4 Financial Factors to Keep in Mind When Budgeting for College

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In the US, the amount of student debt has reached over $1.4 trillion. The bad news for students currently planning on attending college is that tuition isn’t getting any cheaper. Insofar as there’s good news, students are being more financially cautious when planning for college, researching their student loan options, opting to stay in state, or even taking time to earn residency for out-of-state public schools. But college costs aren’t just about paying the university itself. Here are some expected and some less obvious costs students need to budget for when heading to college.

1. Factor in Student Loan Interest

You already know to think about tuition (and perhaps how it compares to the amount of financial aid your top choices offer), but one thing many students don’t really think about until the first bill comes in is how much student loan interest can add to the overall cost.

For the average loan rate of $30,000 at 4% interest, the interest adds over $7,000 for the life of the loan. And that’s if you make all your payments on time—many students end up with loan amounts far higher than that. Some students learn the hard way that they’ll be paying about as much in interest as the amount they took out—or more. You don’t want to be taken by surprise when you get your first bill, so make sure you factor interest in early on.

2. Look into All of a School’s Required Expenses and Fees

Though tuition is the biggest expense, colleges routinely require a large number of other expenses. Textbooks and supplies can cost hundreds or thousands of dollars. Further, many schools expect students to live on campus and purchase a meal plan their first year, and these annual on-campus housing and meal plans can cost about $9,000.

According to the New York Times, mandatory fees are on the rise, and they cost students at four-year public colleges nearly $1,700 during the 2015–2016 school year. These fees range from understandable to seemingly arbitrary—schools charge for everything from dropping a class to “student success fees.” In fact, mandatory fees have risen 30% more than tuition since 1999, so make sure you look into what fees will tack on to your overall college expenses.

3. Consider Transportation

Wherever you go to college, you’ll need to get around. Some schools are located in areas with thriving public transportation or have compact enough campuses that you can bike or walk most of the time. In these cases, you should simply check how much public transportation costs (it could be free or heavily discounted for students), and consider bike maintenance expenses in your budgeting if relevant.

If your school is located somewhere where a car is necessary (or if you want the option of driving home on the weekends), then you have a number of additional expenses to consider—in addition to the car itself, of course:

  • Parking—Many colleges charge hefty parking fees (often to discourage crowding the campus with cars). However, some housing will include parking spaces or garages.
  • Insurance—If you’re staying in state for school, you can stay on a parent’s insurance policy (as long as your primary residence is still your home address). Make sure you consider coverage beyond the state-required liability coverage, and always make sure to compare quotes to find the best coverage at the best rate.
  • Gas—Pro tip: If your friends are bumming rides to the grocery store or elsewhere around campus, ask them to chip in for gas.
  • Maintenance—Take preventative care of your car, get regular check-ups, and keep supplies like jumper cables and an ice scraper in your trunk.

Don’t forget the wonders of modern transportation options. Consider ridesharing or check out car2go or Zipcar for on-demand driving alternatives.

Also, if you’re heading a longer distance from home to go to school, you’ll need to factor flights into your yearly expenses.

4. Don’t Forget the Fun Stuff

Yes, you’re there to learn, but college is full of new experiences, so don’t neglect budgeting for those as well.

Big sports fan? Season student tickets to football, basketball, hockey, etc. can cost a chunk of change. Into theater or music? College campuses draw great talent on small and big stages alike, and ticket prices can run a wide range.

Cold or hot beverage? Pitch in for a tailgate beer or two, and anticipate needing LOTS of caffeine. And ice cream can help get you through exams, so put a little change aside for these treats, too.

Spring break can also be expensive. Whether it’s a trip to the beach or the ski slopes, if a springtime trip is in your future, set some travel funds aside.

Bonus Build Good Financial Habits Now (and Thank Yourself Later)

In addition to budgeting, you can start building other good financial habits for long-term benefit.

Start earning. Think about work options—but don’t be overly ambitious. Working during your college years can help offset your expenses, but if you try to work too much, you risk letting your studies slip and not getting your money’s worth for tuition. Don’t assume you can pull off a full-time job and still finish in four years when you’re working out your budget. Consider a more realistic goal of 15–20 hours a week, and if you decide to do work-study, apply fast before the jobs get snatched up.

Start building credit.

College is the perfect time to seriously start building your credit so you can more easily navigate post-college life.

Consider getting a student credit card and responsibly using it so you build your credit during your four years. Start with a small credit line and choose a card that rewards you for making your payments on time. When you build your credit during college, you’ll be set up to smoothly maneuver the post-grad life experiences that require good credit, including finding housing, purchasing a car, saving on insurance, or starting your own business. Your credit score is partly affected by your track record of making credit payments over time, so you’ll be glad you started building your credit early.

College is expensive, and even if you do everything right, there’s still a good chance you’ll have loans hanging over your head for a while after graduation. It’s worth making cautious decisions based on financial considerations when choosing your college and budgeting for the next four years, but know that if you keep up with your studies, it will likely all pay off.

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