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Get Your Finances Ready for College
College can be the first time students take responsibility for their finances. Once incoming freshmen pick a school and major, they may already have an estimate of how much their education will cost. But college life consists of more than just college tuition costs. From meals to laundry to unexpected class fees, preparing your financial life for campus will help you succeed in your college life.
Here’s what to know about preparing your budget for college.
Costs Don’t Stop With Tuition
You may feel that you got all the money questions out of the way when you researched the tuition costs for your school. But the estimated average tuition and fees for 2018-2019 are only 40% of the total budget for in-state, on-campus students at public four-year institutions, according to the College Board. That is less than half of your total budget for the year. Room and board, the other big expense, is 43%.
The remaining estimated expenses for books, supplies, transportation and other costs amounted to $4,520. These expenses can vary depending on your major, course load and whether you live on campus. As you take on more of your finances, you will learn that nothing is worse than unexpected expenses.
Tuition will not cover lab fees, school supplies, books or a school shirt. Your room and board will not cover sheets, blankets, pillows, laundry fees or parking fees. Meal plans may not cover all your meals or eating off campus.
If you are not covered under your parents’ insurance, you will need to research health insurance. Transportation costs can include gas for your car, airline tickets home or a bus pass if you live off campus. Fraternities, sororities and social organizations can have dues costing hundreds of dollars. Tickets to sporting events cost extra. Research what is covered and what you will need to pay out of pocket.
Know the Difference Between Student Loans and Scholarships
You will probably use a combination of money sources to pay for your college education. Some payment methods are automatic while others require effort on your part. And some funds may not be distributed exactly when your bills are due. Financial aid and grants can help you lower your education costs and avoid graduating with significant student debt.
Scholarships and grants are funds you are not required to pay back and can be used to pay for expenses related to your education. It is important to learn what they do and do not cover and when the funds are sent to your school. They can have unique rules and restrictions and may only cover a portion of your expenses or may only be used for a specific expense. Even a full scholarship to a school may not cover all your fees and living expenses.
Student loans can cover the costs of your education and living expenses, but you will have to pay them back with interest. There are generally two types of federal loans: subsidized and unsubsidized. Subsidized loans do not accrue interest until you graduate while unsubsidized loans start accruing interest immediately. Education costs have risen dramatically, and student loan debt is a serious issue. The more you take out, the more it will cost you down the road. You may qualify for more than you pay in expenses, but only borrow what you need. Knowing your finances and expected expenses can help reduced the amount you borrow.
Coordinate Payments and Taxes With Your Parents
If your parents are helping with your college expenses, it is important to know their expectations and what they will and won’t pay for. You should know how much they are willing to spend and when they will be able to pay. Be sure to share any payment schedules with them and clear any unexpected expenses ahead of time to avoid complications. It is important to confirm any payments are made on time and correctly. Payment issues could impact registration and scholarships.
If you are working while going to school, you may see an increase in your transportation expenses and meals as you commute to work and class and spend more time away from home or campus. If you are working to cover specific expenses, you need to ensure your income will match any payment deadlines, so you have enough to pay the bills when they are due. Depending on how much you earn, you may also need to file taxes. You will need to discuss with your parents whether they are claiming you as a dependent, as that will change how you file your taxes.
Take Charge of Your Finances
The most important way to own your finances is by making and maintaining a budget. A spending plan is especially helpful if you are not used to managing your finances. If you are living off a lump sum for the year, it can be easy to overspend at the beginning of the semester and not have enough to cover your expenses at the end. With budgeting apps such as Mint and You Need a Budget, you can easily track your expenses and income and know how much you have left over for books or concert tickets. Knowing your exact expenses can help you borrow only what you need in student loans. Budgeting also helps you save and create an emergency fund for unexpected expenses.
Having a budget can help you avoid credit card debt. Many credit card companies and banks offer student credit cards. While responsible usage is a great way to build your credit history, it can be easy to overspend and build credit card debt. Practice good credit card habits, such as staying within your budget, spending within your means, never missing a payment deadline and avoiding carrying a balance.
Look for Ways to Lower College Costs
While college expenses can seem overwhelming, there are ways to reduce how much you owe. Even if you didn’t qualify for financial aid, or you missed deadlines for scholarships, keep in contact with the financial aid office. Scholarships, grants, work study and tuition remission jobs become available as other students drop out or transfer. You can also look for a part-time job or paid internships where you can earn money and gain experience. Students are also eligible for a wide range of discounts and promotions, which can lower expenses for transportation, meals and entertainment.
