Give Credit Where It's Due
Given the challenge of keeping spending down, it's not surprising that many students end up with a mountain of credit-card debt (see charts above). While your instinct may be to urge your child to just say no to plastic, a credit card can be a useful tool for a student--to buy a plane ticket home, for example. Paying the balance in full each month also helps your child establish a good credit record. A compromise: Greenlight a student card with a low limit, say $500. While the rates on student cards are usually high--15% to 18%--you can find better deals, such as Sovereign Bank's Preferred Student card (877-768-2265), recently at 9.9%.

Another option is to add your child as an authorized user on your own credit card. That was the approach taken by Wendy Olk of St. Louis, Mo. for her son Nate, 24, and her daughter Molly, 22, both graduating from Indiana University this year. Before using the card, each child had to get prior approval from Mom, who deducted any unauthorized charges from their monthly allowance. When Nate kept charging clothes and meals without warning, she kept her word. "He stopped surprising me," she says.

Prepare for Disaster
No matter how carefully you plan, however, the moment will inevitably come when your child calls home to beg for more money. Before you hit the roof, consider the possibility that the budget may, in fact, be unrealistic. Liz Seely, for instance, always managed to get by on the $500 per semester her father sent her at college in New Orleans. But the same amount proved inadequate when Liz spent a semester in London. "I said, 'Dad, you don't understand that I'm buying less, but it's impossible not to spend more,'" says Liz. Dad sent her an extra $300.

The scramble for money, alternatively, may remind your child that the time to start living within one's means is now. Last December, University of Washington student Nicholas Fusso, 20, spent a lot of weekday talk time on his cell phone to line up off-campus housing--and break up with two girls he was dating at the time. His bill for that month: $380. His mother Denise was sympathetic but not enough to to pay the tab. "It sucks to be you," she told him. "Next time, break up after 7 o'clock." Says Nicholas: "I haven't gotten even close to the limit since then."

Similarly, Pamela Jenkins says she didn't help her daughter out last year when an unpaid $200 bill led to suspension of Tiffany's cell-phone service. "At one point or another, kids are going to get in over their heads," Pamela says. "If you bail them out constantly, they never learn how to work it out themselves." Not a bad lesson for a college student to learn.