Ah who doesn’t love talking about banks and banking? Okay you don’t have to answer, that but please don’t run away yet.

If your bank is on your side then you’re smiling because you’re saving money on fees and growing your savings. Unfortunately, unless a relative of yours works at the bank, chances are that you’re not getting your money’s worth.

Let’s look at some common bank tricks that all 20-somethings need to watch out for:

1. A required minimum balance for certain rates.

Sure you can earn 4%! All you need is a minimum of $25,000 (or whatever their number is). Okay, cool. Well actually no it’s not. Not everyone has 25 grand laying around. Those that do likely have their money diversified in different investments and don’t want to tie it up in one account.

This is actually what caught my eye when I first saw an ING Direct commercial. The female (attractive of course) in the commercial kept on reiterating the fact that ING Direct didn’t require a minimum balance for their high interest savings account. This caught me by surprise. It seemed like every other bank account at the time required a certain limit to earn their juicy rates. Not trying to kiss ass for ING but I really respected the fact that they offered the same interest rate to everyone.

2. Introductory rates.

Perfect, you do get the earn the 4% with your$1,000 in savings– but for the next 6 months only. Watch out for introductory bank rates. There’s no point to leave your bank that you trust for that new bank offering a higher rate for a few months only. Bank rates are always changing (ING Direct just changed theirs at the beginning of February) and it makes no sense to go through different bank accounts for introductory rates. It’s cool if you’re a day trader and a savvy investor, but for the average 20-something there are bigger and better things to worry about (such as increasing or diversifying your income).

3. Fake rates.

Banks (and many retailers) hold out on the really juicy accounts and offers.
Why? Because they want to sign you up for lower rates and make more money off as you, as opposed to have you earn a higher interest rate on your savings. You wouldn’t give someone a discount for your product unless they really persisted, would you?

Some battles are worth fighting until the end. This is one of them. If the bank refuses to waive the monthly fees, then be willing to fight until the very end. You will most likely win if you’re wiling to go at it. If you lose then it shows you’re better off since the bank doesn’t value your business. Another bank will be more than willing to eliminate your monthly fees and offer you their best account/rates.

What other bank tricks have you guys destroyed in the past? Please share…

(Note: The numbers used are not precise by any means. Don’t get offended. Don’t yell at me. Just discuss.)

Many personal finance blogs write about ways to make more money. The problem is– how many of these ways to make money are creative? Not that creativity is the deciding factor in making extra money. It just helps.

I asked my readers last week as to what some of the most creative ways they made money were. I’ve compiled all of the answers and attached them below along with my thoughts.

Daniel played free cell for money. Think of all of the people that play free cell all day for fun. Daniel was able to figure out a way to get paid to do this.

20s Money used to sell air heads candy to classmates in high school. Looks like some readers were entrepreneurs at an early age. In a rather funny note, I tried selling bubble gum in grade 5. I would get my parents to buy me a whole tub and I would bring it to school to sell to my class mates. This worked well until the teachers found out. I guess selling stuff in grade 5 is not such a hot idea.

Sahaiya shared their opinion as part of a focus group. I’ve always heard of these focus groups but have never met anyone that has been apart of one. We all love to speak our minds, so why not get paid for it?

Donna used to sell video game saves. There truly is a market for everything. Some people either find a game too difficult or are too lazy to finish it so they pay someone for this service.

Financial Samurai teaches tennis for $50 an hour. Not creative but getting paid that kind of money do play a sport you enjoy and catch a workout at the same time is alright with me.

Youngandthrifty sold beaded necklaces to younger sisters. That’s what older siblings are for.

Maxwell worked as a product tester. At a $100 per test, you really can’t go wrong with this creative way of making money. I would love to be a beer or pizza tester.

Ron of The Wisdom Journal is the winner. I can’t event try to paraphrase his answer so I’ll just include it word for word.

Probably the MOST creative thing was starting my own shaved ice business. In 1992, I did a little research, found some suppliers, built an 8×12 building, had it wired properly, installed shelving, sliding windows, a bathroom, a three compartment sink, and a hot water heater. I set up across from the practice field at a major college (Roll Tide), and consistently made $300 to $500 per day in profit. Sadly I lost my lease and had to sell, but it was good while it lasted.

Okay now that’s creative.

