Don't Buy Your College Kid a Laptop at the Campus Store

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College today is horrendously expensive. Beyond tuition bills that look like significant percentages of the national debt, and room-and-board costs that make you wonder if the school is housing your child in the Ritz-Carlton, pricey textbooks and laptops are a near universal requirement.

The school store will be happy to sell these laptops. But data collected by DealNews.com suggest you probably want to resist: You could be paying far more than the usual retail price for your hardware -- upwards of 35 percent more.

DealNews looked at the computer prices in the school stores of U.S. News & World Report's five top-ranking public universities and one of the top private universities. (Private universities are often finicky about letting non-students into their online stores, so there were fewer options.) The site then compared the most and least expensive laptops as well as the cheapest tablet to similar configurations in back-to-school deals available from retailers.

Better Deals at Walmart, Target

On the average, campus prices were 35 percent higher than those offered by retail stores. Most of the equipment at the schools also seemed to be sold as is, without additional software or tech support. When DailyFinance asked, a DealNews representative confirmed that the site took into account all the installed software when comparing prices. For example, the University of Virginia sold a first-generation iPad with 16GB of RAM for $299. That was $100 more than Walmart (WMT) and Target (TGT) charged in their summer deals.

Some schools had reasonably priced equipment. But 68 percent of the time, families would have been better off buying the gear off-campus. Even when there are educational discounts, like with Apple (AAPL) equipment, major stores were sometimes less expensive by up to $50.

That said, there are a few situations when the lower price you could get from an off-campus retailer might not be such a smart deal.
  • Specialized software. Some software, like in areas of engineering, may be free. Others could require specific commercial packages. For example, if your kid is studying photography, design or art, Adobe (ADBE) software could be required. Check to see if you can get the same software deal as the school does. If not, you might find that the lower software prices more than make up the cost difference of the hardware.
  • Maintenance. Laptops can take a beating. Does the school include a full maintenance plan? You don't want your student stuck with an expensive brick and no option for fixing it. Plus, you might also need to install various applications and utilities. The time and irritation alone, particularly when things are pressed as you send the scholar on his or her way, might be worth the extra money. If you worry that you'll buy the wrong thing, purchases at the school store can reduce your stress.
  • Financing. The school might provide financing that is significantly cheaper than what you might have available to you via a credit card.
But chances are good that you won't have to give up anything to keep some extra green in the wallet. And you know the kid will be calling soon enough asking if you can spare any cash.

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Don't Buy Your College Kid a Laptop at the Campus Store
"We're living in the 'now' generation, with kids wanting everything now and a lot of parents giving in," says Dan White, a certified financial planner with Dan White and Associates in Glenn Mills, Pennsylvania. But there's a difference between simply wanting the shiny new thing because it's out there and desperately needing the shiny new thing because not having it has larger consequences in your teen's mind.

"Sometimes teens feel that if they don't have the latest and greatest gadget, they won't be popular or fit in," says Kimberly Foss, a certified financial planner and president of Empyrion Wealth Management in Roseville, California. "This is reflective of a deeper issue of self-worth and self-esteem."

The prevention: Foss recommends asking in a calm, non-emotional environment about the reasons they made the purchases and listening to the response and watching the body language. Counseling may be in order if you feel your teen is compensating for a bigger emotional issue, Foss says.

If it's just a case of your teen wanting the next newest thing, White recommends establishing an allowance and saying no to your kids when they ask for more.
According to a recent Gallup Poll, 68 percent of American adults do not have a detailed monthly household budget. Kids who don't see their parents paying attention to the family's inflows and outflows are going to have to cram in later life to learn those important lessons -- in real time, with their own real money.

The prevention: Kids should learn the concept of budgeting for life's expenses before they go to college, advises Ric Runestad, owner of Runestad Financial in Fort Wayne, Indiana. Establish your own budget and share it with your kids. Have your children make their own budget for things like vacations and summer camp.
"The odds of winning the lottery is somewhere around 1 in 259 million," says Gregg Murset, a certified financial planner and CEO of MyJobChart.com in Scottsdale, Arizona. "If your child thinks this is a good way to plan for the future, just start planning now to have them living with you during your retirement."

