

As families struggle to readjust to lower incomes, many students are facing the tough decision of whether or not to transfer to an in-state college to save on tuition and eliminate their housing costs by living at home. In NJ, some colleges are attracting transfers by offering more scholarships and ramping up programs to welcome them on campus. Monmouth University saw a 40% climb in transfer applications this year and Fairleigh Dickinson University and Richard Stockton College observed similar trends. College officials actually find transfer students more attractive- at Monmouth, figures show 85% of transfer students graduate compared to just 60% of traditional students, so colleges are responding by offering more financial aid to transfers. 

http://www.nj.com/news/index.ssf/2009/08/college_students_from_nj_trans.html

http://www.chicagotribune.com/news/chi-tc-nw-college-funds-0714-071jul15,0,7735602.story

Two-thirds of four-year undergraduates leave college with debt, and many students are graduating without a job, so making loan payments will not be easy. Now there may be a solution.

Beginning tomorrow July 1, a new repayment plan, Income Based Repayment (IBR), will kick into effect for the major types of federal loans made to students. Under IBR, the borrower’s required monthly payment is capped at an amount that is meant to be affordable based on income and family size.

If your federal student loan debt is high relative to your income and family size, you may be eligible. You can use the IBR calculator to estimate if you will benefit from the new plan. To apply for IBR, contact the lender or lenders who hold your student loans.

For more information:

http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp