In this lesson:
- University Cost Estimates
- Student Spending Habits
- Budget Challenges for First-Year Students
- How much money does your student really need?
- To Work or Not to Work
Activity: Consider the following question.
How much does college cost?
At this website https://collegescorecard.ed.gov/ select a college and find out the cost for one year and for four years. Also learn how many students at that school graduate within four years.
No matter how carefully you and your student plan for college expenses, you will not be able to precisely predict the actual cost. The cost of attendance depends on the college and the major, but costs are also affected by lifestyle choices and by unexpected expenses. For example, if the school says one year at their institution is likely to cost $18,000, it is just an estimate. And every year, the cost is probably going to change.
Tuition is only a portion of the cost that students must cover in order to attend college. Technology fees can vary within the institution, with an engineering major often facing higher fees than an English major. 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 or a culinary program. 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.
Tip: There are almost always some unanticipated, uncontrollable expenses. An illness, an unexpected trip home, or the theft of a backpack can suddenly break the budget. To be safe, some financial advisers suggest adding 10-20% to the estimated cost of enrollment. Emergencies happen, and it’s wise to have emergency expenses added into your budget. If you never have to spend that money, all the better, but if something comes up, you will have a cushion.
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 shopping or to a concert or sports event 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 watch videos online for entertainment, so their daily spending needs are minimal.
Tip: Discretionary spending is defined as money spent on nonessential goods and service. It can help to talk to your student in advance about how much discretionary spending money makes sense each month. If he or she exceeds the budget, where will those dollars come from?
During the first weeks of school, parents should expect that their student will be making spending choices they’ve never had to think about before coming to college. Many of these are items that neither the student nor the family considers as part of a college budget.
Move-in/first day of classes
- "Affinity" expenses-college gear such as sweatshirts, T-shirts, and notebooks
- Decorations and supplies for residence hall rooms
First weeks of classes
- Exploration of city beyond campus
- Shopping/dining excursions with new friends
- Purchase of unanticipated school supplies
- Clothing, personal care costs
- Concerts, music downloads to suit newfound tastes
- Weekend activities
Other first-semester expenses
- Unplanned trips home
- Fees for texting, data, or cell phone minutes beyond contract limits
- Replenishing toiletries
First-year students typically discover new interests that they want to explore. Maybe they learn about genres of music, films, or books that they didn’t know about until coming to college. When students are seeking out new friends, social opportunities usually involve spending: “Do you want to check out the concert downtown tonight?” “We can try for rush tickets for the play this weekend. They're only $20.” “A bunch of us are signing up for an ultimate Frisbee team. It's $50 for the semester—do you want in?”
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 those savings.
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'll get money for my birthday," and they believe they can manage their funds with credit in the meantime. Too often, however, they overestimate their ability to make ends meet.
Tip: It is important for family members to talk about budgeting and spending before school starts and while the student is attending college--especially during the first year. At least once each semester, work with your student to review her current bank accounts and budget, any outstanding debts, and anticipated expenses over the next few months.
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.
A question to decide before your student starts college is whether you will provide an allowance for spending money, or will your student use personal savings or perhaps work to earn spending money?
There is no "typical" spending amount for college students. With care, expenses can be minimized. For most students, it's the small, habitual spending that adds up without being noticed--a latte every morning between classes and snack foods in the evening. Students may start each semester with a budget plan, only to see it fall apart within a few weeks. As a one-time expense, a small purchase may not seem like a problem. Small purchases every day, however, can add up to significant budget busters.
Textbooks and classroom supplies are a relatively predictable expense, but there are ways to reduce the costs. Students can look for used books, rather than new. Sometimes textbooks can be borrowed from the library or rented from the bookstore.
Transportation costs can be a significant expense for commuter students. They may be able to reduce the costs by purchasing a bus pass, carpooling with other students, or arranging a parking contract.
Tip: Students get hungry at inconvenient times, when the campus cafeteria is not open. A supply of quick-to-fix foods and non-perishable, healthy snacks like nutrition bars, nuts, raisins, even a jar of peanut butter and box of crackers can tide them over until dining hours start again.
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.
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 a while 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. Only with this knowledge can kids really appreciate the value of money or what their parents are doing for them on an everyday basis."
Answer: On average, college students work just over 16 hours per week; approximately 60% of full-time students work while in school.
Students themselves have told us that their friends who earn their own money tend to be more financially responsible than those whose parents give them all the money they need. While students should consider their education to be their first priority, a part-time job can have more benefits than just the paycheck. Most 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.
The majority of college students today work while they are in school. Indeed, financial aid packages are calculated with the expectation that students will contribute a portion of their college expenses. When students work too many hours, however, they stop thinking of themselves as "students." As a general rule of thumb, working much more than 15 hours a week can interfere with an education more than it helps, especially among first- and second-year students.
Most students choose to work more hours during college, rather than take out more 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. Living costs over four years are less expensive than food and lodging for six years. The cost of tuition typically increases each year more than the rate of inflation. It’s estimated that every extra year at a public, four-year college will add more than $22,000 to the cost of a college degree.
Tip: If your student is going to work while in school, encourage him to look for a job on campus. Students who work on campus can often find a job close to their residence hall or near their classes. They have a support network of staff or faculty to give them advice on college life, and they meet other students who work in the same department. Their supervisors are more likely to understand the academic schedule and provide more flexibility than off-campus employers during exam periods or when a student is overwhelmed by homework. For commuter students who live at home or some distance from school, the people they work with on campus are likely to be their most significant support system helping with school-related issues.