Budgeting for college 101: Pay attention to your financial health
Following these simple tips can help create a realistic budget and stick to it
RESTON, Va.—As students arrive on college and university campuses across the nation, most families have already considered how to pay for higher education, but many still need to establish a good budget strategy for the school year. Sallie Mae, the nation’s leading saving-and-paying-for-college company, can help students budget wisely to minimize unexpected expenses and bills.
“Feedback from our customers tells us that it is difficult for them to estimate correctly the total cost of college,” said Patricia Nash Christel, spokeswoman for Sallie Mae. “That’s why we recently launched our Education Investment Planner, a tool that helps students and families estimate all of their college-related expenses, including tuition, housing, books and fees, and build a plan to pay for it. Sallie Mae feels strongly that creating a plan to pay for college and keeping to a realistic budget from the first day you step on campus are key to creating long-term financial health.”
Sallie Mae suggests that families begin by building a customized plan to pay not only for one year but for the full degree program.
Some tips to keep in mind when creating a college budget include:
Think beyond tuition. Cost of attendance varies by school and location, so the best way to start is by using Sallie Mae’s comprehensive Education Investment Planner, available at www.SallieMae.com/Plan, which will help you estimate the total cost of attendance, including tuition, average room and board, and estimates for books and other fees.
Perform an honest assessment. Conduct a straightforward accounting of current spending habits and lifestyle. Don’t forget to take into account expenses such as entertainment (concerts, movies, sporting goods), food (coffee, pizza), clothing, and car-related expenses (gas, insurance).
Evaluate additional expenses. Once students live on their own there will be additional costs to consider when creating a college budget. Remember expenses such as personal (laundry, snacks, personal care products), transportation (gas and mileage on your car for trips back home, subway and bus passes), and miscellaneous (fraternity or sorority fees, club/organization fees, special tools or equipment for a specific major). College Answer has a list of additional indirect expenses to keep in mind. Visit www.CollegeAnswer.com to learn more.
Consider your health. Most colleges require students to carry health insurance, and some institutions may require students to buy on-campus care even if the student is already covered. If you have several options—such as a campus plan versus a private plan—evaluate your health needs and the cost.
Continue saving. It is never too late to save for college using a tax-advantaged 529 college savings plan. Even if college has already commenced, families can continue saving to help students afford subsequent years of school while potentially taking advantage of tax benefits. Upromise Investments is a leading provider of 529 college savings plans. By enrolling at Upromise.com, families can earn rewards on purchases made at nearly 70,000 places. Accumulated rewards can then be used directly for college expenses, as contributions to a Upromise-administered 529 college savings plan, or to help pay down an eligible Sallie Mae-serviced student loan with Upromise Loan Link.
Be book-savvy. Campus bookstores generally buy and sell used textbooks. Used books are generally in shorter supply than new ones, so do not wait until the last minute to make your purchase—just be sure to get the correct edition. You may also find your books at cheaper sources such as off-campus stores or the Internet.
Use credit with caution. Not every student needs a credit card. You may find that a check card tied to your bank account will meet your needs, and keep non-essential purchases in check. Students often opt to use credit cards for convenience and inadvertently end up paying interest on their pizza or concert ticket.
Sallie Mae is committed to encouraging students’ financial health, and offers free services designed to help students budget wisely, borrow responsibly and manage their financial obligations. Visit SallieMae.com/bedebtsavvy for useful tips on how to stay financially healthy.
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