As a mom, the thought of my child going off to school surely put a bit of panic in my heart. Surely, they would stick around for college and go locally, I thought. However, as the junior year in high school approached the conversation of commuting to college or living on campus clearly had to be breached. However, rather than talking from the standpoint of a mother who does not want her children to leave the nest, I knew the importance of speaking about financial matters instead.

Commuting to college is an option in most homes. There are community colleges and often state colleges within a 40 minute to one hour drive. However, there are costs associated with these schools, including gas costs and the cost of maintaining a vehicle.

On the flip side, staying at college and living in a dorm room was more expensive compared to a local school. While you did not need to have a car on campus, you did need to pay for the room as well as food, something that mom and dad paid for at home.

Clearly, it looks like living at home is the more affordable choice, right? Before having this discussion, though, I thought about a few other factors with my children. For example, would living on campus be something to help cement in the money lessons I had taught them over the years? The recent changes to the credit card laws in the United States now require any minor or person under the age of 21 to have a cosigner to get a credit card. I could extend my reach and limit my child’s spending money at school because of this. However, I also want them to learn from their experiences.

Our Conversation

After spending a day in the guidance counselor’s office discussing college options and applications (speaking of which, have you seen the admission testing fees lately!) I decided to that going out to lunch was a great idea. We dismissed him from school for the day, which is a very rare treat and went to lunch. We discussed the college options available and the various programs offered. It was clear he was leaning towards an out of state school, which would be even more expensive than one just a few hours away.

However, I brought up the subject of commuting and attending a school that was 30 minutes away. As we spoke about options, we gave our order and I asked to keep a menu. We were in an average sized restaurant that was priced about right for what a college cafeteria was.

The first thing we discussed was the obvious cost difference: dorm costs. Attending a school out of state would also cost a good deal more than an in state school. Then, we flipped through the college course book to learn more about just what made the out of state school so attractive. After further review, we found that there was no difference between the out of state school’s curriculum and program than that of a school a few hours away in state. My son decided that what he knew of the school was more about the sports and the “fun” he had heard about than his education.

Still, there was the aspect of commuting to school at a school 30 minutes away or to the one a few hours away. This is when I flipped. Instead of encouraging him to choose the local school, I gave him a piece of paper and a pen, along with the menu of the restaurant we were at, and asked him to come up with what he thought it would cost to live on campus, eating three meals a day at a cafeteria. After coming up with a cost figure, we set this aside. Yes, he could see it would be far less expensive to live at home.

However, I did not want him to make this decision just yet. I also wanted him to think about the quality of the school and the programs offered. We learned that the school that was a few hours away had some excellent internship programs and it offered students other key features that the local school did not. These would enhance his education easily.

We discussed costs and we discussed a budget. This is not something every 17 year old would talk about, but it is critical. Knowing how expensive school would be, we figured the income he would need to make to live on campus. We also factored in how much we, as parents would pay, and how much he would be responsible for.

Why This Conversation Is Key

Have you talked to your child like this about the actual costs of going away to school? At the end of the day, I did not want to make a decision for him. I wanted him to also gain the knowledge he needed to do well in his career, but also in his financial life. Going away to school would surely teach him how expensive life could be. It would be a great money lesson for him.

This is PART 2 of a two-part series, designed to teach kids about what the President was talking about when he spoke about investing in education. There is nothing more pertinent to a teen or college student.

Last blog post I delved into what President Obama had to say during his first State of the Union Address–specifically the education issues, because it directly affects both teens and college students. I zeroed in on college tax breaks.

Now let’s move on to student loans. This is an important money lesson, because kids come to understand that taking out a loan is one thing, but paying it back is another entirely.

There were eight education-related points Obama addressed, and four of them were about student loans. So half of what he talked about was student loans and the affordability of college. That sounds like an important issue. Discuss the four student loan issues with your kids. They won’t forget the lesson, and they’ll pay more attention next time that tuition bill arrives.