In case you missed the original post this is your chance to list any creative ways that you’ve made money. It doesn’t have to be a lot of money and it doesn’t have to be super creative.

Being a frugal student or living a frugal student lifestyle does not mean you have to give up all material things and stop going to the movies or enjoying dinners at restaurants. Instead, being frugal is really more about being smart with your money and being aware of the value of money and these frugal principles are ones which can benefit anyone, in any stage of life or financial situation.

1.Take responsibility for your financial situation

This means you need to acknowledge that it is no one else’s fault that you are in the financial situation that you are, and no one else should have to take responsibility for managing the situation but you. As soon as you take responsibility for your finances you will be able to see any issues clearly and go about solving these problems logically, rather than responding emotionally.

Being responsible for your financial situation as a student also means having all the information and to maintain a frugal life where you are able to control your money without it controlling you, you need to make regular checks of your credit report and score. This helps you know whether there are bills which should have been paid which were missed, and can also keep you aware of any fraudulent activity in your name.

2. Know the value of money

Being frugal is not about going without, but it is about going without the things which are unnecessary. Therefore an important frugal principle is being smart with your money and to do this you need to know its value. This means you take the time to shop around for the best deal, or you pass over the more expensive product with extra features which you know you don’t need, to purchase the cheaper one you know you can afford, and which fulfils your needs.

3. Paying yourself first

There is no purchase or bill more important than you, so to be frugal with your savings, create a direct transfer from your wages each pay day so that a portion of your wage goes directly into a high interest savings account. Paying yourself first means that no matter what else happens you are able to protect yourself, your family and your future as you should make sure to keep between three and six months worth of expenses in your savings account in case of emergencies.

4. Budgeting

Making a budget requires you to be realistic about what you can afford after your wages have come in and your bills have gone out. This helps you remain frugal because you are living within your means and spending only what you can afford, because it has been budgeted for. To make sure your budget is accurate, track your actual expenses by keeping receipts and entering purchases into your budget spreadsheet. In this way you can see where you are spending the majority of your money and identify places you go over your budget unexpectedly, allowing you to rectify your budget in the following month.

5. Planning for future expenses

If you want to be frugal in making your money go further, you need to be clear about where it has to go. This means you need to think about your plans for the future and how much money you will need to achieve those goals. It may be that you are planning a family, you want to pay for your child’s studies, are planning a retirement or you simply want to make sure you can keep up with the costs of living. Whatever your plans for the future, knowing how much money you need to achieve them and when you need that money will help you manage the costs in your future responsibly, without having to take out loans or use credit cards to pay for them.

6.  Adjust your attitude

Living a frugal student lifestyle and being smarter with your money is not just about what you are doing, it is also about why you are doing it. Having the right attitude towards life, money and possessions will help you make smarter financial decisions. When you realize that it is alright to have nice things, but it is not essential, then you will be able to adjust your goals to be achieved when you can afford them, not when you want them and have to extend yourself in debt to buy them.

7. Consumerist products

Of the things you want to buy from the point above, when you adjust your attitude you will realise that not all of your possessions have to be brand new. There are a lot of good quality clothes in second hand stores if you take the time to look for them, and you can even make your own clothes for a fraction of the price of new ones. While you are considering making your own clothes, look at what else you could make to be more frugal – you could bake your own bread, make your own jam or craft your own Christmas presents. You also don’t have to go completely without and if you can shop smarter you can be more frugal with your money, for example shopping online can save you money and time and many websites will run specials on free delivery.

8. Consumerist services

It is nice to go out to dinner or be able to put your clothes in the dryer rather than taking the time to hang them out on the line, but these are also unnecessarily costing you money. To be frugal look for ways you can cut back on your luxury services, for example instead of eating out with friends take turns to host dinner parties at home to save money, and instead of turning up the heat in winter to keep warm, snuggle up in bed under a few extra blankets.

Fred Schebesta writes for Savings Account Finder, where he helps people to compare term deposits and savings accounts online

(MD’s Note: I’m not the most frugal person but I do understand the role of frugality in a college student’s life.)

As part of my new “Money Makers” series I will be running case studies/speaking with successful internet entrepreneurs. I’ll skip the introduction for today because I really want to get into this question & answer session.

I had the privilege to correspond with Flexo of Consumerism Commentary. Flexo was kind enough (or perhaps patient enough?) to put up with my emails and questions. The end result is some average questions from me and excellent responses from Flexo.