The prevention: Make sure you're quickly correcting your kids whenever they mention a lottery ticket or windfall. (Search "odds of winning the lottery" for even more colorful examples.) Explain the importance of saving and working hard to fulfill their future dreams.
It's one thing if your child asks to borrow a few dollars to buy something and pays it back immediately when you get home. "However, if a child starts to treat their parents as a payday loan service, then the parents should act as a payday loan service by charging expensive rates of interest," Runestad says.

The prevention: Reinforce the "If you want it now, you have to pay for it now" behavior by instituting a realistic interest rate on borrowed money. Take a cue from the credit card industry and set it around 15 percent. Run the math with your child and show how much more an item costs in the long run when it is paid for with borrowed dollars.
Does your child assume (unrealistically) that he or she will replicate your lifestyle when it's time to be on their own? Here, again, there may be a communication breakdown. "It's important for parents to assess their own behavior and guide the child in the right financial direction," says Eric Johnson, principal of Signature, a wealth management advisor in Charlottesville, Virginia. "If they're spending lavishly and telling their children to save, there will be a large disconnect in the child being able to form solid monetary values on their own."

The prevention: Talk early and often about your money values and reinforce the idea that your wealth may not be a signal of your child's future lifestyle.
"Children can be every bit as gullible as adults when it comes to trying to help someone out who really is just taking advantage of them," says Runestad. "Everyone wants to be liked, and we all have times we need someone to lend us some money. However, any time money is lent it should be under very stringent requirements."

The prevention: You can't always know about your child's private financial dealings. But you can instill in them standard expectations when it comes to money issues by consistently following certain money rules when they come up at home. So, when you lend money to your child, remind them that you are not in the debt forgiveness business and you expect full repayment of the loan by a certain date. Consider drawing up a standard fill-in-the-blank lending document for all parties to sign.
 
"While piggy banks can be a cute way for a youngster to learn about nickels and dimes, what purpose do they serve after that?" asks Murset. "If your kids are old enough to earn money, they're old enough for their own bank account."

The prevention: Open a bank account with your child, walk them through the process of making deposits, teach them about online banking and earning interest. There's no better education about the adult world of finances than actual hands-on experience with the products they'll be using for the rest of their lives.
"Some kids think that credit cards represent free money that banks give away for people to buy things," says Murset. "Until your children have a clear understanding of how cash advances work and what interest rates, penalties and fees mean, they shouldn't have one."

The prevention: Teach your kids the difference between a debit card and a credit card as you use them. When they are old enough, get them a pre-paid credit card. Fund it with their allowance or savings, and give them room to make their own mistakes (such as running out of money because they weren't keeping track of the balance). Better that they learn the lessons of proper plastic usage under your watch.
If your kids spend more time watching TV or playing video games than helping around the house, they're not developing a sense of responsibility, says Murset.

"Get your children off the couch and out of their rooms to do their share around the house," he says. "Besides building a daily routine, they'll develop a good work ethic."

The prevention: Not all chores should be equated with payment. Helping around the house is simply part of what family members do. However, certain chores and work above and beyond the basics can be linked to extra payments. As your kids develop a work ethic, they'll start to learn that doing a good job and taking on more work can be satifying both financially and emotionally.
"Young adults are made to believe that once they graduate college they'll be able to pay off their student loans quickly," says White. "That couldn't be further from the truth. An average student takes a minimum of 10 years to pay off an undergraduate degree."

The prevention: Together, as a family, go over all of the costs of higher education -- everything from tuition to room and board, meals, gas money, and airplane tickets home for the holidays. Together, discuss ways to cut costs. And make sure your kids are exploring every opportunity and avenue for covering college expenses before they commit to a large loan, says White.
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