Finance

Planning for College

Expenses

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University Cost Estimates

No matter how carefully you and your student plan for college expenses, you will not be able to precisely predict each expense category. The University’s cost of attendance is not determined by exact science. When the school says one year at the University of Minnesota is likely to cost  about $21,000, it is only an estimate.

Technology fees vary by the college within the University, ranging from $50 to $700 a year. Some courses, especially science courses, will have additional lab fees. Books can cost more or less, depending on the classes. Supplies might be more expensive for a design class. Students who live in a single room will pay more in residence hall charges than students who live in a double or triple. The meal plan your student selects can affect the bottom line.

Tuition is only a portion of the costs that students must cover in order to succeed at the University. To to calculate the estimated annual cost of attendance for your student's academic program, visit the University's interactive chart.

Parent: "We started talking to our two sons about college when they were very little. We told them that we would pay half of their college expenses when the time came, and they would have to pay the other half. Also, any scholarships they may receive would be deducted from their half of expenses. Any money they received for birthday gifts, etc., we had them put half into their college fund. At times, when we thought they didn't need more presents, we talked them into putting all of their money gifts into their college fund. Over the years they would mow lawns to make money and most of that money would end up in their college fund also. We made sure they could ride their bikes to a neighborhood bank and handle some of their banking themselves. As their college fund grew (first in savings accounts and then later in Certificates of Deposit), we would take them to the bank with us to roll over the CDs, so they could see their money grow. We let them decide the term limit of their CDs with our guidance. This was the beginning of learning the banking industry."

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Student Spending Habits

Student spending habits cover a wide spectrum and will raise or lower the anticipated cost of college. Some students hang out at coffee shops between every class, meet friends for a burger or pizza, and go out to a concert or movie a couple of times a week. Their expenses quickly mount up. Others, however, discover they can socialize with next-door neighbors in the residence hall, drink more than enough coffee in the dining center during meal hours, and check out videos from the hall office for entertainment, so their daily spending needs are minimal.

Student: "I wish my parents would have told me about all of the subtle, yet necessary expenses that are involved with being on your own. I am still getting hit every once in awhile with a cost that not only did I not know about but that seriously affected my financial situation as a whole. Talk to your kids about insurance and healthcare and the costs of vehicles and about everything. It doesn't have to be when the kids are 8, but when a kid is 16-17 years old, they are old enough to be a little enlightened as to what it is really going to be like for them. Only with this knowledge can kids really appreciate the value of money or what their parents are doing for them on an everyday basis."

Students who need regular updates to their wardrobe, bring a car to campus, and are tempted to take weekly trips to the Mall of America will spend well beyond the anticipated cost of attendance.

Then there are the unanticipated uncontrollable expenses. An illness, an unexpected trip home, or the theft of a backpack can suddenly break the budget.

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Predicting Problems

The first year of college presents some typical problem areas for students who are just learning to handle their own finances, and the first few months are particularly hazardous.

After a lifetime of being encouraged to save for college and an influx of funds from high school graduation gifts, many freshmen arrive on campus with an impressive bank account. Now that they are in college, the temptation is to use all those savings.

There are some are real expenses involved with beginning college. Students who have been saving for college for years have no problem justifying their spending, thinking, "This is what I've been saving for."

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Typical Problem Areas

Roommates may want to coordinate the look of the room with matching linens or coordinated appliances, or they may find that neither roommate thought to bring a message board or an iron. A trip to Target with the roommate might end up costing each one an unexpected $80, $100, or more.

Textbooks and classroom supplies are a predictable expense, but there are ways to reduce the costs. Students can look for used books, rather than new. They can buy only the required textbooks and wait to see if the "recommended" books are really necessary. In some cases, these additional textbooks can be borrowed from the library.

Commuter students may choose to purchase a bus pass or arrange a parking contract. The out-of-pocket costs can seem excessive, but students should consider the long-term financial impact. If a student pays $84 for a U-Pass as a one-time expense for the semester, will she save money over time based on a per-ride cost of $ 1.75 ($ 2.25 rush hour ; $3 express routes)? Will she ride the bus often enough to justify the expense?