(Btw, if you haven’t heard of Flexo or his blog, where have you been? He’s 100% transparent with his finances. If you want to see how much money he makes online stop by his site.)

Me: You have been blogging since 2003. Many pf blogs have come and gone. In your opinion why have some bloggers been successful while others have simply packed it up?

Flexo: Success in blogging comes naturally for those who really love something about blogging, whether it’s writing, building a community, or interacting with readers. For most people, blogging is something they do in addition to whatever they do to earn a living, so it’s not always a top priority. That helps those who are passionate about the activity stand out more. There may be any number of reasons why people give up blogging. Most often, other activities like spending time with family or earning an income take priority. Others, who may have heard about the prospect of earning a decent income by blogging alone, may have started for that reason and given up when they realized that hard work is involved.

Me: You’re completely transparent with your finances. As a result you blog anonymously. Do you see either changing in the near future?

Flexo: I write on Consumerism Commentary anonymously for the reason you mentioned: I’m completely financially transparent. Anonymity at the time I started Consumerism Commentary was a necessity because I didn’t want to have my personal finances available to anyone, such as a prospective employer, who searched for my real name on Google. What I didn’t realize was that Consumerism Commentary would grow in popularity, and I chose a silly name rather than something sounding more professional. I don’t plan on changing this until I decide to stop pursuing a career outside of blogging.

Me: What career advice would you like to give to recent college graduates/20-somethings? Would you advise the traditional career route or perhaps something more entrepreneurial?

Flexo: This type of advice is best when it is tailored to the individual. Everyone has different needs, desires and talents. The best advice takes all of that into account so it’s difficult if not irresponsible to generalize. I’m not an entrepreneurial person, yet here I am running what amounts to a business while also maintaining a more traditional career. There are benefits to both paths.

Me: Do you see yourself blogging full-time any time soon? On the personal finance hour you mentioned that it was possible but that you currently enjoyed your job. Either way, what do you think is the necessary process one must take for one to blog full time?

Flexo: I’ve been giving this much thought lately. Income from Consumerism Commentary has outpaced my salary, but at least for now, I’m able to hold onto both worlds. I’m not sure how much longer I will be able to handle it, however. If you’re considering blogging full time, you really need to think about long-term viability of income. While many bloggers work together and help each other out, it is a competitive field. If advertising is your sole source of income, it will be more difficult to make it through periods when companies are cutting back their advertising budgets. My current goal is to diverisfy my income more so Consumerism Commentary and any other projects I take on are better poised to survive any broader economic condition.

Me: Do you ever see CC selling information products (i.e. ebooks, consulting, etc.) If yes, do you care to share any spoilers with us?

Flexo: I have many ideas for “information products,” but I’m not sure if I would be selling them or simply providing them as resources. Either way, this would be a project that is several months away given my current responsibilities. This is another feature that would be easier to handle if I were no longer dealing with a nine-to-five job.

Me: I started blogging under the name “studenomist.” Now I use my real initials and I disclose my real name with anyone that asks. Do you think we will ever know who “Flexo” really is? Do you think you have lost any readers because of this?

Flexo: If I decide to leave my career, the world may discover my true identity. I also have been mostly forthcoming with those I do business with. Many other bloggers know my real name. Like I mentioned, my concern would be with prospective employers searching the internet for my real name and finding Consumerism Commentary, not Consumerism Commentary readers discovering my real name. Nevertheless, I like to keep a low profile. I’ve received perhaps two negative comments in almost seven years of running Consumerism Commentary, and I’ve managed to convince both that my name is the least important aspect of Consumerism Commentary. I have little interest in “personal branding.”

Me: Step inside the time travel machine for a minute. If you were 22 years old right now, what would you do differently in terms of money and life?

Flexo: I was doing many things “wrong” when I was 22, and I didn’t know it. I wasn’t paying attention to money, and I wasn’t earning much, either. Regardless of my mistakes, I wouldn’t change much other than find a way to start investing sooner, even if it was just $100 a month. I may not have been able to afford even that. In terms of life, I would have been a better communicator and friend. Other than destroying or damaging a few relationships, which I deeply regret, there isn’t much I would have done differently.

Me: Twitter style. In 140 characters, what is your best personal finance advice?

Flexo: Pay attention, think about the future, cover all the bases. Life is short so make the most of it. Set some goals but life is in the journey.

