How To Reduce College Expenses
"How To Reduce College Expenses" submitted by SchoolGrantsfor Editorial Team and last updated on Monday 9th January 2012
Okay, so you've read about School Costs, Direct and Indirect Costs. Now it's time to learn about a few things you can do to reduce some of those costs. In addition to scholarships, grants and student loans, there are things you can do to directly effect the cost of your education. Expenses means costs incurred includes living and food costs, transportation, debt payments, entertainment, etc. When attending school expenses also include tuition, fees and books.
Paying for College?
Does the process of paying for college seem way too complicated and expensive? There's no doubt college is a major investment. However, there are a number of entities such as federal and state governments, private institutions, and colleges themselves-that will assist you in completing the financial aid process and share the costs with you.
Receiving financial aid does require that you and your family share information. That's why parents applying for aid are asked to report financial information to the federal and state governments, as well as to the colleges to which their child applies. The student's assets and earnings are also considered. This information is used to determine how much financial aid you can receive in grants, student loans and work-study, to ease the burden of the expenses you and your family must bear. You will not have to cover all the costs alone.
Set up separate files for your bank statements, household bills, insurance payments, college applications, financial aid papers, loan documents and correspondence with your college and lender. Keep them in a safe place.
What is the definition of a Spending Plan?
A spending plan is a monthly breakdown of the cost of attendance expenses, your additional expenses, and income.
Create a monthly spending plan and stick to it
First, you’ll need to know your income and expenses. To figure out your expenses, write down all your purchases every day for at least two weeks to understand where your money is going. Also, look at your bank or credit card statements at the end of the month. You’ll get a good idea of the number of coffees you bought, how many times you ate out, any clothes, shoes, books or other items you bought, and your regular household expenses, such as rent, utilities and food.
What costs are included in the financial aid budget?
- Tuition and fees
- Room and board
- Books, supplies and instruments
- Miscellaneous/Personal Expenses
What's the difference between the financial aid budget and my Spending Plan?
The financial aid budget (also known as the Cost of Attendance) is an itemized list of the amount of money required to complete the academic year at a particular school. Your Spending Plan will show a monthly breakdown of the cost of attendance expenses along with other expenses that may not be included in the Cost of Attendance but are expenses you incur. Examples of these types of items would be eating out, CDs, etc.
What are the steps to making a Spending Plan?
- List your sources of money for school.
- Enter expenses.
- Chart when your income and expenses occur on a calendar so that you can make your Spending Plan.
- Health Insurance
- Personal Expenses
What's not included in the budget?
Some students think that car payments, credit card payments, summer expenses, and vacations are included in the financial aid budget. These costs may be included in your Spending Plan but not in the financial aid budget. Plan to pay for these costs through a part-time job or some other source of funding.
How do I keep track of my expenses and money?
Complete an Expense Diary so that you can figure out where your money is going and where you can trim expenses. Some of the places where you can trim expenses are:
Shop around for textbooks
Research new and used textbooks online. Compare ISBNs (every book has its own International Standard Book Number, located on the copyright page) to make sure you get the right edition. Also, ask if your college has a book rental or buyback program.
What tips do you have to help me save money?
- Reduce rent by sharing an apartment with roommates rather than living alone
- Most cell phone companies offer good weekend and evening rates on long distance plus you can e-mail friends whenever possible to reduce phone bills
- When you shop, don't buy sale items to save money unless you need them
- Buy in bluk and split the costs with roommates/friends as often as you can
- Participate in free or cheap activities. Get outside to hike, bicycle, go to the beach or the mountains. These activities are all fun and you don't have to spend money
Are there online forms I can use as a guide to develop my spending plan?
- Savings Calculator Worksheet
- Online Financial Planning Guide
- Assist in paying for those college expense
Are there online calculators that can assist me in computing my loan payments?
Yes, visit http://www.finaid.org/calculators/loanpayments.phtml to calculate the most accurate loan payment amount(s), but first get out all of your loan papers and tally the total amount(s) you borrowed.
What can I do to reduce my spending and control my debt?
