For students and parents, the college journey can be an emotional roller coaster ride! Excitement, uncertainty, pride, happiness and anxiety are just some emotions that may be encountered. There will also be many decisions to make along the way. But topping the list will be deciding what you are willing to pay and how you will fund the cost of a higher education.
From the cost of filing applications to footing the tuition bill, the financial burden to attend college can be substantial. According to U.S. News and World Report, data shows the average tuition and fees at an in-state public college is about 73% less than the average sticker price at a private college, at $10,116 for the 2019-2020 year compared with $36,801, respectively.1 Keep in mind these averages do not include room and board.
Yes, that’s a lot of money! But you can use the following tips to navigate the financial waters that come with pursuing a college education -- they might even help you pay off some of the bill before graduation day.
1. Choose a college that fits your budget.
Whether you’re heading to undergraduate or graduate school…the first step is to shop around to determine which college fits your budget. Keep in mind prices vary by public versus private institutions, length of degree program (two-year versus four-year) and even the pedigree of a university. Review these five main categories of expenses that contribute to the total cost and do a side-by-side comparison of the colleges on your list:
- Tuition & Fees. All costs associated with taking classes fall under this heading. The amount varies based on credit hours and whether the student is in-state or out-of-state. NOTE: Some colleges charge “comprehensive fees,” which combine tuition, fees, room and board.
- Room & Board. The expense of living on campus will depend on the type of dorm room you choose, what meal plan option you select, whether or not laundry is included and even costs to purchase a bike or parking permit. And off-campus living comes with its own set of expenses. Remember, you will also need money to set up a dorm room or furnish an apartment. Make sure you consider these costs too!
- Books & Supplies. First-time students often have no idea how costly this expense can set them back. Books, technology and other course materials averaged $950 for the 2018-19 academic year.2 Buying used, sharing, downloading free materials or renting textbooks may cut your costs.
- Personal Expenses. Laundry, cell phone bills, gas, car insurance, personal products, haircuts, eating out and other social activities – they add up. In fact, myFICO.com estimates the average student spends $10,360 on personal expenses during a 9-month school year.
- Transportation. You'll want to budget for transportation costs, especially if you plan to be far from home. Driving? Flying? Taking a bus or train? Will you need to stay at a hotel? Many colleges close down during breaks and most students have to leave campus so take your best guess at how often and how you’ll travel back and forth.
Two websites streamline the process of comparison shopping. Tuition Tracker lets you compare colleges using data that shows the true cost for the upcoming academic year. Consumer Financial Protection Bureau’s College Cost Comparison Tool lets you compare costs for up to three schools, including a way to calculate the impact of financial aid.
2. Tackle your financial aid early.
As soon as you narrow down the list of colleges that match your budget, you’ll want to file your Free Application for Federal Student Aid.
Otherwise known as FAFSA®, this is the first step to figure out any federal financial aid you may qualify for and it is also required if you want to apply for a federal student loan. Colleges also use the FAFSA to determine their own financial aid awards, including grants and scholarships. The FAFSA can be a little overwhelming to complete, especially initially, but check out this article to learn more about it and simplify the filing process.
3. Understand your loan options.
If you need to borrow money for college, it’s important to understand the different types of loans and options you may be offered. There are two types: federal and private.
Federal loans are funded by the federal government and private loans are secured through banks, credit unions, states or schools. Because federal loans are typically less expensive than private loans and may offer benefits such as fixed interest rates and income-driven repayment plans, they can be a good place to start to help pay for college.
The U.S. Department of Education offers three types of loans to cover the cost to attend a community, two-year or four-year college or a trade, career or technical school. The website Studentaid.gov is a trusted and valuable resource, and is the source for the following overview:
Direct Subsidized Loans
- available to undergraduate students with financial need
- the school determines the amount a student is eligible to borrow each year and the amount may not exceed a student’s financial need.
- the government pays the interest on a Direct Subsidized Loan while the student is in school at least half-time, for the first six months after leaving school (referred to as a grace period), and during a period of deferment--a postponement of loan payments.
Direct Unsubsidized Loans
- available to undergraduate and graduate students
- no requirement to demonstrate financial need
- the school determines the amount a student can borrow each year based on the student’s cost of attendance and other financial aid received.
- student pays interest during all periods of the Unsubsidized Loan
Direct PLUS Loans
- available to parents, graduate or professional students
- the U.S. Department of Education is the lender
- a credit check is conducted and the applicant may not have an adverse credit history
- the maximum loan amount is the cost of attendance (determined by the school) minus any other financial aid received
4. Make money and start saving now.
Depending on your financial picture, you may need to figure out a plan to supplement your financial aid award – and you probably won’t be the only one. Most students look for options to help pay for their education so they can avoid taking on too much debt. Many get a jump-start with a summer job before heading to college. Starting early can go a long way toward building up a savings account that provides money for discretionary spending or to pay tuition bills going into each new school year. It may be helpful to calculate just how much you should be saving for college.
Once at college, you may consider looking for a job on campus—or even one nearby. The federal work-study program provides part-time employment for enrolled undergraduate and graduate students with financial need. Check with your school about on campus jobs in departments such as food services, maintenance or human resources. Ask about resident assistant and hall director programs that might provide room and board. Professors are a great source to learn about teaching assistant and research positions. Maybe you’d be a great tutor or campus ambassador! There are typically lots of options to work on or around campus.
Decisions, decisions, decisions!
One thing is for certain, you will make tons of decisions related to your college journey. But if you have a solid financial strategy in place, it will be easier to make some decisions. Once you have an idea of your financial aid package, loan obligations and best income sources, you can turn your attention to decisions such as choosing a roommate, joining the rowing team or selecting a fraternity.
If you found this article helpful, we also recommend 4 Ways to Fund a College Education or Financially Preparing to Move Out to Live on Your Own.
1“See the Average College Tuition in 2019-2020”, U.S. News and World Report, on the internet at: https://www.usnews.com/education/best-colleges/paying-for-college/articles/paying-for-college-infographic (viewed online July, 2020)
2National Association of College Stores, “Student Spending on Course Materials,” on the internet at: https://irp-cdn.multiscreensite.com/badb3262/files/uploaded/OCR.400.07.19_SW_infographic_Web.pdf (viewed online June 2020)