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The True Cost of a College Education

June 03, 2015

By Alissa Green

When considering the true cost of a college education, you may be tempted to look at the annual tuition of your chosen school and think that’s all the money you need, less the student aid and scholarships you’ve been awarded.

Unfortunately, you’d be wrong.

The typical college list price doesn’t include room and board, books, ‘fun’ expenses, traveling home for the holidays, on-campus transportation, along with a host of other variables including differing fees by major. For example, engineering and fine arts majors tend to pay more; at the University of Illinois Urbana-Champaign last year, students majoring in engineering and science paid $5,004 more in tuition last year than students in the humanities, likely due to lab equipment and special software.

According to the College Board, the average combined tuition and fees for the 2014-2015 school year after scholarships and student aid were:

  • $31,231 at private colleges
  • $9,139 for state residents at public colleges
  • $22,958 for out-of-state residents attending public universities

And don’t forget that the tuition you pay tomorrow is likely going to be higher than what you pay today –the average tuition increase was 3.7% for this year.

Plus, those numbers don’t include a roof over your head or food in your belly. The fees for "room and board" vary based on the cost-of-living of your school’s location. Fees in New York City are going to be much higher than in Ann Arbor.

According to the College Board, the typical cost of “room and board” last year ranged from $9,804 at four-year public universities to $11,188 at private universities. To see how your school’s location ranks in terms of the cost of consumer goods, check out this handy calculator from the Economic Research Institute.

Books and supplies (don’t forget about software/technology!) can also be pricey. Both public and private college students tend to spend around $1,200 yearly on them. Meanwhile, extraneous fees for transportation, entertainment and clothing cost students $2,600 - $3,200 last year.

It’s also important to keep in mind that while nine out of 10 freshman think they’ll graduate with a bachelor’s degree in four years, according to a national study by UCLA...the truth is less optimistic. A U.S. Department of Education report shows that fewer than half of students will actually graduate in four years. In fact, only 55 percent of students will have graduated in six years. That’s a lot of extra money not accounted for – approximately $64,000 at a public university once you consider education costs, cost of living expenses and, especially, lost wages.

Extra years typically accrue when students change majors or realize they need extra credits they weren’t planning on. Ironically, extra years of school are much more common at public schools than private schools, which can seem like a comparative bargain when looking at four years of school vs. five or six.

So, what can you do? Take the time to budget carefully and follow our expert financial tips:

  1. Choose the best time frame for your college budget. Are you budgeting by week? By month? By semester? We tend to favor budgeting by week as it makes the budget feel more tangible, but choose whichever time span you’re most comfortable with and go from there.
  2. List all your sources of money coming in. This should include any work-study income you receive, financial aid, grants, scholarships, etc. If you choose a time frame by week or month, divide your income accordingly.
  3. Consider all expenses. See our estimated list above. Once you have your total list, divide them by fixed expenses (tuition) vs. variable expenses (dining out). This will help you know what you can spend per time-frame and what you need to save.
  4. Emergencies happen. Budget for them. Period.
  5. Ask your family for help. Parents are great for budgeting help. You may not be aware – but your parents have pretty much been budgeting since they were your age. Consider them your ace in the hole.
  6. Use a budgeting tool to help you keep track. Technology is your budget’s best friend. Consider using a tool like the Alliant Money Management and Budgeting tool to track your savings and spending by category such as ‘books, ‘entertainment’, and any other category you want to create. You can access the Alliant Money Management and Budgeting Tool via Alliant Online Banking or on our Alliant Mobile App.
  7. Balance your budget. Balancing your budget makes sure that you have more money coming in than going out. Again, we find it helpful to do this on a weekly basis (at least at first), so you can get a good handle on what you’re spending vs. what you’re saving – and can easily remember each item that you bought. If you do this on a monthly basis, it can be a lot harder to remember where every charge on your checking statement originated. However, once you become a budgeting wizard (which we know you will), you can try balancing your budget bi-monthly or monthly.
  8. Go easy on yourself. Budgeting is one of the true signs that you’ve entered adulthood, and for good reason. It’s hard. So, if you spend more than you should every now and then, that’s okay. You won’t go broke forgoing off your meal plan once or twice. But it’s the little things that add up. So, forgive yourself for small mistakes. Just make sure you learn from them so you don’t find yourself deep in the red come the end of the semester.

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