Expert Reveals Biggest Financial Mistakes College Students - And Their Parents - Make and How To Avoid Them

LONG BEACH, CA, October 04, 2012 (Press-News.org) Next to purchasing a home, funding a college education is often the biggest expenditure in the lives of most middle-class Americans. With some students and their parents being saddled by debt that can take years to repay, financial expert Jeff Motske, president of Trilogy Financial Services, has announced the biggest financial mistakes college students and their parents could make and how to avoid them:

1. NOT APPLYING FOR STUDENT LOANS - There's cheap and even free money out there and people are just too lazy or uninformed on how to get it. The U.S. Department of Education estimates that more than 40% of students don't apply for federal financial aid and there are 2 million+ students who would have qualified for Pell grants but didn't apply. Remember to apply early enough as Free Application For Student Aid (FAFSA) applications must be submitted January 1 - June 1. Besides federal loans, try applying for scholarships and grants based on academics, sports, special skills and community involvement. Also, avoid taking out loans from traditional lenders like banks, if at all possible, as interest rates there are likely to be higher than the previously mentioned sources.

2. CREDIT CARDS GONE WILD - Credit cards are not free money. Students should be given one credit card (perhaps a 2nd one as a backup) with strict spending limits. The cards should be paid in full each month. The student should never apply for a credit card without the parents' permission. Remember that late payment or nonpayment will result in damage to your credit report, which will hurt your chances of someday securing a home or auto loan.

3. TAPPING INTO YOUR 401K - While the government will allow you to withdraw funds from your retirement account for tuition, boarding, books and other approved expenditures without the usual 10% early withdraw penalty, you will still have to pay income taxes on all or part of the money. Also, you will have to declare that amount as "income" when you apply for financial aid the next year. Avoid borrowing against your retirement accounts, after all, there are no scholarships for retirement.

4. MISUSE OF STUDENT LOANS - While students may be tempted to buy the latest Iphone, take a sun-soaked trip to coastal Mexico with their friends or buy a car with their new found "wealth" (e.g., student loans, credit card cash advances, etc.), don't do it. The long-term headache associated with such impulse buying isn't worth the temporary pleasure such purchases afford you. Instead, take advantage of the free or near free activities offered by your school including concerts, plays, guest speakers, art exhibits and use your student ID card to secure discounts on movie & play tickets, public transportation and some restaurants. Also, take advantage of the on-campus fitness center, health clinic, library, counseling services, etc.
5. CHOOSING THE WRONG SCHOOL -- The true cost of a college education goes beyond mere tuition to include rent, transportation, food, books, entertainment, gas, car & health insurance, etc. Add to that the long-term cost of any loans you may secure. After analyzing these costs, parents and their college bound freshmen must ask themselves if the school of their choice is feasible or if the debt that will be incurred by both parties might prove to be insurmountable.

"Data recently released by the Federal Reserve Bank of New York shows that an increasing number of parents 40+ are taking out student loans to help fund their children's education," said Motske. "While we all want to do everything we can to help our children succeed, in today's tough economic times some hard choices may have to be made in terms of which colleges make sense for the entire family."

Since 1999, Trilogy Financial Services has helped clients achieve their retirement goals by offering financial, estate and tax planning specialty under one roof. Even if clients retain outside legal and CPA counsel, Trilogy still invites its team of specialists to review their work to ensure that clients' best interests are being maintained. With more than $2 billion in assets, the Huntington Beach, CA headquartered company maintains 11 offices in 4 states with 200 top-tier employees (not independent contractors) dedicated to helping clients achieve financial independence. For more information visit http://www.trilogyfs.com.

Securities and advisory services offered through National Planning Corporation. (NPC) Member FINRA, SIPC, a Registered Investment Adviser. Trilogy Financial Services and NPC are separate and unrelated entities. CA Insurance # 0C64576.

The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual. To qualify for the tax free penalty free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½ or due to death, disability, or a first time home purchase (up to $10,000 lifetime maximum). Before taking any specific action, be sure to consult with your tax professional. NPC does not render tax or legal advice.