College can bring a lot of firsts for students. It may be the first time living out of the house, your first time being away from family, or the first time you feel like you’re taking charge of your life. For many, it also may be the first time taking full responsibility of your finances. That inexperience might lead you to think that once you’ve figured out a way to pay your tuition cost, you’re out of the woods. The truth is, your college expenses don’t end there. Here are four tips and things to consider to help college students manage their finances.
Tuition cost is only part of the puzzle
Once you’ve done your research, picked a college, and have your tuition cost laid out, you should have a clear idea of how much you’ll be spending on your college education, right? Well, not quite.
According to a report by the College Board, the estimated average cost of tuition and school fees for 2018-2019 only make up 40% of a student’s budget for in-state, on-campus students attending public institutions for a four-year program. A whopping 43% of your college budget is taken up by room and board. This means that your tuition isn’t even half of what you can expect to pay for college.
The rest of your college expenses are taken up by school supplies, books, transportation, and other costs. What these costs end up amounting to is going to be different for everyone. Your major, the number of courses you’re taking, and your living situation will all factor in to how much you end up paying over the course of these four years.
As nice as it would be to have your tuition cost cover all of these variable expenses, there’s no real way of getting an exact, holistic number for the cost of college. The cost of transportation might include a bus pass, car expenses, or even plane tickets to go home for the holidays. If you want to join a fraternity, sorority, or even just have an active social life, you’ll need to pay up.
Staying on top of these college expenses can be tricky, so you’ll need to do your research, find out what’s covered and what you’ll need to pay out of pocket, and put together a simple monthly budget to stay on top of your finances.
Start budgeting
If you want to effectively manage your college expenses throughout your time in school – and even beyond – you’re going to need to put together a budget. Never created a budget before? You can check our Ultimate Budgeting Guide to learn more about some effective budgeting strategies to help you get started. You may also want to check out these personal finance apps to help you budget and manage your finances.
If the money you’re using for your college expenses and tuition cost comes in the form of a lump sum from scholarships or loans, it can be easy to spend more than you should and lose track of your spending without a budget. You might find yourself in a sticky situation if you’re scrounging just to cover your basic expenses by the end of the year.
Start by listing the cost of your essential monthly expenses, like rent, groceries, and utility bills. As a student, you’ll need to include things like tuition, school fees, and cheap college textbooks. Once you have these listed, you should put your payment dates in your budget calendar to make sure you stay on top of them. If you manage your expenses effectively, you should have a much easier time managing your college expenses.
Understand Scholarships and Student Loans
Unless you’re lucky enough to have your college paid for by your family, there’s a good chance that the money you need to pay for your education will come from a number of different sources. And among these sources, there’ll be some significant differences that will be important for you to understand, namely the differences between scholarships and student loans.
Scholarships
Scholarships are a sum of money that’s given or awarded to a student to help them pay for their education. The most important feature is that they’re gifts that don’t need to be paid back. The ins and outs of each scholarship can vary, so it’s important to understand what each one you’re applying for covers and when you’ll be receiving the funds. They’ll have unique qualities, and some may not cover all of your college expenses, or are only allowed to be used for specific expenses. Even if you manage to earn a full scholarship to school, this may not cover every school fee and all of your living expenses.
You’ll also want to understand exactly how to properly apply for each scholarship you’re looking into. For example, to apply to MoneyKey’s Key Thinkers Scholarship, you’ll need to meet the minimum requirements for eligibility:
- Be 18 years of age or older
- Be a U.S. citizen or Permanent Resident
- Be enrolled as a full-time student at an accredited college, university, or trade school in the U.S.
- Possess a cumulative GPA of at least 3.0.
You’ll then need to write a short essay on what financial responsibility means to you and what steps you think students should take to plan their budget. The key is to understand what each scholarship covers you for, when you’ll receive the money, and how to properly apply.
Student loans
While student loans can help you cover some of the costs of your education, unlike scholarships and grants you’ll have to pay them back with added interest. These loans can typically be split into two categories: subsidized and unsubsidized. The main difference between the two is that subsidized loans won’t start accruing interest until you’ve graduated, while the interest on an unsubsidized loan will start accruing interest right away.
With the rising cost of education, the cost of student debt is a mounting problem in the U.S., with 44.2 million Americans owing $1.52 billion in debt in 2018. The important thing to remember is to only borrow as much as you need, and nothing more. While you might be able to qualify for more than you need to cover your college expenses, the more money you take out, the more you’ll end up paying back later on.
If you need some help paying off your student loans, take a look at these tips to help you lower student loan payments.
Talk to your parents about help
It's great any time your parents can help you pay for a major expense, but if they’re going to help you with your tuition cost or your college expenses, it’s important to know exactly what they’re willing to pay for, and whether they intend for you to pay them back. Start by giving them an idea of how much your tuition and living expenses will be and find what they’re willing to contribute, and when. Make a payment schedule for yourself, and include their payments in the schedule. You need to make sure you’re making your tuition payments on time, so make sure you have this all mapped out.
If you’re working and earning money throughout the year, you might need to start filing your taxes depending on how much money you’re bringing in. You’ll need to determine whether you’re being claimed as a dependent by your parents so you can make sure you’re filing your taxes properly.
Prepare yourself for your college expenses
No one would blame you for feeling a little overwhelmed at the prospect of paying for your college expenses. As overwhelming as it may seem, if you put together a budget, take charge of your finances, and stay educated on the different ways of paying for your education, you’ll give yourself a better chance of organizing yourself to make it through this period in your life.
Do you have any tips for managing your college expenses? Share below!
Posted in: Lifestyle
Disclaimer: This article provides general information only and does not constitute financial, legal or other professional advice. For full details, see MoneyKey's Terms of Use.