I want to thank Flexo for doing this. Please check out Consumerism Commentary and feel free to share your thoughts on the interview below.

Personal finance/entrepreneurship blogs often advise college students that they can make money by tutoring. It’s a great idea and all, but how exactly do you do it? How do you exactly make money from tutoring? It’s easy to tell someone to tutor. It’s solid advice in theory. But it’s also lazy advice. I’ve been guilty of giving lazy advice myself. That’s not what Studenomics 2.0 is about.

If you’re anything like me, then you like having things explained to you. On top of the above questions, there are a few more issues that need to be addressed before any of us can make money from tutoring:

How do you make money from tutoring?

How do you set your prices?

What do you tutor?

Where do you find clients?

I can’t answer these questions for you guys but I really wanted to help out. This is why I reached out to a good friend of mine, that I know makes money from tutoring. On a ride home after a mini road trip he was kind enough to let me pick his brain. The result is my first of many case studies on ways to make money and entrepreneurship.

I will show you guys exactly how my friend made $2,100 from tutoring over the last 2 semesters with a advertising budget of– catch this– zero dollars.

Where do you find clients?

Is it possible to find clients for your tutoring services without spending a penny on advertising?

YES.

Word of mouth. He has not spent a single penny on advertising. He hasn’t put up any flyers. He also hasn’t created any fancy business cards nor has he created a website to promote his services (not that there’s anything from with any of these things). Word gets around fast when half the class appears to be failing the course at the mid term point and help is needed.

Being visible around campus. He has held many jobs within the Accounting Department. From Teaching Assistant to Exam Invigilator to dating coach (okay maybe not the last one). Students within the department know who he is and most important of all- they know they can trust him.

As a matter of fact, before he even thought of tutoring, students came up to him to ask if he could tutor them. After a few free sessions it became evident that there’s a demand for this service. The demand for tutoring also comes with a willingness to pay for the service. Potential clients clearly know that they have have a problem and they’re willing to pay to have it resolved.

Offer group sessions/rates. You want students that appreciate the value of your services. However, you also need to understand that some students are on a tight budget. This is why you should offer group rates. If a student wants to get a lower rate then simply suggest that they bring together a group of their peers and offer them a decent (lowered overall per person) price.

(Note: This is a little trick because every new student that is brought to a group session becomes another potential long-term client.)

What do you tutor?

My bud tutors three different accounting classes- Intro, intermediate, and advanced accounting.

Accounting isn’t exactly the most exciting topic to tutor or learn. But if you do master your challenging accounting (or whatever the difficult courses are in your program) then your new found knowledge can make you some solid income from freelance tutoring.

Why? Because odds are in your favor that other students will be challenged by the same courses collectively. Every program has extremely challenging courses. If you excel in them, you may have a gold mine under your belt.

How do you set your prices?

He checked out what other tutors were charging for accounting courses in his school and other schools in the area. You naturally don’t want to charge more than the very experienced tutors. On the other hand you don’t want to de-value your own skills and services. You’re worth more than you think.

Therefore,  you should charge less than the most experienced tutors around campus because you need to build up your clientele. But you shouldn’t offer too much of a price difference because you’ll only de-value yourself.

For example: In this scenario, one of the older tutors that’s been around for a long time charges $40/hr. My friend set his price at $30/hr.

If you’re the only person tutoring a particular subject then you’re in a unique situation. You should aim to set your price at what clients are willing to pay. If you find only a few people complain about your price, then it’s all good. If you find that you’re turning away more clients than you’re accepting, maybe you should revise your costs.

Any other tips for readers looking to make money through tutoring?

1. Don’t call it tutoring. Use terms like mentor, coach, help or assist. College students don’t like the word, “tutor” for some reason. It makes students feel more comfortable when they’re not being “tutored.”

2. You don’t have to be the best at what you coach but you need to know your shit. Clients won’t necessarily care what your credentials are. As long as you’re able to help them learn the information in a straight-forward manner, they will return.

3. Always have your students come and leave with something. Tell your students to bring challenging questions ahead of time. This shows that you value their time and that you’re not trying to rip them off. As the students leave the session, make sure they leave with something. Whether you give them a handout, summary of the day, or a few more questions to solve, they need to leave with something.

