(The writer is a Reuters contributor. The opinions expressed
are his own.)
By Chris Taylor
NEW YORK Aug 25 It is an American rite of
passage. Little Johnny finally grows up, goes off to college,
and starts handling money on his own. He probably spends a
little too much, and racks up some debt.
Does Johnny tell mom and dad the truth - or keep it a
More than half of college students (55 percent) admit they
hide information from dear old mom and dad about all that money
they are spending, according to the 2014 RBC Student Finances
Poll. But only 33 percent of parents realize that's the case.
Another disconnect: While 90 percent of parents claim to be
on top of how much debt their kid owes, just 78 percent of
students agree their parents are up-to-speed on their finances.
Welcome to a college course that is not really on the
curriculum, but that every student is grappling with. Call it
Secrets and Lies 101.
"It may be that a student doesn't have as much money as
their peers, and is trying to keep up with what their friends
are doing," says Christine Schelhas-Miller, a retired faculty
member at Cornell University and co-author of "Don't Tell Me
What To Do, Just Send Money: The Essential Parenting Guide to
the College Years."
"Or they may be getting lots of credit card offers, and
naively sign up," Schelhas-Miller adds. "Then they're not
sharing this information with parents, because they're afraid of
getting into trouble."
Of course, money disconnects between parents and kids are
nothing new. In fact they are par for the parenting course,
whether they revolve around tooth fairy money or allowance
The difference when kids reach college is that the sums
involved are taken to the next level. Serious money, which can,
in turn, have very serious consequences, like debt accumulation
or poor spending habits that could dog families for years to
After all, the average Class of 2014 graduate with
student-loan debt is in hock to the tune of $33,000, according
to Mark Kantrowitz, publisher at Edvisors, a site about planning
and paying for college. That's the highest number ever.
The potential scenario, for a college student whose only
financial-planning experience has been with Monopoly money? A
couple of adviser Darla Kashian's clients were gobsmacked to
find out that their kid - unbeknownst to them - had blown
through a significant inheritance in his last years of college,
to the tune of tens of thousands of dollars.
"They didn't know what he had done, and were astonished to
find out," says Kashian, who is an adviser with RBC in
Minneapolis. "In their minds, he was using the inheritance to
pay off his student loans, and now he was returning home with
lots of debt. He was totally unprepared."
Of course, students may suspect how badly they are screwing
up financially. According to the RBC poll, 26 percent of college
students admit they may be doing damage to their credit rating.
Only 17 percent of parents think their little angels could
possibly be doing such a thing.
Such blind loyalty to one's offspring isn't cute; it's
actively harmful. But when it comes to such a delicate and
emotional topic, many parents just don't know where to start.
"It's like the sex conversation: Parents are worried about
how to even bring it up," says Schelhas-Miller. "But they need
to get over that hurdle, and think of it as a big part of their
Her advice: Arrange a pre-emptive strike, and have The Talk
over the summer, before your kid even heads off to campus. Then
arrange for regular money conversations throughout the school
year - maybe once every couple of weeks, or maybe once a
semester, depending on how responsible they are - to ensure
budgets stay on track.
If you just avoid the subject and table the conversation for
later, an unprepared college kid could stack up debt very
quickly indeed, and it could be too late.
Kashian is a fan of online budgeting tools like Mint.com, a
unit of Intuit, which can be set up to allow access to
both parents and their kids. That, of course, requires plenty of
trust from both sides.
"That way you can have real transparency, and open up a
dialogue about the spending that is happening - instead of just
shaming and screaming."
(Editing by Lauren Young and Andrew Hay)