For review, before we get into the student loan issues solely, here are the eight education-related topics Obama urged Congress to:

• Renew the Elementary and Secondary Education Act
• Revitalize community colleges
• End taxpayer subsidies to banks for student loans
• Award a $10,000 tax credit for families for four years of college
• Increase Pell Grants (need-based Federal grants for low-income college students)
• Reduce compulsory student loan payments to only 10% of income
• Legislate that all student loan debt forgiven after 20 years, after 10 years if they choose a career in public service
• Cost cut at colleges and universities

The third item, ending taxpayer subsidies, was covered in the last post (LIVE LINK HERE) in detail. The most important thing for kids to remember about it is that families who need student loans shouldn’t help foot the bill for offering student loans.

Pell Grants, the fifth item on the list, are Federal government grants designed to help low-income families afford college. They are very important loans that need more funding. Go to the website and take a look, discuss with your kids what income levels qualify for these grants. Give them a sense of how impossible it might be to try to pay for college with that level of income, if there aren’t grants available.

You can do this by talking about household expenses: rent or mortgage, monthly food, utility and insurance bills. They’ll get the idea quickly.

The 6th and 7th items are perhaps most pertinent to kids in college, who might already fear the stress of having to pay back loans.

The 6th item means that when kids are out of college, and have a full time job, they won’t have to take too big a chunk out of their paychecks to pay back student loans. It’s hard enough to get started as an adult, working and paying living expenses on starter salaries, without having debt hanging over your head. By limiting the amount they have to pay to 10% of what they’re earning, it helps reduce the stress.

Now, the stress reduction is only worthwhile in the long run when it’s combined with the 7th item on the list: The forgiving of the loan. Tell kids this means if you’re paying 10% of your income for 20 years, your obligation is over, even if you haven’t paid off the whole loan.

This seems like a long time, but if you go to an expensive school, and take out a lot of loans, your payment can be steep.

You see, you pay interest on those loans, so in some ways it’s not worth paying very little over many years. If the interest is accruing, the amount of the loan is actually increasing over the long term. So if your loan is never forgiven, you’re only sinking deeper into debt.

Having a cap on paying off the loan makes that low payment worthwhile. You need not take responsibility for racking up interest over your lifetime.  And if your teen is interested in a career in public service, it becomes an even sweeter deal.

If your kids have interesting comments about Obama’s call to Congress, please share them.

(This is a two-part series, designed to help kids understand what the President was talking about when he spoke about investing in education. There is nothing more pertinent to a teen or college student. PART 1 will address tax credits for college. PART 2 will address paying off student loans.)

Two weeks ago, President Obama gave his first State of the Union address. It is an historical occasion, and naturally what I loved best were all the teen money lessons crammed in there. My students are still moaning about having to analyze and write about what it all means.

Today’s lesson, about tax credit for college costs, is pertinent to our teens’ lives, so they’ll remember it, but it also can be generalized to understand taxation altogether. And it’s the most important–or at least the most exciting–aspect of taxation: the tax break.

First, have your kids watch the Obama State of the Union Address. Just Google it, and it will appear.

Second, hone in on the part of the speech about investing in the skills and education of our people. There were eight points Obama addressed. Obama called for Congress to:

• Renew the Elementary and Secondary Education Act
• Revitalize community colleges
• End taxpayer subsidies to banks for student loans
• Award a $10,000 tax credit to families for four years of college
• Increase Pell Grants (need-based Federal grants for low-income college students)
• Reduce compulsory student loan payments to only 10% of income
• Legislate that all student loan debt be forgiven after 20 years, after 10 years if they choose a career in public service
• Cost cut at colleges and universities

Third, ask them if they understand what the two tax items mean: Ending taxpayer subsidies, while increasing the tax credit to $10,000 for four years of college. Make note of their answers, whether they answer correctly or not. Understanding how they perceive these terms will help you explain other related issues later. Then give them workable definitions.

Subsidizing: Explain first that the word subsidizing means to help pay for something. As the recession hit, student loans became harder to get. People, otherwise known as taxpayers, had to help foot the bill to keep student loans available by paying extra taxes. The irony of that won’t escape your kids. What is the point of having the people who need the loans to begin with contribute to the pot of available loan money?

Well, not a lot of point, especially since there’s no way to guarantee that wealthy people, who could afford helping to subsidize the student loans, would be the ones contributing. So the call to end subsidies for student loans means that the tax burden, in theory, will be lessened for the average taxpayer.