- Review your budget each month. If you spend too much one month, cut expenses the next month
- Talk with your financial aid counselor about unexpected expenses to see if they can be added to the budget and funded
- Keep good records and develop a filing system that will keep you organized
- Balance your checkbook monthly, subtracting service fees
- Use savings to cover emergencies to avoid credit card charges
- Use only one credit card and pay the full balance each month
- Use a debit card whenever possible rather than charging purchases, but remember to subtract the transaction in your checkbook
- One strategy to control debt is to find scholarships and grants --both are free money. You don't need to pay them back. There are a number of online scholarship search services to help you.
Avoid using credit cards
It’s easy to get a credit card and even easier to get into trouble. Consider a debit card instead, but you’ll still need to read the fine print. If you decide to use a credit card, shop around and be wary of low introductory rates that quickly jump higher. Look out for hidden fees. If you have a credit card, pay your balance in full each month. If you can’t, try to pay more than just the minimum payment.
Save Your Credit Card for Emergencies
Thinking about using your credit card to pay for college? Think again. Let’s say you use your credit card to pay tuition one semester, giving you a balance of $1,400. If you make only the minimum payment of $56 each month (and continue to pay 4 percent of your outstanding balance as now required) at an interest rate of 18 percent, you’ll end up paying $756 in interest—that’s more than half the original amount you charged! The same $1,400 in a federal student loan would cost you at most about $129 in interest, paying $50 a month at 6.8 percent. That’s a savings of $627.
Which of your resources will you use to repay your student loans?
You will be using your future earnings to repay your student loans.
How do I find out how much my costs will be for the academic year?
The cost of attendance (COA) is established by the financial aid office to provide students with the expenses required to complete the curriculum and to live for an academic year. Visit the financial aid office's web site, the catalog, or call the financial aid office for this information.
Which of my financial records are important to keep?
- Application forms
- Promissory notes
- Disclosure statements
- Repayment schedules
- Rental agreements
- Utility contracts
How can I confirm the student loans I borrowed?
If you don't know your current lender or you just want to check on the loans you have, you can find your loans online at The National Student Loan Data System
What should I be spending on household expenses?
Here is a list of recommended percentages of your household budget:
- 31% housing
- 16% food
- 6% clothing
- 5% health
- 20% transportation
- 15% miscellaneous including utilities
- 7% savings
Why should I save money during school?
To cover emergencies and have peace of mind. If you keep this money in a savings account, you can earn interest. That is free money! Saving small amounts may seem inconsequential, but it is getting into the habit of saving that is most important.
No matter how little, set aside something every month. Even $20 a month will get you in the habit of saving and help build a cushion for a financial emergency.
Know how much you need
Your expenses during college amount to more than just tuition and fees. Find out the current costs of nearly every college in the country by exploring the College Navigator Web site at http://collegenavigator.ed.gov and the College Board’s Web site at www.collegeboard.com.
What is the rule of 72?
Formula for calculating how quickly invested money will grow. Mire Details: Rule of 72 to reduce spending to increase savings and compounding interest benefit.
Why should I make Spending Plan?
To achieve your financial goals, to accumulate less debt, to have confidence that you can afford what you need and want, and to have peace of mind so that you can handle emergencies that may arise. Getting what you want --that is what a Spending Plan is all about!
What steps can I take to become financially successful?
- Identify financial goals
- Track expenses and list your debts
- Create a Spending Plan
- Save in ways that fit your lifestyle
- Start a savings plan, and stick to it
- Borrow as little as possible
If lowering college expenses is important to your family, here are some options that you may want to consider:
- How To Fill Financial Gap (Unmet Need) To Cover Your Actual Need
- Applying for a Aid.
- State Tuition Programs
- Online Financial Planning Guide
- Different Types of Student Loans After You Graduate, Leave School or Drop Below Half-time Enrollment
- Repay Your Student Loans Without Breaking the Bank
- Loan Counseling For Undergraduate, Graduate/Professional
- Using One Lender
- Important Documents to File
- Adult and Continuing Education
- How my eligibility for financial aid determined