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How to Budget for College

For many students, finance can be a make-or-break factor in whether you decide to apply to certain schools. It is also a complicated factor. In this post, we break down a few important points of consideration as you budget for college. Let’s start by understanding expenses and income, then by understanding how colleges look at these things. At the end of the post, we suggest a few actions you can take to help save money during college.

Understanding cost

One of the key things to understand when budgeting for college is how much you it will cost. Paying for college is not only about covering tuition and fees, but also housing, meal plans, health insurance, transportation, books & supplies, and other miscellaneous spending such as cell phone plan, credit card fee, laundry, personal allowance, among other.

When you are looking up how much a college costs, it is better to search for the phrase “cost of attendance” rather than just “tuition.” Most schools provide estimates of both the direct (fixed) charges and indirect expenses of attending their institution, at varying levels of detail. For example, Colorado College provides a very thorough breakdown of its cost of attendance (Table 1), while Colby College provides a more general list.

Most state schools have a different cost of attendance for in-state vs. out-of-state students. If you are considering state schools, you should take this discrepancy into consideration.

You can also take advantage of the MyinTuition system to help you calculate the net price of several colleges.

Understanding EFC & projected income

EFC stands for “expected family contribution,” which means the amount of money that you and your family can pay each year.

Apart from your EFC, if you are eligible for work-study, you can earn extra income separate from your student loans to cover a portion of the cost. How much you can make depends on the school: the amount of work-study aid you’re eligible for will be listed on your financial award letter. Usually, the eligible amount is anywhere between $2000 and $5000 per year.

Another opportunity for extra income would be part-time jobs on- or off-campus. Again, how much you make is speculative and will vary depending on where you work and how often. I often estimate your projected income using this formula:

projected income = 15 (hours/week) * minimum wage * 37 (weeks)

We recommend that you document all these numbers on a spreadsheet so that you can more easily calculate your needs. Here’s a sample spreadsheet format that you can follow:

By subtracting your total income (= EFC + projected income) from your total expenses (= sum of all expenses), you will be able to have an estimate of how much you will need in a combination of merit-based scholarships, need-based financial aids, and student loans.

Knowing this number will most likely influence your college list. For example, if you are applying to a lot of private schools, beware that the costs will be significantly higher compared to large state schools and community colleges. Subsequently, you might not receive the aid you need to afford college.

In the case your awarded aid does not meet your need, you can of course take student loans. However, be careful with how much loan you take out. Students should not be coming out of college with over $100,000 in debt. In fact, according to , the average federal loan debt is $36,510 per borrower and the average private loan debt is $54,921 per borrower. It is important to remember that debt has interests, and unless you can offset a huge chunk of the principal (original debt) before your graduate, you might have to be paying off student debt for a few decades. Another thing to consider is that it is very difficult to get rid of college loans even if you declare bankruptcy and the difference in post-college income between one school and another may not be large enough to make up for a large debt burden. You can easily find average salaries post-graduation from different colleges, just remember that major and which industries people go into also have a significant impact.

Understanding school policies

Your EFC can determine whether you get into a school or not: many schools reject any applicant whose EFC falls below a certain threshold. Likewise, your outstanding financial need might deter you from applying to certain institutions.

It is therefore crucial that you do careful research of school policies. There are two main policies that you should look into:

1. Whether a school is need-blind or need-aware

If a school is need-blind, this means that your financial ability does not influence the school’s admission decision. On the flip side, if a school is need-aware, your financial need will influence the school’s admission decision.

Most US colleges have need-aware policy for international students. There are only five schools that are truly need-blind for international students: Harvard, Yale, Princeton, MIT, and Amherst.

However, don’t feel discouraged! Many schools are generous with international students and offer significant financial aid packages. We encourage you to look into the school’s average financial aid package, and whether they meet a higher percentage of demonstrated need. This information is usually available on the college’s website, and the College Board website.

2. The school’s billing schedule

Most schools bill their students roughly a month before the start of a new term. For schools on the semester system, this means your billable costs (tuition and where applicable, room and board) are split in half, usually billed in August and January. Schools on the quarter system will bill you three times a year, usually in August/September, January, and March/April. Several colleges also offer monthly payment plans that help spread the cost of attendance evenly over 12 months.

Depending on how much you can afford within a fixed amount of time, you might also want to consider applying to more semester-system schools, quarter-system schools, or schools with monthly payment options.

What to do to cut cost in college

There are several ways for you to save money during college: applying for merit-based grants and aid offered by the college, doing research, getting an internship, etc. Check out our other blog post on additional ways to save money during college on our website.

Here, we recommend three reliable measures that plenty of students take:

1. Look for outside scholarships

Check out scholarship search engines such as, Scholarship America, and FastWeb. These databases will come in handy when you look for additional grants independent of your prospective colleges.

2. Consider off-campus housing

While some colleges have live-in requirements for one to two years, undergraduate students generally can move out afterward. Some large state schools might not even have that requirement at all. Living off-campus has proven to be a wallet-friendly option for students, as living in a dorm is often more costly than renting an apartment or a townhouse in the area. If you can find roommates to share the cost, even better!

3. Don’t purchase new textbooks

Check out books from the school or public library. Rent or buy used copies (a service that is often available at your college through their bookstores). Borrow from your friend. Find a digital version (many school libraries now offer chapter-scan services). There are a variety of ways for you to cut down textbook costs.

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