On the other end of the tax problem: The average taxpayer needs a tax break, not simply being absolved of paying more. Explain that a tax break is when you get out of having to pay certain taxes. This either happens by lowering your taxable income by a certain amount, or by taking the tax you would be paying and subtracting a designated amount. Lowering taxable income tends to be for wealthier people. Actually getting a refund tends to be for people who have no more deductions to take and who already get a refund.

In Obama’s proposal, he is asking to lower the amount of taxable income a family pays by $2,500 per year for every student who finishes four years of college. So if a family has a taxable income of $120,000, it would be reduced to a taxable income of $117,500 each year for four years. The total after four years is $10,000.

Incidentally, families stop being eligible if they’re too wealthy. The tax benefits start to fade when the family income is $160,000.

But the tax credit also helps families with much, much lower incomes who need the cash back. If a family spends at least $4,000 per year on college, then they can actually get a refund of 40% of that $2,500–$1,000 back in cash. So the taxable income is lowered, but the refund is also real.

Have your teen or college student look up these Acts. They should be informed at a detailed level. The American Recovery and Reinvestment Act of 2009 included a scaled-back version of the American Opportunity Tax Credit as a modification to the Hope Scholarship tax credit. The legislation increased the maximum credit to $2,500 (100% of the first $2,000 in tuition, fees and course materials and 25% of the next $2,000) per year, expanded it to four years from two, and made the tax credit partially refundable.

In addition, the income phaseouts were expanded and the tax credit is no longer subject to the Alternative Minimum Tax (AMT). To date, these improvements are temporary, for the 2009 and 2010 tax years only. However, in his speech, President Obama has proposed making the improvements permanent in his FY2010 budget.

It’s important because of course it saves money. But it also shows kids how when we budget for life expenses, we have to look at the big picture to see what’s affordable. In some cases, this type of tax credit could mean the difference between being able to afford college and not being able to.

Also, there is a growing number of college students–many of mine included–that take five years instead of four to graduate. This is a thorny issue, because sometimes it’s very difficult to schedule needed classes on campuses where budget cuts are translating to fewer class offerings. (I will do a post on navigating the college and university advisor and registration system, to help ensure that your kids get the classes they need to graduate in four years.)

By pointing out to your kids that there is no tax credit for a fifth year of college, they will understand on a whole new level that it’s critical they register early and remain organized.

In his speech, President Obama said: “No one should go broke because they chose to go to college.” And he’s right. The tax changes are designed to live up to that message. So are the changes in student loans, which we’ll talk about in a future blog post. Stay tuned.

My father, a very successful entrepreneur, had a saying about finding business partners as a brand new business: Before you approach people that don’t know you from Adam, check out the people who demonstrate an interest in you, or the type of person you are. Make yourself a going concern, then widen your circle bit by bit.

He had another saying: The people who can get their hands on money easiest are always those who need it least.

When it came to paying for college for my brother and me, my father borrowed against the equity in his house, put that money to work in a vibrant stock market, earned more than the loan finance charge, paid for school, paid the loan back, and took a cut.

This is not the time for that.

It is the time to find the institution that finds your kid attractive. Hard to imagine, I know, but my father assured me that there’s always someone out there who is interested in you. So, after being asked by my college students to write a post about finding student loans, I sat down to do some extensive research. I know why my students asked. They wanted a secret weapon, something other than the standard advice about going to their college admissions office and applying for all the financial aid and student loans available. That’s common knowledge.

They wanted more than me telling them to apply for an unsubsidized federal student loan, which, depending on the school year you’re entering, could make you eligible for $5,500 (freshmen) to $7,500 (seniors). Not all students are eligible for the full amount, but all students can apply regardless of financial status. Nope. None of the standard advice seemed good enough for this economy, when promises for more student money are still outpacing the actual writing of loan checks. Even with the unsubsidized federal loans, you can’t cover the cost of many tuitions, public or private.

Then I found it: the marketing campaign that proves Dad’s law of attraction. Credit Unions, it turns out, are now actively looking to establish lifelong relationships with Generation Y. It’s a perfect time of course, in the wake of TARP, because disillusionment with banks is at an all time high, and even my students have tuned in to the news.

What do you need to offer to win over Generation Y and their budding financial lives? You got it. Student loans.

