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Financial Independence needs to start in the Dorm Room

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According to a new study, if you had paid for some of your college tuition you may have done better on that psych final. The study, published in this month’s American Sociological Review, suggests students with some of their own “skin in the game” may work harder, and that students with parents paying for their tuition and other expenses feel more free to take on a more active social and extracurricular life. But this attitude can hurt their GPAs and therefore hurt their chances in the job market later. Boy, this study is really putting that Golf Pros and Tennis Hoes mixer you have later in a dark light.

The study is based on figures from three large federal data sets that allow parental contributions and grades to be compared.

Why you should financially independent in college

From the study:

“When parents pick up greater absolute amounts and shares of college costs, it affects GPA across the income distribution, though the effect is steepest at families earning over $90,000. At that level, and controlling for other factors, parents not giving their children any aid predicts a GPA of 3.15. At $16,000 in aid, GPA drops under 3.0. At $40,000, it hits 2.95.”

Author Laura Hamilton of the University of California, Merced., said the damage of this is seen more clearly with families with less money. Wealthier students can rely on connections and further help from parents but more middle class students cannot. Students without those connections “have to have the 3.0 in order to pass the initial resume glance,” she said.

Hamilton found grants, scholarships, work-study, student employment and veterans benefits don’t have this negative effect on GPA, but loans do, along with direct parental aid. Money from your parents and loans don’t have the strings attached responsibility weight that a grant or scholarship does.

But Hamilton isn’t saying that parents shouldn’t give their money to children during college, but they should come up with some sort of strategy where the college students have to pay them back some of it or at least get a part-time job partly to feel responsibility and to also appreciate what it means to make and manage your own money.

Learning about money should be a college course but it seems to be missing from the national college curricula and so many students find themselves clueless when they graduate and start making real money. “We learn about everything else before we learn about money,” said Alexa von Tobel, founder of LearnVest, an online personal financial education site. So if you can start even just learning how to budget money in college, you will be ahead of the pack. And it will definitely help you out more than that tennis hoes mixer.

Topics:

#Education Personal Finances College #Budget Lifestyle #News You Need To Know
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My parents entirely supported me financially through college - they paid for my private school tuition and my miscellaneous expenses (though I was on a budget). I was actually discouraged by my father from getting a part-time job with a biology major, because I spent the majority of my time studying. I switched to public relations my sophomore year, and my senior year I finally landed that hard-to-get paid internship which covered my monthly expenses.

Sure, I went out and had fun, but I kept up a 3.8 GPA my entire time in school. I am VERY thankful that my parents supported me entirely and I consider myself one of the lucky ones. I had no intention of squandering that expensive education they paid for.

Within one month of graduating I had a full-time public relations internship which turned into a salaried position within two months. I am very grateful to have no student debt on top of my monthly bills!

Carly Heitlinger
Carly Heitlinger

I was supported by my parents as well, but on the condition that I treat school "like a job." I was also on the rowing team, which gave my days LOTS of structure and took up time.

Throughout college, I always worked 2 jobs. I was lucky enough to get a work study job every year, so during the week I'd work there and commute home to work retail on weekends/holidays. At one point, Junior year I worked 3 jobs. I always worked and was involved in campus with my sorority, student government & my student IT group. My senior year I started my Masters program in conjunction with finishing my Bachelors & I finished that only one semester after my Bachelors (total for both degrees combined was 4.5 years). It was hard, but I made it work.

My parents couldn't afford to pay for my private school education and made my sister and I value going to private school. We could have gone to a state university, but looking back I wouldn't be nearly as successful. So yes, I have student loans out the butt. But I lived at home, so they supported me that way & helped pay for my gas/insurance to get to school and work.

I think I'm more successful/financially smart than the people I know who had their parents pay their way through. Most of those people don't have a job or have a job but not with what their degree is in. They don’t understand how hard it is to study, work and be involved. But that’s just what I’ve observed, so others may be different!


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