4. You better be patient. You don’t have to be the worlds greatest people person (I’m far from it) but you need to be patient. Not being able to solve a problem can be embarrassing and frustrating. If you snap/lose your patience easily then maybe you should become an MMA fighter or something else.

What does the future hold?

A brand new job as the Head Teaching Assistant at current school. Hopefully build tutoring business on the side at other schools in the area.

Do you have a life?

Okay I didn’t ask this question but I’m 100% certain he does.

Now I turn it over to the readers: did you enjoy my case study approach? Do you see yourself making money from tutoring after reading this? Please share…

(Extra: Don’t forget to claim this new found income on your taxes.)

It’s time for a book giveaway: Master Your Debt: Slash Your Monthly Payments and Become Debt Free
The book is written by Jordan E. Goodman. You’re best off clicking the link to read the reviews to see what the book is all about because I haven’t read it yet to be perfectly honest.

How can you win this book?

By answering the following question in the comments section over the next week:

What’s the most creative way you’ve ever made money? Keep it legal folks.

Bad news- There will only be one winner.

Good news- I will include the top ideas in a post next week. If you’re a blogger then that means free link for you.

Time for some links:

Squawkfox gives us free cover letter examples & tips. If you want to get job you’re definitely going to have to fix up that annoying cover letter.

Budgets Are Sexy talks about losing $24,000 last year. If you want to know how expensive home ownership is then you need to read this article.

Erica.Biz shows us how to get through the fear or failure. This is a guest post from Flexo of Consumerism Commentary and his ten venue tour.

Amateur Asset Allocator tackles the always popular topic of paying down debt vs. saving for retirement. A great take on this never-ending debate.

Wisdom Journal asks if you would rather be right or employed? We can all relate to this. Do you tell your boss off or do you collect your pay check?

College Candy talks about blackout mistakes. I’m sure many of us have done things we regret after a few too many drinks.

Good Financial Cents gives us 3 subscription tools that can save us money on the web. A few helpful tools to help out the ol’ wallet.

Carnivals:

Festival of Frugality @ Ultimate Money Blog

Carnival of Personal Finance @ My Journey To millions

College kids are crazy. They’ll do anything for money. Spending an hour in a brain scanner? Why not? Everyone thinks they can beat the system and be great at blackjack, and who hasn’t tried a little online poker?

Donating blood for a free lunch is a no brainer. I did it for the cookies. And the t-shirt.

No college kid wants to put forth much effort in return for money, and getting a real job is out of the question. So here are five ways any college student can make a little money without taking too much time out of their “busy” schedules:

Sign up for studies between classes

The psychology, language, business, and anthropology departments were always recruiting students to participate in 30 or 45 minute studies for $10-$15 each. They didn’t require much work and they helped them do research. They paid well because most students didn’t know about these paying opportunities. Check out their websites and monitor them regularly to make sure you get first pick at time slots that fit your schedule.

Tutoring

Think that tutoring is only for nerds? Well, think about that class you aced last semester. Offer to help out students who are currently enrolled in that class. You’ll seem like a genius compared to them, plus you probably have old tests and notes that could be helpful. Hint: Advertise yourself right after the first test. That’s usually when students beg for extra credit and realize it’s time to take work seriously.

Do What You Know Best

During my freshman year, I was addicted to free cell. I played tens of thousands of games on my computer, and I was very god. So I went online and found a site that let me add money and bet others on who could finish a game faster. The site took 10 cents of every dollar, but soon I was winning weekly and monthly competitions. For me it was barely a gamble because I knew I was better than 90% of the people I played against.

Are you good with computers? Lots of college kids get viruses and don’t know where to turn. If you’re a guitarist, there are always dorm kids who want to learn but don’t want to pay much. Figures out what you’re best at and help others.

Sell Your Textbooks The Smart Way

Instead of heading over to the campus bookstore, where they will give you 40 cents on the dollar for your textbooks, try selling them to friends. Figure out the going rate and offer yours for a few dollars less. They’d rather give you the money than the bookstore, right? By cutting out the middle man, you’ll both benefit.

You can also try to buy your friends books for a few dollars more than the bookstore offers, then visit the class and offer it at the going rate. You save them the hassle of walking to the bookstore and you get a premium for your effort.

