For many people, college is the first experience with true independence—and we know that it is exciting. But without preparation, this new freedom can lead to bad spending habits which can balloon into huge financial distress. So yes, splurge a little; get the pizza at midnight when you are studying and the ticket to that awesome concert. But be sure to rein it in and avoid huge financial pitfalls so that post-graduation you are set up for success.
While we give a lighthearted nod to financial freewheeling during college life, there is a real financial urgency among some students today. A 2018 report by The Wisconsin Hope Lab (looking at 43,000 students from universities and community colleges in 20 states and Washington DC) found that 36% of university students don’t have enough money for enough food, and 42% of community college students are hungry or not getting a balanced diet. When it comes to rent or utilities, 36% of university students (46% of community college students) are finding those issues a huge struggle. To address this difficulty, many colleges and universities offer food banks for students, including Campus Cupboard at SFCC, Mobile Lobo Food Pantry at UNM, Roadrunner Mobile Food Pantry at CNM, and Aggie Cupboard at NMSU to name just a few local examples.
Don’t overspend on housing
Housing is one of the most costly college expenses (outside of tuition). According to the College Board, the average yearly costs for room (and board) while at college is roughly $11,140 – $12,680. So explore what’s available (and safe) for you or your student. Evaluate the difference between a single versus a shared dorm room (or apartment). Can you make a 15-minute walk to save hundreds of dollars? Is it possible to live at home and commute? Are you allowed to live off campus? For instance, UNM Albuquerque has an on-campus living requirement for full-time freshman (with a few exceptions). So in this example, the 2019-2020 on-campus cost ranges from $4,890 for a double occupancy dorm, to $6,390 for a single apartment/bedroom on campus. In the middle is a single traditional dorm room at $5,590. Once students are older, Lobo Village, a popular off-campus student housing option, offers four bed/four bath fully furnished apartments for $529/month per bedroom. Housing costs vary greatly depending on location and population. Online real estate resource Trulia studied how much it costs to live on campus versus off campus in 48 of American’s biggest college towns. In more than half, it was either the same price or cheaper to live off campus, with an average savings of $219 a month for those with a roommate. However, utilities–which were not included–cut those savings to roughly $146 per month. Crunch the numbers to determine the best option for your individual circumstances.
Be careful with credit cards
College students are often bombarded with credit card offers—right on campus in convenient booths. And they often lure students in with free gifts and offers like no interest (usually for a ridiculously short time). Often these cards take advantage of students’ lack of financial experience and come with a high interest rate and/or annual fees.
A credit card is a good financial tool if used correctly and responsibly. If you need a credit card, shop around and find one with a low-interest rate, no annual fees, and perhaps good rewards or money-back perks. Use the card as little as possible, and make every attempt to pay off the balance every month. The right credit card, used properly, is a great way to build credit, which will set you up for financial success in the future. Check out State ECU’s Visa credit card.
Don’t misuse college loan money
This is a real danger zone. The student debt crisis is real and continues to grow. Americans now owe 1.53 trillion in student loan debt, far surpassing credit card and auto loan debt. The standard repayment timetable for federal loans is 10 years, but research suggests it takes four-year degree holders an average of 19.7 years to repay loans, at an average repayment of $393 per month. (Statistics as per U.S. Dept. of Education.) Loan money (after tuition) should go to living expenses like food, rent, and utilities. Parents must instill the importance of how this money is to be spent—and explain how much students will be expected to pay each month once they graduate. To reduce your student loan burden, consider low-cost options like public universities, trade schools, or getting some coursework done at a community college and then transferring.
Meals plans versus cooking
Many schools require students who live on campus to participate in a meal plan. Usually, there is a tiered structure, so figure out what works for you. It can be much cheaper to purchase your own meals and certainly to shop for groceries and cook if you have kitchen facilities in your housing. Don’t grab meals at pricey restaurants! The general meal plan at UNM Albuquerque is about $4,000 for the school year. With careful shopping and planning, it is absolutely possible to cut your food tab considerably.
Make a budget and stick to it!
Budgeting is usually new to college students, and many have habitually used the bank of mom and dad to get them out of shortfalls. Encourage your students to make and stick to a budget—and don’t bail them out if they fail. (Of course, if health and wellness is an issue, that is not a good teachable moment.) Students need to figure out down to the week or day, how much money they have to spend. And learn from their mistakes—because they are bound to make a whole bunch! One option is to set up a Mint account and track expenses. Mint is a popular app that allows the creation of customized budgets that can sync with bank and credit card accounts. Online banking is also another good way to track spending. With State ECU’s online banking you can track if funds are low, set recurring transactions, and access online bill pay, which allows you to set up reminders when bills are due, and make same-day payments. If they prefer old school methods, there are a ton of free college budget templates on the internet that can be downloaded and used. Whichever method is chosen, items outside of food and housing that need to be incorporated into the budget include cell phone expenses, transportation (especially if airplane travel for visits home is expected), clothes, and yes something toward entertainment. Be sure to also put an amount toward emergencies. You can help your student by carefully explaining what they are expected to cover and the means to do so. For instance, if you have their cell phone on a family plan, but expect them to cover 50%, let them know that exact amount. And let them know of any consequences if they fail to meet those required expenses.
Take advantage of free and discount activities
Many colleges offer a variety of free or very inexpensive activities that complement the college experience. Look for free (or low cost) sporting events, concerts, and guest lectures on campus. Take advantage of student discounts–there are tons! For instance, qualifying UNM and CNM students can get a free ABQ Ride bus pass sticker that allows for unlimited use of the bus throughout the year. And students can get a deep discount (up to 40% off) on Popejoy Presents tickets through the UNM Bookstore Ticket Office or at the Pit. University of Arizona (Tucson) students get in free to Arizona State Museum and UA Museum of Art and get a big discount to Biosphere 2, a “world under glass” engineering feat. So it is worth doing a little research and finding out what is available where you happen to be studying. And always ask if there is a student discount whenever visiting a cultural/entertainment spot.
Leave the car at home
Cars bring more expenses into the mix. There can be hefty parking fees (plus the headache of tickets if you end up parking quickly in an illegal spot when you are running late to class). That is in addition to gas costs and car insurance. For most college experiences, students walk, bike, or use local transportation to get around campus. (We understand that cars are usually a necessary cost for commuter students.)
Ways to save on textbooks
Many students (and parents) experience sticker shock when it comes to the cost of college textbooks (a report from the College Board estimates a yearly per student costs of $1,200).There are ways to save. One option is to look for books with a used sticker in your college bookshop. But in this day and age, that is just the first step. Check out sources online to purchase new and used books, e-textbooks, and even rent textbooks (check out Textbook.com, CampusBooks.com, and Chegg.com). You can also set up a price alert to find out when the book you need goes on sale—such as by using Amazon’s online price alert. If you have a friend you trust in your class, perhaps you can go “halfsies” on the textbook—admittedly this takes a lot of patience and responsibility from both parties. And at the end of the semester or year, don’t forget to sell your books back!
On a final note, if you find you are experiencing financial stress, talk to your parents or guardians. They may have additional ideas about ways to save or can help ease the financial strain. Just sharing your concerns may reduce your anxiety—and help you concentrate on your coursework.