There is an initiative of 60 credit unions participating in a program called Credit Union Student Choice. Check out this site, explore this option. Make sure to look at the full list of participating credit unions, but don’t be daunted if your state isn’t listed. Some of the participating credit unions are offering members these loans based on where they live, work, or go to school, so the residency options are fairly wide.

I think even my Dad would have liked this.

To keep updated on new posts, you can also subscribe to our RSS feed, on Facebook and on your Twitter page. Just add us.

Sometimes the worst times make for the best lessons in resourcefulness. Not just for ourselves, either. If we can pass on resourcefulness to our kids, it’s so much more than a money management lesson. It’s a life skill that can help in everything from relationships, to work, to, yes, even parenting.

Over this past week— at end of the college semester parties, and at an award event at the high school where I sit on the Board—there was a lot of talk focused on Fall college tuition and how to come up with it over the summer.

Some folks were worried that even though they have the tuition now, if just one thing changes, they won’t. That change doesn’t necessarily have to be a job loss, maybe just a job reduction. Or for self-employed parents, it could be a big contract that gets put on hold. People were talking and bonding, in an effort to come up with backup plans, to pick each other’s brains for solutions.

I found out that many people don’t know about IRA withdrawals for college tuition. And we all should. There are two big catches—in most cases you need to liquidate the entire IRA, and you will pay some taxes— but as a last resort, it’s a trigger we should be okay with pulling this year. Once I explained it, the stress level in the room shot down, like a hot thermometer run under cold water.

There are some catches, so be clear what they are, but in many circumstances this year, it may be the only option, and even a decent one, especially if your household income has dropped significantly from its norm. Explain this whole following scenario to your kids, too. It will really teach them some essential lessons about how taxation works, and what a zero sum game is.

Here’s the deal: You can always take money out of an IRA for college tuition. You will get taxed on the withdrawal as if it were regular income. But you will not pay the traditional 10% penalty for early withdrawal. You must use the withdrawn money, called a distribution, to pay for school directly. You can’t remove money, for instance, and place it in a 529 college fund. The IRS doesn’t like that. If you reinvest, it is considered a change of investment vehicle, and not condoned. You will be taxed and penalized. And in most cases, you must liquidate the entire IRA, though there are some exceptions.

How to know if you’re the profile who should tap your IRA. You may see yourself in one or more of these characterizations:

1. If you have no other choice, and it’s a matter of your kid going to college, or not.

2. If you’ve already cashed out of investments at a loss in your IRA, and the money is sitting there, dormant, in cash. Many people have done this over the last year. If you’re already in cash, you stand to lose a lot less than those that are still completely invested in the stock market. They may have shares that are deteriorated, but shares can come back. Cash doesn’t.

3. If your income is so deteriorated— and will be for a couple of years—that the tax hit may not actually hit you that hard. This is especially true for people who contribute heavily to IRAs, with a lot more than the annual allowance of $2,000 pre-tax dollars.

Here’s how to figure out if you can wiggle out of the tax bite: First and foremost is whether you have contributed to your IRA with after-tax dollars. If you have not, then you will pay taxes no matter what; you may not offset losses against that money. So, those $2,000 contributions made right before April 15th, which lop the money off your gross income, and lower your taxable income out of the gate—you can’t get out of paying taxes on that money. The IRS doesn’t like giving out double benefits to people. Remember, if it looks like income, and smells income, they’ll tax it. And if you’ve wiggled out of tax on the way in, there’s no wiggling on the way out. You can, however, still take the distribution without the 10% penalty.

But if you have made contributions with after tax dollars, then crunch some numbers. If your income this year is lower than last year—from a job loss, job reduction, losses from stocks or mutual funds you’ve cashed out— or in the red altogether, it will offset that tax liability, at least in part. Remember, the tax they levy is regular income tax. All normal deductions apply.

There are limits to offsetting investment losses with your qualifying IRA withdrawal gain. You can only take up to $3,000 per year of stock losses against the capital gain of your IRA withdrawn money. But, if you actually have more losses than that on the stock market, you can take $3,000 of those losses in future years.

To explain this concept, do show your kids your original buy-in dollar amount for the equity, or mutual fund, or whatever the investment was. If the original purchase price is higher than your stock cash out price, then you get a loss, which is a deduction against regular income.