Sell Drinks on Game Day

Ever been to a loaded parking lot for a September football game? Sometimes it gets HOT. Take a cooler, fill it with ice and cheap water bottles (this 24 for $4) and drinks and see if people will buy them for a dollar. I bet that beats the price of a drink once they get inside the stadium. If you can sell the whole case, you’ll make a cool $20.

Start Today

These tips won’t make you rich. But for the college student who doesn’t want to get a part-time job and doesn’t need a ton of money, a combination of these tactics could give you the pizza money that gambling probably can’t (not to mention the risk!).

This is a guest post from Daniel Packer of Sweating The Big Stuff. Daniel writes about negotiating, saving, and budgeting, while attempting to maintain a high quality of life. To read more, subscribe to his feed or follow him on Twitter.

I have started to realize that many people in general simply hate learning about personal finance. But 20-somethings especially hate learning and talking about personal finance (not everyone, but lots).

The two most common reasons people hate learning about money or researching it, is because their ashamed to admit they’re not good with money and because money management is terribly boring for most young professionals.

Everyone would ideally love to be good with managing their money. We would all like to save a significant portion of our income, travel a few times a year, plan for retirement, and save up for a down payment.  The problem is figuring out how to become good at managing money. It’s like learning about how to lose weight or getting huge. It’s exciting at first. Then you start thinking about all of the boring food that you will have to eat on top of the hours of work.

I wrote about the importance of personal finance education in college a few months ago. I still think it’s possible but I simply don’t see it happening at the moment.

Why do twenty-somethings hate learning about personal finance/money management?

Many personal finance information sessions are a scam

We all know the drill and we’ve all seen the late night infomercials. All you have to do is attend a $50 seminar and you will learn how to turn ten bucks into $200,000. Sign me up, jackass!

How can anyone care about personal finance information when a majority of it seems like a big scam? This is where I completely sympathize with those that hate learning about personal finance/money management.

Money management talk makes people feel bad

When I hear religious people speak about their beliefs I feel bad for not being such a firm believer. When I hear athletes speak about their intense training I feel bad for not being as dedicated to working out. This is the same feeling that people in credit card debt feel when speaking with “personal finance experts.”

People feel horrible when they realize how they’ve been mishandling their money for many years and a feeling of shame hits them. Unfortunately, this feeling of shame is usually followed by some sort of retreat. It’s much easier to avoid the topic of money management then it is to dwell on personal finance issues.

Personal finance information is usually expensive

When someone is in debt they really don’t want to spend any additional money. It took me forever to buy a book on personal finance. Unfortunately, books are usually the lowest priced piece of personal finance information. Most of these seminars and “get rich quick” tutorials/tool kits cost a couple of hundred dollars. If you’re in debt then all these BS “personal finance” products will do is put you further into debt.

The way the college system is setup

I have taken many valuable courses in college that I simply crammed for at the last minute. Instead of truly absorbing the material I just crammed it into my mind at the last minute. Why? Because that’s how most college students operate. All we think about is completing our degree and then moving on with life. If you truly seek value for each and every one of your courses then I’m jealous because I just care about the credits for the most part.

Another negative is that most college students suck at personal finance. This could likely result in a poor grade. Instead of applying the course material, most college students will only remember the poor grade and curse the concept of personal finance/learning about money management as they get older.

Now I want to ask all of you two very important questions:

What can I do to make you care about learning about personal finance/money management/entrepreneurship/whatever else comes to mind?

If you’re a loyal Studenomics reader, what can I do to help your friends care about personal finance?

This is a guest post from Ryan: a recent college graduate who writes about personal finance, real estate, entrepreneurship, mobile living, and personal development at Planting Dollars. In his free time he scuba dives with sharks, builds travel websites, and enjoys frugal living in Hawaii.

Each year incoming freshman beginning the college journey are greeted with the Free Application for Federal Student Aid (FAFSA). This form makes or breaks the student’s ability to pay for their college career. No pressure, right? College costs money and without grants and student loans, you’re not going to get very far. There are scholarships, part-time jobs, and of course parents, but what if you don’t have any of that?

The FAFSA is the government’s way of controlling who gets financial aid for their college and who doesn’t. Fair enough, the government should control who’s getting the aid, and it should be based on merit and need, I completely agree.

However, the government also bases this decision by how well off your parents are. This is known as the Expected Family Contribution (EFC). The EFC is based on how much your parents make along with their assets. If your parents don’t make a lot of money, you’re likely to get more money from the government. On the other hand, if your parents make oodles of money, you most certainly will not get any government help. In my college experience, I was the latter.