If the student drives to campus every day, gas and parking expenses can be significant. Students can save by carpooling and sharing gas expenses, and they receive bargain rates on carpool parking (carpool parking is $ 2.50 a day; the least expensive daily lots are $ 3.75 per day).

In the first days of college when students are seeking out new friends, social opportunities usually involve spending: “Do you want to check out the concert at 7th Street Entry tonight?” “We can try for rush tickets to see a play at the Guthrie. They're only $15 .” “A bunch of us are signing up for an ultimate Frisbee team. It's $50—do you want in?”

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Habitual Spending

For most students, it's not the big expenses that cause budgets to get out of hand. It's the smaller, habitual spending that adds up without being noticed-a coffee mocha every morning between classes, snack foods in the evening, the weekly news magazine or daily paper from the convenience store, and the twice-daily stop at the soda machine.

Student: The best advice my parents gave me? Don't eat out all the time and get Starbucks. Saving just a little amount each week adds up a lot.

Students often discover genres of music, films, or books that they had not known or liked prior to coming to college. They are introduced to new styles by their roommates or friends, and they feel compelled to have their own copy of a CD or book or to watch all the movies by a newly discovered film director.

Students tend to spend freely during the first two months of college, then realize in November that they are in trouble. When the savings start to dry up, a credit card might seem like the answer. Students think, "I'll work over winter break," or "I've got money in my bank account back home that I can transfer in December," and they believe they can manage their funds with credit in the meantime. Too often, however, they overestimate their ability to make ends meet.

Student: I would tell college students to manage their money wisely because it is amazing how spending a little here and there adds up. You can have one weekend of fun and be paying for it for the next month. It is amazing how money goes, and with proper planning you can prevent yourself from getting into a serious financial problem.

Parent: Our freshman, who has gone through too much money these first few months of college, has learned he needs to use cash or write a check. Using the debit card got away from him, so now he doesn't use it. He also learned how his money can be gobbled up by bank overdraft fees!

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Mini Calendar

Move-in/first day of classes

First weeks of classes

Other first-semester expenses

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How much money does your student really need?

There is no "typical" spending amount for college students. Theoretically, those who live in a residence hall and have a full meal plan would not have more than incidental expenses. Nevertheless, students want to go out for the occasional meal off-campus, or they might agree to meet other students at a coffee shop for a study group. Students with a 14-meals-per-week dining plan will need funds for the occasional breakfast. Toiletries and other basic supplies add up. And some students are simply accustomed to spending money more freely than others.

We recently asked parents how much spending money they provide to their students. Half of the parents who responded said they do not provide spending money for their student; the student uses personal savings or works to earn spending money.

On average, how much spending money do you give your student per month?

Students themselves have told us that their friends who earn their own money tend to be more financially responsible than are those whose parents give them all the money they need.

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To Work or Not to Work

Students should consider their education to be their first priority, but a part-time job can have more benefits than just the paycheck. Many students say that the structure of a work schedule helps them manage their time better. If they know they have to work on the weekend, they will not procrastinate on their homework during the week. Students who work on campus can usually find a job close to their residence hall or near their classes. They have a support network of staff or faculty, and they meet other students who work in the same department.

When students work too many hours, however, they stop thinking of themselves as "students." As a general rule of thumb, working more than 15 to 20 hours a week can interfere with an education more than it helps.

Although two-thirds of U of M students work less than 20 hours a week, the majority of our students work at least part time. A Boynton Health Service Survey asked how many hours per week students worked:

Hours worked per week Percent
0

28%

1-9 17.6%
10-19 22.4%
20-29 16.9%
30-40 6.7%
More than 40 3.9%

Students may choose to work more hours during college, rather than take out loans or otherwise incur debt. When the extra work time leads to doing poorly in school, however, or if the student takes less than a full-time academic load, the long-term costs prove to be more expensive than a student loan.

At the same time, however, students do need to be earning money and saving each year for the following year. Unless parents can afford the full cost of a college education, financial aid packages are calculated with the expectation that students will contribute a portion of their college expenses.

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Assignment

Consider the following:

Question: Does your student plan to work during the academic year? During the summer? How many hours per week of work do you think are appropriate for your student?

Question: What do you think is the best thing you have done to teach your student about finances?

Question: What do you wish you had done, but didn't?

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