So, investment losses are one small advantage. But job loss is the big advantage here. Remember, the IRA withdrawal is added to overall income. So if the IRA is equal in amount to what your salary would have been if you had one this year, you might break even with taxes.

Or, if you have a job now but anticipate that your income will be lower next year—your job is going to come to an end, or be reduced— wait until Jan. 1, 2010, and then take the IRA distribution to pay for college. The game here is to play the tax liability against overall income. You want to calculate your losses in wage, and losses from cashed out investments. Have your kids help you figure out the best timing to come up with a zero sum tax liability.

Withdrawing from your IRA may not be your first choice. But, if you’re so strapped you can’t find another way, it’s definitely an option, no penalty. Do consult an accountant or other tax advisor before pursuing this option. Situations vary.

And please share college tuition backup plans that you have in place.

To keep updated on new posts, you can also subscribe to our RSS feed, on Facebook and on your Twitter page. Just add us.

It’s inevitable. Your college kid calls to announce his or her intent to move off campus. Here’s the part where I cringe: They have it all figured out.

What all figured out means is that they’ve chosen the other kid or kids they want to live with. Maybe they’ve seen a cute or apartment house they like, or an area where they want to look.

That’s it. If they’re really advanced, they’ve done some math and figured out what each kid would pay, and how much money will be left over for beer.

The idea for this blog post walked into my classroom the other week, in the form of one of my students. She was very upset, and equally haughty. “Can you help me deal with my rip-off landlord? He’s totally screwing me over. I can’t believe he can get away with this. Are there any lawyers who help students?”

Always feeling protective of my students, I said I’d help, not to worry. She relaxed, calming down enough to tell me the problem. “This girl, my roommate, who is my friend, which makes it totally awkward, isn’t paying her share of the rent. My landlord keeps calling me and threatening me. He hasn’t even called her, and it’s making it like it’s my fault. I’m paying my share.”

A few minor question later I find out that: a) The lease is in my student’s name only; b) She hasn’t even confronted her friend/roommate once; and c) There is no subletting allowed on the lease.

“What do you mean, your landlord? This all your responsibility. He has nothing to do with this problem, and actually you’re lucky he doesn’t kick you out because you lied about who would be living there. You’re delinquent on your rent, and blaming him.”

Let’s just say that sometimes my students are not fond of me. Her face screamed betrayal. And so what has followed are these 3 lessons on leases and responsibility, which I emailed to my student:

1. Try not to be the sole person on a lease if you are sharing an apartment or house, and sharing the rent. It puts your budding credit at great risk. If you are the sole person named in a lease, and the only one who signs it, you are legally solely responsible for paying. It is not the landlord’s responsibility to hunt down roommates. It is yours. So you become the apartment manager, in a way, if you sign a lease alone. Be prepared to confront your friends if they don’t pay. And if they never pay, be prepared to pay for them or ruin your credit

If it’s unavoidable: Say you rented the apartment first, or your friend and his or her parents have terrible credit, so the landlord won’t accept them as co-signers. In these cases, get something in writing from your roommates stating that they are legally responsible for their share of the rent. Make their parents sign it. Blame your parents if you dread the confrontation. Say your parents co-signed the lease for you and won’t allow roommates without a notarized, signed statement.

2. Be up front with the landlord about who will be living on the property. Landlords have a lot of rights if you are not up front about this. In the same vein, try to get a lease with rights to sublet, in case one of your roommates needs to transfer to another university, or someone’s plans otherwise change.

3. Make sure it is in the lease that the landlord is responsible for repairs. This is one area where students are often taken advantage of. Many times landlords don’t take very good care of student rental properties. Make sure you know your rights. If the paint is peeling, the landlord has to paint. If the toilet is constantly clogging, the landlord has to fix it. Make sure you inspect the property and make noteof anything in disrepair before you sign the lease. Write down that disrepair on the lease with your initials and only sign the lease if the disrepairs are included on the lease as pre-existing conditions.

If the landlord makes noises about this, and says you can forget it, don’t back off. Call any local real estate agency that rents places, ask them about the pre-existing condition lease law, and they’ll tell you what your landlord is responsible for. Then go back to the landlord and explain what is legally your right. If the landlord doesn’t comply, you can file a complaint with police,and that landlord can be prevented from leasing property. Do not be intimidated.