Is the FAFSA and EFC Fair?

Considering that a person is 18 when they go to college, or soon after, they are no longer under the supervision of their parents or legal guardians. Therefore, those guardians do not have any obligation to pay for their child’s college tuition. So why does the government base how much you get, off how much your parents make?

There is the argument that parents do typically pay for the son or daughters college expenses as illustrated by this statistic by Reuters:

“Parents paid 45 percent of the total costs of college in the 2008/09 academic year using income, savings and borrowing.”

Even so, I don’t agree with limiting the potential of kids who’s parents make a certain amount of money or have a certain amount of wealth and don’t decide to pay for their child’s college. Having had a personal experience with this, it was frustrating on my end, because I still had to pay for a considerable amount of my college without any help from grants or other forms of financial aid. I am not saying that I am any more deserving than any other potential college student, however I’m wondering about the merits of the system and if it’s doing America’s soon to be college students justice.

Enron and the EFC

When I read about the EFC it reminds me of a company called ENRON, ever heard of em? ENRON failed because they based their current level of income off future earnings. The EFC is much the same. The government is projecting that you will be able to pay for your college from your parents wallet. This projection is often untrue and thus these students have to work harder or go belly up much like ENRON.

Actually The Rich Kids Get Some Help… The Scraps From the Table

Recently the government has changed its tune on the EFC… kinda. The quote below is from the FAFSA student handbook.

Although students whose parents refuse support are not eligible for a dependency override, the Higher Education Opportunity Act of 2008 (HEOA) granted that such students may receive unsubsidized Stafford loans only.

This illustrates that the rich babies are able to get unsubsidized loans, but are still not in the running for the good ones like the Perkins loans, Pell grant, or subsidized Stafford loans. Basically they’ve given these kids a few table scraps and that’s about it.

So what do you think? Should the FAFSA have the EFC as part of the criteria?

Are rich kids at a disadvantage if their parents decide not to pay for their college or should they simply stop complaining?

In just under a month (Feb.22.2010) the new credit card act goes into affect.

A few readers have emailed me to ask about this.

What does this new credit card act mean to me?

What’s going to happen to student credit cards?

Will it to be tougher to get a student credit card?

These have been common questions and it’s time to answer them.

Is it tougher to get a student credit card?

Well if you’re below 21 than the credit card act means a lot for you. And yes it will be tougher to get a credit card.

It’s going to be tougher to get a credit card if you have no evidence of income or a co-signor with good credit. Prior to the new credit card act, credit card companies were throwing credit cards at college students the same way we throw everything around when we get home after a night of drinking. You could go to class on the first day and come home with a shiny new credit card and a brand new frisbee. Not anymore.

The thing is this- if you have no income you shouldn’t really be spending money. But that’s none of my business because we all live different lives. Let’s move on…

The new credit card act really sucks if…

You’re an entrepreneur. As a young entrepreneur it can be fairly difficult to prove your income/earning potential. Plus as an entrepreneur there’s a good chance that you want to build your credit for the future (mortgage, car, or even rent). Until you hit the age of 21 you’re either going to need a co-signor or some how have to prove you have money coming in.

Your parents have bad credit. If your parents have bad credit then they won’t be able to co-sign for you. If you have difficulty proving you have a steady income and your parents have less than stellar credit, you’re going to have to wait until you’re 21 to both drink booze and hold a credit card.

Waiting until you turn 21 to get a credit card can be a blessing in disguise for some. For others it will only delay the credit building process.

Consequences of the credit card act for parents…

So say your child messes up with their new credit card and the debt adds up. Not your problem, right? Well not anymore. You co-signed!

If your child doesn’t make their monthly payments, defaults, or runs into the risk of completely destroying their credit, you may have to help out. I know this sucks but financial education now becomes even more important.

On the bright side, you now have more control of your kids financial situation. You won’t be surprised to find out that your (18-21 year old) came home from school with 3 different credit cards.

What do you guys think of this new credit card act? Good idea or horrible idea?

Details: The new Credit Card Accountability, Responsibility, and Disclosure Act was signed by the President of the United States in May of 2009. It goes into effect on February 22, 2010.

Check out Gen X Finance for more on what the new credit card law means for teens.