It’s never too late to start planning for college expenses and how you’ll pay for them. Below, you’ll find comprehensive explanations of important points to consider when financing college, along with over a dozen useful calculators to help you plan.
When students and their families are navigating the costs of college for the first time, they may be unfamiliar with some of the additional fees and living expenses that need to be factored in. While it’s tempting to only notice the cost of tuition when making a decision, ancillary costs such as technology fees, housing, parking, and meal plans can all add up to thousands of dollars quickly.
When calculating the total cost of a college education, these are the components that should be taken into account:
Learners have lots of options when it comes to the type of school they attend, and this facet of education tends to be the largest expense. While two-year schools and public institutions in the student’s home state tend to offer the most affordable prices, those who choose to attend a private university or a state school outside their region usually pay the highest rates. For the 2016-2017 academic year, College Board estimates students pay between $3,520 and $33,480 annually depending on their chosen type of institution. Inflation also drives prices higher each year, so students and families considering an education that may be a few years away still need to account for slightly higher tuition rates.
|Public Four-Year (In-State)||$9,650||$9,420|
|Public Four-Year (Out-of-State)||$24,930||$24,070|
Source: College Board 2017
Some colleges include fees in their tuition rates, but it’s best to ask each school if these are included. Some of the most common fees a student may encounter include those related to technology, counseling, health services, student body membership, online learning, use of laboratories and membership to a campus fitness center. As reported by a 2016 New York Times article, fees during the 2015-2016 year averaged $1,700 at public universities – or approximately 20 percent of the cost of tuition at a public institution.
Unless a student plans to live at home, living expenses can quickly add up. Whether living on campus or finding an apartment or house unaffiliated with their school, students need to think about the cost of living in the area where they plan to attend when creating a budget. While College Board found that 2016-2017 room and board costs ranged between $8,060 and $11,890 for on-campus accommodations, schools in cities where housing rates are above the national average often charge more. Based in NYC’s Greenwich Village, room and board at The New School cost nearly $18,000 per academic year. Students also need to factor in transportation, whether that means maintaining auto insurance and maintenance for their own vehicle or setting aside monthly funds for public transportation.
After calculating all the costs, it’s time to think about something a bit more pleasant. In addition to funds saved by parents and families during a child’s primary and secondary educations, students who take the time to find and apply for scholarships and/or grants can also qualify for these based on things like need, merit, degree path or location.
Once all of the fees associated with attending college are ascertained, students and their families can take advantage of numerous college cost calculators to better prepare themselves for what’s to come. The roundup below highlights some of the best calculators on the market today – all of which are free to use.
Students can enter info like annual costs, years of attendance, and how much money is available via savings to get an idea of how much college will cost.
FinAid allows users to see how much inflation will increase costs based on when a student begins college.
Use this tool to search for specific schools and find out their current tuition rates and the percentage of students receiving institutional funding.
Several institutions provide their own college cost calculators, as evidenced by The University of Chicago’s “Calculate Your Cost” tool.
This service provided by the U.S. Department of Education lets prospective students check different schools to see how much it will cost to attend.
Understanding college loans can be a confusing process, and often students and families are under a time crunch to arrange funding and don’t really get a chance to learn all the ins and outs of how these funding sources work. College loan calculators are a great resource when it comes to getting a sense of the actual numbers involved, including how long it will take to pay off a loan, what the monthly repayment plan will be, and how much interest will be charged.
Both the federal government and private loan companies can provide funding to students looking to make ends meet in college, but experts warn that private loans are usually not the best option. In addition to requiring learners to make payments while still in school, variable rates mean interest rates can soar as high as 18 percent. If a loan must be taken out, those provided by the U.S. Department of Education are the safest bet.
Provided to undergraduates with financial need. The government also pays interest on the loan when students are in school, for six months after graduation, and when students apply for deferment. Up to $20,500 each year is available.
Provided to undergraduate, graduate, and professional learners. Demonstrating financial need is not a requirement, but interest accrues while in school and must be paid by the student. Up to $12,500 is available each year.
Provided to graduate or professional students or parents of dependent undergraduates. Maximum borrowing amount is the cost of attendance.
Provided to undergraduate or graduate students with exceptional financial need, with the school acting as lender. Up to $5,500 per academic year is available for undergraduates, or $8,000 for grad students.
