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Crash course in giving college kids money

The biggest freshman class ever is headed to college in a few weeks. But there's one big issue that many parents have yet to resolve: How much should they give their kids for spending money?

It can be mind-boggling to think that the kid will require even more dough after you've paid thousands of dollars in tuition, room and board, purchased a new computer, and budgeted for books and transportation. How much can a teenager really need, other than necessities like toothpaste and shampoo?

A fair bit, it turns out.

Toiletries, printer cartridges, dorm decor and school supplies can take a chunk, for starters. And while many campuses are teeming with dining options (including food courts) and cheap entertainment, students want to go out occasionally to see a movie, shop, go on a road trip or just take a break from the monotony of institutional food.

“You don't want to be the kid who sits in the dorm room and does nothing,” says Kim Richards, who will be a sophomore at Emerson College in Boston this fall.

Even if your student has a generous financial-aid package, these costs most likely will be borne by one of you, since most packages require some combination of parent contributions, loans and student jobs. For parents, the challenge can be finding the right balance between being too frugal and too frivolous – providing, perhaps, enough money for your child to eat, but not quite enough to drink.

Because college is a great time to learn budgeting and other financial skills along with serious academic stuff, this is a good time to outline expectations and agree on limits. Here are some suggestions:

Start talking before money becomes an issue. If your child will be expected to earn some of her spending money, make clear how much is expected upfront, and consider a backup plan in case illness or exams require missing work. Some schools discourage freshmen from working so they can adjust to the workload.

In addition, you'll want to discuss what the allowance is supposed to cover. Will you pay extra for winter clothes? Who pays for the shuttle to and from the airport or the gas for a trip home?

Estimate a budget. To start the “how much” conversation, look for the “cost to attend” chart on the school's Web site, often found in the financial-aid or admissions pages. There, you'll find the amount factored in for “personal expenses” in financial-aid packages. (These amounts are in addition to books, which most schools budget at roughly $500 per term.)

Depending on the school, those amounts may be generous or tight-fisted. Whether your student's budget falls within the typical estimate of $1,000 to $2,000 a year will depend on his eating habits and extracurricular activities – and your willingness to fund them.

At $200 or so a month, however, your child still won't be living large. Richards, the Emerson student, receives $100 a month from her parents and earns an additional $120 from a campus job. When she went to Cheesecake Factory with friends to celebrate the end of last fall's semester, the bill came to $30 a person – a week's paycheck.

“We were all in shock,” she says.

Paper or plastic? Your student will need a checking account for basic needs and should have a credit card for emergencies. If you share your card, agree in advance what it can be used for and how you'll be alerted.

Sooner or later, your student should get a credit card in his name to establish a credit record, and getting a card may be easier as a student than later on. Students should be responsible for their own accounts, paying their own bills and learning the ins and outs of credit limits, minimum payments and due dates.

They may need some time to get the hang of it. Emily Roth, who will be a sophomore at Emory University in Atlanta, had trouble remembering the due date at first – until she got hit with a late fee. “I set up an e-mail alert after that,” she says.

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