As students start college this year, they face new freedom and responsibility. A college finance consultant tells CNBC that for most students, starting college is a "first step towards financial independence."
Over 44 million Americans hold a total of $1.4 trillion in student loan debt and it takes them, on average, 20 years to pay off those loans. In order to master the transition and not fall into dangerous amounts of debt, students need to remain disciplined and organized.
These six steps can help any incoming student start college off on the right foot and prepare for their financial future.
Create a budget
The first step, of course, is for kids to start to manage the money they have on their own. Create a budget. It may be the first time a college student has seriously looked at the numbers.
The next part of creating your budget it to track your expenses. What can be helpful, especially for kids who have never done this before is to try tracking their expenses for the first 30 days to see, "Where am I spending my money?"
Contrary to popular belief, there are many ways college students can cut costs. Even though your parents may be paying the bulk of the bill, there are also decisions that you can make that are going to make a difference in what they end up having to pay.
One of the biggest ways to save money is on transportation. Don't take a car to college. It is one of the biggest expenses for students. Most campuses have good public transportation systems, so if you can avoid taking a car, that's going to save money on insurance and the cost of parking.
Students can also save money by choosing affordable housing options. In many college towns, off-campus apartments are often less expensive than paying room and board and fees at school. Also, the more roommates you have, the better as far as monthly rent and bills.
In order to save money on expensive text books, check the college library for copies that can be borrowed. Also, look into renting textbooks online or through the university book store.
And instead of subsisting off of ramen noodles for weeks on end, try to make the most of an affordable meal plan. It will be better for the physical and financial health in the long run.
Keep your parents in the loop
Most students pay for college with the help of a parent or family member.
The families that are the most successful are those families who approach it as a team.
Parents have got to be in the conversation with their kid about what their responsibilities are. When students do not fulfill their responsibilities, it is important that they learn the hard way. If your kids mess up, you have to let them mess up and not bail them out immediately, which can be really hard.
It's the students' college experience, but students need to be communicating with parents and working with parents to make decisions that are good for them and good for everyone.
In order to promote this communication and transparency, students will need to give parents access to their financial records. Students have to grant permission to their parents to see certain parts of their records. They want to give access to the bill so they are sure that their parents are seeing it and taking care of things.
Explore campus jobs
Having a campus job is one way for students to cover personal expenses and help contribute financially to their degree. The type of job you can get depends on whether work-study is included in your financial aid package, but even students who aren't awarded work-study may be able to find paid work on campus.
In order to see what your options are, set a meeting with your college's student employment office and find what kind of jobs you are eligible to apply for. Networking with older students is also a great way to learn about the best opportunities on campus.
If finding campus work is proving challenging, there is one place that is always hiring: the cafeteria. Sometimes you have to be willing to take the less glamorous job, but making some of your own money can really give you independence.
Research from the National Center for Education Statistics indicates that students who work have better grades. There is other research that shows that kids who work a reasonable amount do better academically, because it helps them structure their time and is a good non-academic way to connect with people on campus.
Companies and banks often see college students as impressionable consumers. When getting to campus, students should be careful about the products and services that are advertised to them.
In 2009, the Credit Card Accountability, Responsibility and Disclosure Act banned banks from aggressively marketing credit cards and financial products on college campuses. However, this regulation does not stop banks from actively pursuing college students.
There are regulations that are still in effect but students still need to do a little bit of homework. A lot of times these companies have marketing deals with the campus that make them look like the 'school approved' product, but it doesn't necessarily mean that the school has made sure that those products are in fact the best products for their students.
One of the most important financial steps that students must make is one of the hardest —establishing a credit history. One of the factors in a credit score is the length of credit history. You want to get things started as soon as you can so that when you graduate, you already have some established credit.
It can be particularly difficult for students to get a credit card because they often have no previous financial record. Unless students have really significant part-time job income, it can be difficult to get an actual credit card on their own.
Once you have a credit card, it is important to stay on top of all payments. Being responsible and consistent with your account is the only way to make sure that a credit card pays off. It is also a crucial lesson for all students as they begin the next stage of their adult lives.