Watching your child go off to college can be exciting. On the other hand, figuring out how he or she is going to afford living away from home while getting a great education can be quite a different matter. We’re here to help you and your child learn how to budget for college and all that it has to offer, in the classroom and beyond.
Discussing the Big Expenses
College can be overwhelmingly expensive. In 2016, the average student paid $20,090 in tuition, fees, room, and board each year to attend a four-year, in-state public university. That same student would pay a whopping $35,370 on average each year to attend an out-of-state four-year public school.[i]
As a parent, when discussing your child’s upcoming college education, start by being upfront about how much money you have put away for college expenses and whether you are willing to assist him or her in paying down student loans after graduation. This may help him or her to determine which college he or she will attend.
If you are considering taking on loans to help cover the cost of your child’s college education, make sure you review the potential consequences. In 2017, the Annual Percentage Rate (APR) for a private student loan ranged from 4.75% to 14.75% depending on the applicant’s credit score.[ii] Those interest rates can start to take effect as soon as you sign for the loan, meaning that your child’s college debt will start to accumulate while he or she is still in school.
There are a variety of ways to pay for your child’s college. Make sure you review all of the financial aid, scholarship, and lending opportunities available to your child each semester.
The Not-So-Little Things
With your plan for how you are going to pay for your child’s college tuition in place, it is time to decide how your future college student will pay for all of the extras that come with living away from home.
Meal Plans: Review the school’s meal plan information to find an option that works for your family. Meal plans can offer individual meals or a set dollar amount for your child to use. You can also send him or her off with a few items that can be prepared in his or her dorm room to make the meal plan last longer.
Books and Supplies: The average cost of classroom supplies for a full-time student is $1,298 a year.[iii] This cost could be higher or lower depending on your child’s major. You can try to lower the cost by looking for used books or asking professors if your child can use a previous edition of the required text book.
Transportation: Having a car for the first years of college may not be necessary for your child. Review the university’s policy on allowing students to have cars on campus and if there is a cost for a campus parking pass. For those that need a car at school, discuss who will be responsible for the costs of repairs, gas, and insurance.
As a parent, you want to provide your child with every opportunity possible. However, being upfront with what expenses you can afford can help your child decide how much of a financial burden he or she is willing to take on for his or her college education.
Outside the Classroom
One of the most difficult budgets to put together is the amount of discretionary funds your student will have while away at college. From semesters abroad to dinners out with friends, the college expenses extend far beyond the classroom.
One option families can provide for their children is a set monthly allowance. At the beginning of each month, a predetermined amount is transferred directly into your child’s checking account. This allows your child to continue practicing the budgeting skills he or she developed throughout high school, as well as to budget their money for big ticket items such as a summer trip overseas.
Some students may also find taking an on-campus job to be a great way to earn extra money. A campus job provides the convenience of being able to squeeze in shifts in between classes. It may also provide added flexibility when finals week arrives compared to off-campus jobs.
Creating a College Budget Is an Ongoing Process
Work with your college student to anticipate where his or her money will be going each month, and walk your child through the online budgeting tools he or she can use to stay on track.
Take a little time before each semester to evaluate how your child did the previous semester and create a new budget that more accurately reflects his or her expenses. You can also contact Bank of Internet USA by phone at 1-877-541-2634 or by email at firstname.lastname@example.org to learn more about products and services such as our Smart Savings Account that could help you save toward your child's educational expenses.