Good financial health begins in college - beginning college students are advised to cut costs and use credit cards sparingly - Brief Article

USA Today (Society for the Advancement of Education), Sept, 1997

Students about to enroll in college this fall should takes steps now to cut spending and reduce their debts, laying a foundation for good financial health after graduation, maintains debt management consultant Tess Van Duvall, Emory University, Atlanta, Ga. Whether they are 18-year-old freshmen getting their first credit card or among the older people returning to campus, many students are starting college with an array of financial obligations, she notes. "Students need to realize they are entering a time of limited income and maximum expenditures, so cutting costs in lots of areas can only add to their financial well-being."

Van Duvall gives the following tips on how students can manage their finances better and avoid long-term debt during those early career years:

* Eliminate or reduce credit card balances before enrollment. "As a student with limited income, the last thing you need is to be paying past debts."

* If you have a credit card or student loans, learn how to read a credit report. "If there are errors on your credit report, they need to be corrected, because it can affect your credit rating and even keep you from getting lower interest rate loans." Many lending organizations are adopting a practice called "credit scoring," which judges each individual student borrower, instead of lumping all those from one university into the same financial lending category. With credit scoring, says Van Duvall, "one 30-day late payment can make a difference in your loan interest rate."

* Be aware of credit card annual interest rates and remember the real cost of using a credit card. "When students are tempted to make a $1,000 purchase with a credit card, they should remember that the annual interest on even a 12% APR card pushes the price to $1,120. Always think of the total cost of a purchase and ask, 'Do I still want this?'"

* If you can eat, wear, or listen to what you want to charge, it isn't an emergency and shouldn't be put on credit.

* If possible, pay more than the minimum monthly payment to creditors.

Van Duvall also advises students to be budget conscious in little things, such as buying frozen pizza instead of take-out, taking advantage of on-campus and free entertainment, and sending e-mail vs. making long-distance calls. Her number-one piece of advice to students is to get a roommate instead of renting alone. A savings of $300-400 a month on rent over a three- or four-year period adds up to big bucks and can keep you from having to borrow more heavily to make ends meet.