Please share any off campus rental stores—good tips, or nightmares to avoid.

To keep updated on new posts, you can also subscribe to our RSS feed, on Facebook and on your Twitter page. Just add us.

As the Secretary of the Board at a private school, of course I’m hearing more and more stories about parents struggling to pay for private school (see Private School Bailout post). But what I’m also starting to hear are creative ways people are coming up with to keep making those private school payments.

It’s inspiring, especially the cases where the teenagers whose education is at stake are proving to be incredibly resourceful. There’s one case so striking that I’m starting to believe we should all set our teenagers to the task of playing treasure chest detective.

Let me explain: The principal at the school where I sit on the Board is an exceptional human being. He took an old Jeep Cherokee in lieu of one student’s tuition, because the math-smart kid was blossoming at the school, after a tough time in a public elementary school. Of course word spread, and the joke on our campus—and it’s a beautiful campus, open fields against a mountain backdrop—is that soon people will be bringing in goats.

So one parent called and said her daughter, 16, had spent the entire weekend in the attic, taking inventory, wondering what she could try to sell on eBay. Her mother didn’t have the heart to stop her; she was so organized and industrious, so mature in her thinking that goods could be liquidated and put to good use.

So the girl finds these gold coins that the mother had all but forgotten about; they had been handed down from grandparents, not wealthy ones. At second glance, and after much prodding from the teenage daughter, the mother called the school. Our principal referred her to another Board member who happens to deal in antiques. One of the gold coins was worth $59,000. And there were several of them. The teenager not only saved her private high school education, but found her college education as well.

This story gives me goose bumps because it’s in the fairy tale realm, but it’s also true. Yet I hesitated telling it to the kids in my life because it could be disappointing to send them on a mission that will never result in such glory.

Still, I couldn’t shake the thought that systemizing what that 16-year-old girl did would be of great benefit to any teenager. First of all, taking inventory of family valuables teaches kids to assess a dollar value for goods— a great skill applicable to so many things, from comparison shopping to being responsible about taking good care of valuables.

Even the act of going online to determine what something is worth by finding comparables that have sold is a great skill. And of course just knowing what things in this world cost, and how quickly they lose value, is important.

Want to teach the kids something? Have them look at what your car cost new, and how much its value dropped to the minute you drove it off the dealership lot. It will help them learn how to spend wisely, assess what they really need versus want in goods and services.

So, I decided to give kids a chance to flex their research muscles while earning a commission. First, they assessed the goods in my house. Then I sent them to my brother’s, and other relatives willing to participate. They were allowed to set up an account on eBay, and they got a commission on whatever they sold.

eBay requires the seller to do a lot of monitoring, so it enforces the lesson of following up and following through on things. Of course the commission keeps them motivated. Teaching them eBay also teaches them how to deal with online transaction settlement, which of course leads to the question of what to do with their commission. I think setting set them up with a reloadable prepaid card is a great idea. In some cases, the stuff they sell on eBay can be paid to their card, and then they can take out cash to pay the seller, keeping a commission. They end up running a business.

To be updated on new posts, you can also subscribe to our RSS feed, on Facebook and on your Twitter page. Just add us.

This is always a tricky question. After I advise my students, and they’ve left my office, their new decision awkwardly in their minds, a piece of paper with a contact or two jotted down, I often feel like calling after them: “Or you could….”

This year, this economy, even more college tuition hikes staring them in the face for fall semester, I feel downright guilty touting the high-brow virtue of internships. Maybe I should be sneaking a call to their parents and asking how they’d like me to play it. (Not a bad idea.)

There are always tradeoffs, even in a thriving economy. But for this year in particular my advice to students is divided like this (There are variations on this for younger teenagers as well. I’ll do a separate blog post for them.):

If you are paying for college yourself, and you need the money: Go for the highest paying job you can in the summer, sock away as money as you can. Use this Savings Calculator to see how much money you’ll save by September. The idea is if you can avoid working during the school year, it’s best. That way, during the school year you can pursue student clubs, extracurricular activities, Fall and Spring internships that will expose you to your fields of interest, and supplement your resumes when you graduate.

Also, in summer, there’s always time to volunteer in some capacity that can enhance a resume and test out a field of interest, to see if it’s something you really want to pursue. Even if your college kid volunteers instead of officially interns for a Political Interest Research Group (PIRG), for instance, it is a memorable, life-changing experience.

