Are you a parent who thinks your costs for college are spiraling out of control and away from your allotted budget? Budget? What budget, you may wonder, as your bank account bleeds more and more money for all-things college.
College costs can develop into the nightmare that gives you insomnia, and you’re not alone. But there are ways to control costs if you think strategically by making a plan with your student starting with the college admissions process and all the way through to graduation.
Start Off at a Community College
An obvious way to save money and invest in your child’s educational future simultaneously is to have them stay at home and commute to a nearby community college or university for a couple of years.
Students can take required general education classes while acclimating to college life. Many states offer very low tuition to attend community colleges. They often have guaranteed admission agreements that detail specific four-year universities that promise admission to students earning an associate’s degree. Many also give easy credit transfers.
By making this decision, you won’t have to pay for room and board, dorm decor expenses, meal plans and travel expenses. While tuition is steadily increasing at most universities, room and board is too – sometimes more than tuition.
A community college also gives your student time to pick a major if they’re wavering about areas of study.
Additionally, studies show that an associate’s degree can lead to certain jobs that pay more than $50,000 a year without requiring a four-year degree. Often, the old adage is true: Not every student is a candidate for a four-year college experience. When considering the bottom line, also think seriously about the needs of your student. A four-year college may sound dreamy, but the outcome may be far from perfect.
Investigate All Your Funding Options
The best way to save money is obviously not to borrow. Students should start in high school exploring opportunities for free money such as private scholarships, merit scholarships, work study, and grants while in high school.
If you do need to borrow, always borrow through federal student loans as your first option.
Why a federal student loan? These loans, distributed through the U.S. Department of Education, have a low fixed interest rate with standard terms and conditions. To be eligible to borrow, you must complete the Free Application for Federal Student Aid (FAFSA). Undergraduate students may also be eligible for a federal subsidized loan, which does not accrue interest while they are enrolled in school.
Federal loans often have more flexible repayment schedules, and students may qualify for a loan forgiveness program.
If you still have a borrowing gap after utilizing federal student loans, you’ll need to research and compare private student loans from private lenders.
It’s important to research private lenders and understand the application process and requirements (these vary from lender to lender) such as origination fees, prepayment, interest rates, and repayment options. You may also want to ask about flexible deferment, which can help a student delay payment after graduation.
College Ave Student Loans, for example, offers a wide range of repayment terms, along with both fixed and variable interest options. When you apply for a College Ave student loan, you can choose a repayment length of 5, 8, 10, or 15 years. Of course, the shorter the loan term, the higher the payments, but you’ll pay less interest. College Ave also offers private parent loans, which have repayment options from 5 – 15 years.
Don’t forget to explore interest-free loans. Yes, they exist. If you borrow a $1,000, you only pay back $1,000. Nonprofit organizations, government agencies and even private companies offer them.
Dorm Life: Yes or No?
Does your student really want to live on campus? Many campuses require first-year students to live in campus dorms for at least the first semester or the full academic year. But what about sophomore year and beyond?
The pros of campus living: easy access to classes (students may not need a car, which means no insurance or gas costs); cable, Internet access and utilities (these are included in room and board, students don’t have to worry monthly about paying these bills); 24-hour security, nurse services or medical care, cafeteria meal plans and socializing. Make sure your student is eating on the meal plan instead of spending extra money on eating out, which can quickly add to the cost of college.
Downsides? If your student likes privacy, living in a dorm situation may not be ideal. Many students prefer to get an apartment or a house with friends so they can have separate bedrooms and baths. Your student may like to cook, and most dorms don’t have full kitchens. Students who also work night jobs often find living off campus beneficial. In some cases, living off campus saves money, depending on the city where the college is located.
If your student really enjoyed living on campus their first year, also consider any resident assistant (RA) positions that the school may offer for sophomores and higher. These opportunities can often supplement some or all of the room and board costs for the year in exchange for the student working as an RA in a campus dorm. Do your research and reach out to the Residence Life department to get more information about these positions and deadlines to apply.
Do the math and list all costs including utilities, food and transportation before making a decision.
Explore Dual Enrollment Opportunities
Before your student even hits a college campus, they could take some classes at a nearby campus or online for credit. Guidance counselors are a great resource for high school students looking for help with dual enrollment. Taking even one or two classes while in high school will not only prepare a student for the college world, but will cost less than taking them at a four-year college or university.
Don’t Go for New, Try Used
Textbooks can be expensive.
Students often spend a lot of money at campus bookstores because it is convenient. But convenience often comes with a high price tag. It’s worth investigating buying or renting books online. At the end of the semester, students can resell the books back to the bookstore or online. Don’t be afraid to compare prices at multiple stores. Often school bookstore rentals will still be more expensive than some deals to buy used textbooks that you can find online.
Also think about the required book and if it will be used for more than one course. Many science and math courses may split one textbook between two different courses. In this case, it may make more financial sense to buy the book, use it for two semesters, and then resell it. You can check if the book is being used in more than one course by reading class reviews, talking to other students at the school, or reaching out to the professor.
Working While in School and During Summers
If possible, your student should work during college to help pay for expenses. Many colleges offer work-study programs or other on campus jobs. It’s also smart for your student to work during summers if it’s too stressful to attend classes and work at the same time. There are lots of ways to make money while in college.
Be Responsible With Any Loans Borrowed for College
Remember that money you borrowed? If you and your student are resourceful and budget properly, you may have some money left. You should ask the school to return the money to the lender. That way you will have less to repay after graduation.
You should start paying the loan back while your student is in college. Lenders offer options that allow you to repay the loan while your student is in school. Even $25 a month helps.
A good rule of thumb regardless of where you borrow money? Figure out your student’s expected income after graduation and what you can contribute – if you plan to help pay off the loan – based on expected future earnings for you and your student. Then try to keep your total student borrowing below that amount.
Pay Attention to All Your Daily Expenses
If your student had a car in high school, keep the car at home. Invest in a bike to save money and help the environment, too. Encourage walking for exercise. Cars require gas, insurance and, inevitably, repairs. Car insurance can be suspended while your student is away and reinstated when they are back home during vacation.
Don’t forget to closely examine meal plans. If your student only ate a bagel for breakfast and downed a cup of coffee in high school, chances are they aren’t going to roll out of bed to go to the cafeteria in the morning. Save money and pick a meal plan that excludes breakfast. Will your student make daily runs to Starbucks? Tell them a better investment is a coffee maker in their dorm room, and a popcorn popper for late-night snacks. Make sure to check with schools about what kitchen electrics are allowed. Send care packages with their favorite snacks, too, so you control some of their food spending.
Students should also use debit cards instead of credit cards. Debit cards will only allow a student to spend what is in the bank. Credit card debt can quickly spin out of control. Try to avoid allowing your student a credit card, but if it is a necessary, make sure they use it wisely.
Graduate in Four Years
One key way to save money? Choose a major and graduate on time. That way your student will only take classes that contribute toward their degree, and they will be able to graduate on time. Try graduating in three years – taking some dual enrollment and AP classes in high school will help with this goal – and avoid that fourth year of tuition and other costs.
With smart planning, research and budgeting, your student will have a successful college experience.