Get good grades...save money

by Center for Personal Finance editors

NEW YORK (8/23/06)--A student's grade point average (GPA) isn't the only thing affected by end-of-semester grades. Good grades can help young adults save money on car insurance, rent and the high cost of college tuition (CNNMoney.com Aug. 10).

Car insurance rates are based on risk, and good students tend to have fewer accidents. Thus, most insurers offer some form of good-student discount. For students who maintain a B average or better, Allstate Insurance offers a 15% discount to full-time, unmarried students. State Farm Insurance offers up to a 25% discount, depending on where you live and the kind of vehicle covered in your policy. If the B drops to a C, the discount quickly goes away.

Similarly, good grades can lower monthly rent expense at some off-campus apartments. CNNMoney reports that California Polytechnic State University in San Luis Obispo, Calif., takes 5% off your rent if your GPA is between 3.0 and 3.5, and you get a 10% discount if you have a 3.9 GPA or higher.

It's worth checking into merit-based financial aid for students who already have a proven track record. For example, some universities offer scholarships to students who have earned and then maintain a GPA of 3.5 or 3.0. Some aid is based on freshman-year performance, so stress the financial significance of good grades beforethe student heads to campus. Merit-based aid is a plus for competitive students who aren't successful in getting scholarships.

Ask whether government money is available if students attend college in their home state and maintain a grade of B or better. These in-state grants, available in 37 states, may cover tuition, student fees, and book allowances.

Finally, if you're the parent of a college-bound student, check your auto policy (Insurance Information Institute Aug. 8). Inform your insurer if the student will be living at least 100 miles from home. You may qualify for a discount for the time the student isn't around to drive your car.

For more information, read "College Costs Update" in the Home & Family Finance Resource Center money savvy section.