Sometimes loans offer more money than students need to get through college and, although it may be tempting to have some extra cash while in school, learners need to talk with their families or other trusted advisors to have a clear picture of how much money they need. Students should look at the cost of their chosen college, their average cost of living, how much their family is able to contribute and their financial aid package to get a sense of how these numbers line up. It’s also important to be realistic about things like cost of living, as daily expenses can quickly add up. Rather than accepting a loan for these types of costs, students should consider if a work-study program or other part-time job may be able to cover things like fuel, coffee, or an on-the-go lunch.
Students who aren’t quite ready to apply for federal student aid but still want to get a sense of how much may be offered can use the U.S. Department of Education’s FAFSA4caster to get an early estimate.
Loan repayment plans are based on three factors: the amount of money borrowed, the interest rate, and how much time a student must pay it off. There are lots of loan calculators available where students can enter these amounts to get a sense of their monthly payments.
After gaining a fuller understanding of types of loans available, total costs of college, and how much will be needed, future college students can select from a range of college loan calculators to get a sense of the repayment process.
The standardized testing company ACT offers this calculator, which helps students figure out exactly how much they’ll need to borrow.
For visual learners, this calculator provides an X/Y axis graph to show how the loan principal amount shrinks as payments are made.
A great tool provided by the U.S. Department of Education to estimate payments for federal loans.
The most detailed calculator available is College Board’s, which asks a series of questions about subsidized and unsubsidized loan amounts to provide an accurate estimate.
Sallie Mae manages millions of student loans and offers this service to customers and non-customers alike.
When students fill out the Free Application for Federal Student Aid, the U.S. Department of Education collects information related to their families’ taxed and untaxed income, assets and benefits while also ascertaining the total number of family members and if any others will be attending college during that academic year. All of this information is then sent through a formula that helps determine the Expected Family Contribution. Families with a higher annual income may receive less financial aid – particularly funds earmarked for need-based students – while those with lower income may qualify for more federal assistance.
Simulating the FAFSA application, families can enter their information to get a close idea of how much they may be expected to put towards a college education.
This document, provided by the U.S. Department of Education, provides a comprehensive and detailed explanation of how and why EFCs are used and includes an example of the paperwork that will need to be filled out on the FAFSA.
Use this tool provided by FinAid to see how factors like enrollment status, dependency, household size and parental income affect EFC figures.
One of the best ways to avoid loan debt later on is for parents who are able to begin setting aside funds long before a child will be heading off to college. While this may not be a realistic task for families with financial need, even a few dollars set aside each month – when invested properly – can make a big difference.
Also called a tax-advantaged savings plan, 529s were designed to help parents save for future college costs by allowing them to make contributions that are exempt from federal taxation. Two types of plans exist under the 529 federal tax code: prepaid tuition and college savings investments. The first plan allows individuals to lock in the current cost of tuition and avoid the average four percent annual inflation. Funds placed into a prepaid tuition account can only be used for in-state tuition at a public institution, making them more limited. College savings investment plans allow account holders to invest funds in stocks, bonds or money market funds to propel steady growth over time. These funds may also be used at any type of college or university.
Answering this question requires a family to consider a couple factors to ensure they have a full picture of what is needed. College Board found that tuition costs are rising between 3 and 4 percent annually, and parents need to factor inflation when deciding how much to save. In the previous academic year, tuition at private institutions rose by more than $1,100, meaning a child born today would pay approximately $20,000 more for their education than someone who is currently 18 and entering college. The benefit of a younger child is, of course, time. Parents who are able to begin saving when their child is born – or even before – have more time and can therefore contribute smaller amounts than parents who don’t start saving until their child enters middle school.
Use this tool to see how much tuition and fees are expected to inflate by the time your child goes off to college.
The Financial Industry Regulatory Authority allows users to enter costs, current savings, annual return, and inflation rates to get a better idea of how far their savings will go.
Vanguard helps answer this question with its college savings planner than can be used for multiple children.
FinAid offers this calculator to help parents understand how savings will grow over time in an interest-bearing account or investment fund.
For those looking to get more into the nitty-gritty of interest rates, this calculator helps parents understand the annual interest rate they’ll need to find to meet their savings goals.
Let’s be honest: students in college are often strapped for cash. In the midst of completing an expensive education, they also need money to live their daily lives. So how can these students balance busy schedules and the lack of time to cook meals at home with trying to keep their spending low during this season of life?
Whether that means a car or the subway, students need to consider average costs for things like parking, fuel or monthly bus passes to ensure they’re able to get to school every day.
