Originally Posted by
Jazzop
Speaking of building credit, the very first thing a college student should do is take out federal student loans. The interest rate on those loans is dropping to <4% soon. Assuming you don't otherwise need the loans, "churn" them into a Roth IRA. The interest differential will be significant over the long term. Plus you have the tax-deductibility of the student loan interest (try to time it so that you pay the interest only in years when your annual income is below the phase-out point). If your finanical situation allows you to repay the loans quickly, then you have a major boost to your credit history.
You need to have earned income to contribute to a Roth IRA. Unless the student is working, they can't put money into a Roth IRA. And if they are only making $2k a year, from say a work-study job, then they can only put $2k into the Roth IRA. This is one thing that poses a problem for a lot of students since the majority don't hold paying jobs while in school (maybe I'm incorrect with that assumption, but most people I knew didn't hold a paying job, but many held volunteer jobs, etc...).
Also, while the interest rate is dropping for undergrads, it isn't for grad students. It's unfortunate because graduate school, specifically professional school, is way more expensive then undergrad.