Volunteerism is important, too, for perspective. Sometimes a good paycheck is so intoxicating to kids, they get completely money focused, and they don’t think about the long-term implications of devoting themselves to menial labor. All they want to do is work for money. But they need to really understand that what looks like a lot of money now won’t in five years. If they volunteer in an environment that’s more of an investment in their intellectual and professional future, they’ll be exposed to seeing longer term payoffs—which is a great money lesson, of course.

PIRGS, incidentally, exist in every state and have some of the most valuable internship programs in the country. Your kid will lean about grassroots democracy, political canvassing, how a Congressional Bill works, what issues are important to the state, who the political players are, how laws are made, and how purse strings are pulled. Talk about teaching kids valuable lessons about money at an unpaid job.

PIRGS are my number one recommendation for students, even if they’re not going into journalism, political science, or law. Intelligent citizenship creates thinking that is applicable to every career.

The best part: PIRGS always need volunteers. So even if your kid must work year round, encourage them to volunteer for a PIRG, to get the same richness of experience and boost to the resume. I’ve had students tell me that their work for a PIRG changed their thinking, opened their eyes to interests they never knew they had, incited passion about issues they didn’t know mattered.

If you are going to be a freshman or sophomore in the fall: Even if your college kid doesn’t need the money to pay for college, this is a great summer for these ages to have a paid summer job. First of all, internships are harder to get for kids entering college, or even soon-to-be sophomores, especially if the kids are trying to get those internships through their universities.

Most universities give priority to juniors and seniors because they need to prep them for the job market and they’re running out of time. Many students don’t think about internships and valuable volunteerism until well into their junior year. (Big mistake.)

For freshman and sophomores, this summer is a great time to learn the value of earning money and what to do with that money. Job fairs are happening all over the country. Just Google job fair to find out where, and look at local university postings. Have your kid check them out. Sometimes there are paying jobs at university job fair events that are as high caliber as internships. Definitely have them start looking for a job now.

Whatever the job, encourage the kids to start a savings program with a portion of their earnings. If they aren’t paying for their college education, then introduce mid-term savings vehicles: CDs and bonds, for example. Remind them when they do graduate they’re going to want cars, apartments, vacations, more material goods than they imagine. Socking away money now is something they’ll be happy about later. It teaches them envisioning and planning, very important money management skill.

To show them how their money will grow in different savings vehicles, use the same Savings Calculator I mentioned above. You can key in different interest rates to show accumulation over time. I’ll also do a blog post on learning what interest rates mean, and how interest is calculated, so kids can understand what the deal is, and how it’s determined.

And, of course, encourage them to volunteer somewhere, particularly if they think they’re interested in a field but aren’t sure if they’re cut out for it. For instance, many kids who think they want to study medicine spend some time in a hospital and change their minds. If your kid has a set goal already, try to help them get exposed to the environment they’re interested in on a volunteer basis.

Volunteering at freshman and sophomore age can sometimes translate into internships the following summer.

If you are going to be a junior, senior in the fall: If you can at all afford to, focus on an internship, especially if you have never had one.

Try not to let your kids wait until they’re seniors for their first internship. It’s very competitive, and often when students apply for internships, it takes a semester or two to land one.

Also, once a student is a junior, their coursework is of course major-focused. What if they decide, after a summer internship related to their field of study, that they don’t like that path? Better to know before the fall semester.

If you are going to be a freshman or sophomore and REALLY know what you want to study: Often in the fields of science, law, and medicine, kids know early. If this is the case, and they can afford it, definitely try for an internship in that field, or simply volunteer. First of all, these fields are intensely competitive, so the more experience you have, the better.

But more important: Your kid needs to make sure he or she is cut out for the field. I know too many students—and adults—who ended up in careers because by the time they realized they didn’t necessarily like what they were doing they had a degree and a first job in that field.

It’s not a tragedy if that happens. It’s why many people go to graduate school. But testing waters, and learning about who you are, versus what you think you should be, is perhaps the greatest life lesson a college age kid could hope to get.

To be updated on new posts, you can also subscribe to our RSS feed, on Facebook and on your Twitter page. Just add us.