For many young adults, college is a drastic step from the comforts of living at home. In fact, college is a drastic step for students as well as parents when it comes to budgeting for college. Where before parents could skimp and save, many households are now finding it nearly impossible to put their child through college—especially if they have more than one. About 47% of full-time undergraduate students who go to a public or in-state college are charged around $9,000 a year in tuition and fees. Students attending private universities are faced with fees upwards of $35,000 a year. Numbers like these can be crippling when unprepared for. Some students will benefit from financial aide, loans, scholarships or grants, but no student will find ill use of creating and maintaining a healthy budget to keep debt and credit in check.
The first step in the budgeting process is for college students to sit down with their parents and have a discussion on what parents can and cannot pay for. The next core step is to make the big list. Start by listing fixed expenses like tuition, room and board, meals (if catered for), costs of books and supplies, phone bills, miscellaneous costs like laundry, toiletries and haircuts, as well as travel expenses. Then make a list of discretionary expenses that could potentially be adjusted: grocery budgets, entertainment, personal items, eating out, and clothes shopping. Once all potential expenses are listed, it is equally important to discuss and record all sources of income. If scholarships or financial aide is awarded, these may sometimes have to be used specifically for tuition or living expenses, in which case money may not be spread evenly across a student’s expenditures. Calculate when and what loans will be disbursed and how long they will last, and then label any monetary contributions from family as a source of income as well. Once all of these values are out in the open, a real budget plan can begin to take form. Prioritize fixed expenses first and match them to income sources to see whether expenses can be covered. If they aren’t, it could be a good indication for the student to pick up the slack with a part-time job or apply for alternative financial aide if the need is great enough.
Alternatively, if the difference between expenditures and breaking even is too substantial, and no other financial support is available, some students may have to reconsider where they will get their education. Many students are now deciding to opt out of four years at an expensive university in exchange for two years at a community college with a transfer to a more prestigious institution. This has proved to be a very beneficial option for many students who have been able to save thousands of dollars already.
Regardless of institution, credit cards have become a popular choice among many college students as a means to front expenses and build good credit while in school. The risk with carrying a credit card presents itself when a student doesn’t stick to his or her budget and spends more than what he or she can repay. When this happens, credit card debt piles on mercilessly, undoing any previous hopes a student might have had to budget college expenses wisely. For students interested in credit cards, it is of utmost importance to be aware of terms and conditions as well as the interest rate, grace period and minimum payments, before signing the dotted line.
When it does come down to moving out and going to college, it is the student’s responsibility to follow up and abide by the budget that they have prepared. Buying used textbooks and selling them when finished is one way to cut costs, along with taking advantage of student discounts where available. The main focus in maintaining a budget is living within means and cutting back on unnecessary items to stay out of the red. With debit and credit cards, though, spending money can sometimes go unnoticed. For this reason, a good habit to make is limiting cash withdrawals to once a week and, if tempted to withdraw more than the budget allows, leave the ATM card at home. Sacrificing and saving is integral in making sure college life doesn’t dig students into a deeper financial hole than they can dig themselves out of.
College years can be some of the safest years in a student’s life. Surrounded by vibrant university communities and the opportunity to soak up as much knowledge as possible with the least accountability, many college students forget the invaluable benefits of preparing and sticking to a budget. Financial responsibility and stability might well be the few lessons students will take all four years of university and the rest of their lives to learn and perfect.