Colleges post estimates of anticipated living expenses online, but you have surely discovered these estimates are not always accurate.
By this point in the year, you and your student have a better idea of what college really costs. Now is the time to put this knowledge to use and create a plan for next year.
Here are the steps to follow.
1. Assess current expenses and help your student adjust their personal budget.
Before your freshman left home, you had a rough idea of what a year of higher education would cost. You knew the price of tuition, room and board but other expenses weren’t quite as defined. Did textbook costs exceed what you expected? Did your student spend more on food and entertainment than planned? Were travel costs higher than anticipated?
If you’re looking at a budget shortfall because your student is over-spending, whether you provide an allowance or not, you can help them examine where the money is going and identify areas to economize.
2. Prepare for possible tuition increases.
According to research conducted by Discover Student Loans, tuition costs are rising at about six times the rate of inflation. Colleges usually announce their new tuition rates in early March so that gives you time to plan. Susannah Snider, the Personal Finance editor at U.S. News, recommends that families follow these four strategies to cope with the increases:
- Be prepared: Factor inevitable tuition increases into planning for next year.
- Tap financial aid: When notified of an increase, your student should visit the financial aid office and inquire about additional aid (remember that your student must reapply for financial aid each year). SEE #6 BELOW.
- Consider student work: Experts say that most students can cover a three percent increase by working over the summers, during the school year and over breaks. SEE #8 BELOW.
- Stay on course: Don’t let the added expense delay graduation. The sooner your student graduates, the less you will spend in total.
3. Look at housing expenses.
Where your student lives during college — on campus, off campus or at home — affects your overall costs. If on-campus room and board is straining your budget, consider other options. Your student can apply for a Resident Advisor position — these positions come with perks and may include discounted or even free room and board. Off-campus living can reduce your costs because expenses are shared with roommates, but your student will need to make a housing budget that includes not only rent but also food, utilities, renters insurance and transportation to and from school.
If the college is close to home, your student could live at home and commute — even just for a year.
4. Evaluate the student meal plan.
Finance blogger Abby Hayes has good advice about choosing a meal plan. “You need to figure out your preferences. Do you usually eat a full breakfast, or do you prefer to grab a granola bar on the way to your 8 a.m. class? If it’s the latter, you’ll save a chunk of change by cutting down your meal plan and buying a box of granola bars every week.”
Most freshmen are required to sign up for the full meal plan. By choosing the least expensive meal plan that fits your student’s needs — maybe just one meal per day in campus dining facilities — you can save money next year.
5. Calculate travel expenses.
Travel was one item that may have been particularly tricky to budget for last year. Now you have a better idea of what it costs you and your student to travel back and forth to campus (whether by car, train or plane, plus shuttles or Ubers from the airport). This will help you plan for next year, including perhaps needing to negotiate how often your student will come home for breaks.
6. Review financial aid.
As mentioned in #2 above, it’s critical to review your student’s financial aid portfolio. Your student should schedule an appointment with financial aid to discuss next year’s aid package. Some grants and scholarships may not be renewable; in most cases students must reapply by completing the FAFSA (and CSS if required). This is a good time to access your student’s student loans and view the repayment amounts. This information will help you decide whether to accept loans for next year.
Don’t forget that students should also continue to apply for scholarships throughout college. Scholarships are not just for incoming freshmen. There are numerous scholarships available as your student progresses through college and they can help you decrease what you pay for higher education.
Will your student study abroad next year? The college study abroad office can help them estimate what the semester or year away will cost compared to staying on campus. Your student’s financial aid award from the college can be applied to study abroad expenses. Research the cost of living in the city or country your student will study in by using cost of living calculators and adjust your budget accordingly.
7. Anticipate changes in EFC.
Regarding the financial aid for which your student may be eligible, your EFC (Expected Family Contribution) could change next year because of variables such as rising tuition costs, a change in your income, an additional child attending college, or a student graduating. Use the College Board EFC calculator to find out what you can expect.
8. Factor in student employment.
Your student will most likely work over the summer and use this money for college next year. In addition, based on this year’s spending, your student may need to work on or off campus during the school year (if they aren’t already). Studies show that students who work part-time (20 hours a week or less) excel academically because it requires time management to balance work and study.
9. Don’t forget summer!
Summer expenses should also be calculated when preparing next year’s budget. Will your student take summer classes either at college or at home? If so, factor in the tuition. If they will stay on campus to work or study, there will be living expenses, too. Some schools offer fellowships to cover summer expenses (for example, to make it possible for students to accept unpaid internships or stay on campus to do research). Make sure your student doesn’t miss the deadline to apply!
More helpful financial planning information: