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College is expensive.
According to U.S. News & World Report, public institutions raised their prices by 2%, and private schools rose by 3% for the 2018-2019 academic year. As prices steadily drift upward, parents and their children have to be creative and strategic in their plan concerning paying for a college education.
Some costs of attending college are more transparent than others. Tuition is often the largest numerical player in this equation and the one that gets the most attention. But, there’s more to pay for college than the tuition, such as room and board, food, books, and other supplies. Even after factoring in these other costs, there are more stealth costs that creep up once your child begins their program.
These are the costs I want to talk to you about today: The ones that aren’t in the brochures, and that you can’t easily find online. These costs are the ones that can really throw a wrench into your budget.
How long does it take to graduate college?
Many discussions of college education focus on the four-year degree program. But this is not a reality for many students today. The National Student Clearing House Research Center’s annual report found that only 58% of students who enrolled in 2012 graduated six years later.
If only about half of students graduate in six years, there is a serious concern about the four-year degree rhetoric. It is not the reality for many students and those extra years can amount to a much larger cost than you expected. If the average cost for in-state, public institutions is approximately $25,000 per year, those extra years could add another $50,000 or more to your college costs.
This is a huge, unexpected cost for many families to bear. But there are some proactive steps you can take to strategically maneuver this hurdle.
No matter where your child goes to school, they will need a means of transportation to get there. Travel costs are something that many people forget to factor into their budget, but it can get costly, especially if your child is attending school out of state. This could require plane tickets back and forth for winter and summer breaks and other miscellaneous times they may want to come home or you going to visit them.
Even if you don’t have to worry about flying, some students may want to have their car at school. This requires costs for additional parking passes, gas, insurance, and routine maintenance.
As you continue to form your budget for education expenses, don’t forget to factor in transportation!
The Institute of International Education found that 10.9% of all undergraduate students study abroad at some point in their education journey. For the 2016-2017 school year, that amounted to about 332,727 students.
Many degree programs offer specialized courses for students that take them abroad. This can be an incredible experience, academically, culturally, and socially. But you have to factor in the costs for airfare, passport, visas, tuition, food, room and board, transportation, and recreation.
There are other opportunities for students that don’t involve traveling overseas such as summer research intensives and study-away opportunities. These opportunities are wonderful but as most are in the summer months, that makes it more difficult for your child to work and earn money during that summer. Because of this, it is important to factor in these unexpected costs.
The transition from high school to college is a big one. With many students moving away from home, they have a newfound sense of independence and responsibility. This transition will be difficult for both of you, especially concerning money.
It is important that you have clear conversations with your child about money in college. Will you provide them with spending money? When can they use the family credit card? What expenses do you expect them to cover themselves? These questions are so important because they allow you to have an open, honest dialogue with your child about money and what they should expect.
I have seen some parents concerned that their child is spending more money than they should in college. This is a learning moment and one that is important to discuss ahead of time so that it doesn’t become a problem in college.
College is an exciting time for both you and your child. With many transitions, there can be growing pains along the way. But by keeping an open line of communication, setting clear expectations, and keeping a strategic budget you will set yourself and your child up for success.
College planning is one of our favorite topics here at Arnold & Mote Wealth Management. Whether you are just starting your education fund or you’re about to move your child into their dorm, we would love to speak with you!