Depending on their institution, students may be able to incorporate a meal plan into their overall college expenses. Those who live off-campus should think about weekly staples and create a set budget that also takes into consideration days when papers are due or finals begin and cooking isn’t feasible.
Whether living on campus or in private accommodation, housing can take up a significant portion of a student’s budget. Lots of schools offer roommate finding services for students looking to save a bit on rent by sharing a place rather than living alone.
Textbooks are expensive, especially if students can’t find used copies or their classes require lots of different materials. Things like notebooks, folders, binders, writing utensils and printer ink also need to be factored in at the start of each semester.
Things like car payments or cell phone bills are considered fixed expenses as they typically cost the same every month. Students should think about monthly bills and incorporate these into any budget.
Students who want to begin paying their student loans while still in school can set up monthly payment plans, but they can also defer until after graduation if these payments stretch the budget too far.
The last thing a student wants to do is graduate with an empty bank account, especially when they’re trying to find a job, move to a new city or start graduate school. Setting aside a few dollars a week can add up to an apartment deposit or grad school application fee over time.
Even the most studious learners occasionally need to close the books and have a night out with friends. Things like concerts, dinners, party supplies or spring break trips need to be considered while also keeping a level head about responsible amounts to spend in this category.
Students looking to understand projected monthly expenses versus actual spending and how those differences add up can use the Affordable Colleges Online budget template to get started and learn more about student budgeting.
Students can enter things like housing, food, transportation, and personal spending to see if they’ll have a surplus or shortfall.
Bankrate lets students enter all their monthly expenses then set payment schedules based on whether they are monthly, annual, or one-time costs.
This handy calculator allows students to enter monthly income and expenses to see if they have enough money or need to scale back their spending.
Mark Kantrowitz is Publisher and VP of Strategy for Cappex, a website that helps students achieve their college dreams by connecting them with colleges and scholarships. Mark is a nationally-recognized expert on student financial aid, scholarships and student loans. His mission is to deliver practical information, advice and tools to students and their families so they can make smarter, more informed decisions about planning and paying for college. Mr. Kantrowitz has written for the New York Times, Wall Street Journal, Washington Post, Reuters, Huffington Post, US News & World Report, Money Magazine, Forbes, Newsweek and Time Magazine. Mark is the author of four bestselling books about scholarships and financial. He serves on the editorial board of the Journal of Student Financial Aid, the editorial advisory board of Bottom Line/Personal, and is a member of the board of trustees of the Center for Excellence in Education.
The most important type of calculator is a net price calculator. The net price is the difference between total college costs (e.g., tuition, fees, room, board, books, supplies, equipment, transportation, and miscellaneous/personal expenses) and gift aid (grants, scholarships and other money that does not need to be earned or repaid). This represents the real cost of the college and is needed to determine whether the college is affordable or not. If total resources (savings, contributions from current income, and reasonable debt) is less than the four-year net price, the college is affordable, otherwise not.
The next most important calculator is a loan calculator that can determine the monthly payment, total payments and total interest paid over the life of the loan, given the amount borrowed, interest rate and repayment term.
The third most important calculator is a college savings calculator that calculates how much you must save per month, given a college savings goal, earnings interest rate, contribution frequency and duration of contributions (e.g., from birth, from when the child enters high school, etc.). Also useful is a college savings growth calculator that shows how much money you will have given a particular savings contribution amount.
Families should start with the net price calculator, to determine the net price for several colleges their child will consider. Include a variety of college types, including an in-state public college and a private non-profit college. This will give you an idea of the current net price. If the child will not be enrolling in college for several years, assume that the net price will increase by 6% to 7% each year, on average.
Next, calculate the total amount of savings available to pay for college costs. If college is several years away, use a college savings calculator to figure out how much you can save in total or how much you need to save per month. Use about a third of the sticker price or net price as the goal if you don’t have another goal already.
Student loan debt is reasonable and affordable if total debt at graduation is less than your expected annual starting salary. So, use the student’s future annual income as the loan amount.
Combine the debt and savings figures with the amount of money the family expects to be able to contribute from income each year the child is in college. Compare this total with the four-year net price. If it is less than the net price, the college is affordable. Otherwise, the family will have to stretch to afford the college.
There are many hidden college costs, such as class-specific fees, technology and printing fees, the cost of outfitting a dorm room, and various other fees. Assume that there will be $250 to $500 a month in such hidden fees.