Breaking It Down: The Costs of College

For many high school seniors around the United States, the college application process starts ramping up at the beginning of the school year. While it’s an exciting (and often nerve-wracking) time in their lives, it should also be a time for students and their families to consider the financial side of college.

So where do you start? Each school is required to produce a cost of attendance (COA), which is an estimate of total expenses for one year, including tuition and fees, books, room and board, and transportation. The COA, which can be found on the school’s website, should also break down the costs between in-state and out-of-state attendance if it is a public institution. Bonus: the COA can also be used as a guide for reimbursement from 529 plans. 

If your child is looking to apply to various schools, there is a useful online resource from the U.S. Department of Education called College Scorecard that lets you compare the average annual cost to attend, in addition to statistics like fields of study, financial aid, debt, graduation rate, median earnings, and more.

No matter how many colleges your child has to choose from, there are some key topics to evaluate when making that final decision. Here are four things to consider as you help your child narrow down their choices.

Tuition
College tuition charges vary based on several factors beyond public vs. private institutions. Most state schools charge students different tuition depending on whether they are considered residents of the state. Some state schools, however, have programs that allow out-of-state students to gain residency status after a year or two, thus lowering the cost of tuition.

Additionally, many state schools have created alternative programs that allow students to study online while living at home or close to campus. Online courses may have a reduced cost over courses taught in person on campus. 

Many fields of study have created mixed programs where a student may begin their graduate degree classes while still procuring their bachelor’s degree. Graduate-level courses are often more expensive than undergraduate courses, but fast-track dual programs are typically going to be less expensive than paying for two separate degree programs.  It is important to ask your child what they expect their course of study to look like to get the best estimate of tuition.

Living Expenses
Many factors affect the true cost of living expenses when your student attends school, starting with where the school is located. Is it in a big city such as New York or San Francisco with a high cost of living, or is it in a smaller community mostly centered around the university that may have a much lower cost of living? 

Secondly, will the student live on campus for the duration of their college experience, or will they move off campus? On-campus housing may be less expensive than off-campus housing, but your student may be limited in their accommodation choices. For example, on-campus housing may not offer as many options that allow for your student to have their own bedroom or bathroom. Shared living facilities and kitchens or laundry facilities may be much more common. As your student adjusts to living away from home, these may become higher priorities. As your family explores this option, you may also consider other implications of living off campus, such as the potential increased transportation and dining cost.

If the plan is for your child to live on campus for the duration of their college career, is there a sufficient supply of acceptable on-campus housing? Many parents were unpleasantly surprised to find that in the sophomore year, their student didn’t find the campus housing options acceptable and moved to a less affordable off-campus residence.

Transportation
One question many parents immediately face is, “Will my student take a car to campus?” Some campuses do not allow freshmen to bring a car, while other campuses have access to ample public transportation. But for those considering a car, there will be added costs. It is important to understand not only where the student will park the vehicle but also the costs associated with parking the vehicle on campus, at the residence, etc. Also, this move may affect your car insurance rates and options.

You may also want to think about the costs associated with your child visiting home and if that involves airline tickets. How often will your child plan to return home, and how often do you plan to visit your child? Most people only think about how much it will cost for the student to come home and fail to take into consideration their own trips to visit.

Activities and Clubs
Many students choose to engage in Greek life, which can have significant added costs even outside of the cost of membership. You may find that housing and dining are cheaper campus options if your child moves into the house, but make sure your student is actually planning to utilize these options before adding them to your cost comparison tool.

Even if your child is not planning to “go Greek”, they will likely have added costs of entertainment. Maybe they will join a social club, or amateur athletic league that will result in traveling, extra equipment, and training. It is a good idea to establish an expected cost of entertainment and budget with your child.

Once you have identified the various costs of attendance and any offsets to those costs, have your child sit down and create her own comparison chart. Online tools are a great starting point, but making your own will help identify what is truly important to your family in this decision.

We hope this information is helpful to you and your family as you embark on this exciting journey. As always, your Resource Consulting Group advisor is available to help you. Please reach out if you would like to discuss financial options for college.

Resource Consulting Group is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC. All information referenced herein is from sources believed to be reliable. Resource Consulting Group and Hightower Advisors, LLC have not independently verified the accuracy or completeness of the information contained in this document. Resource Consulting Group and Hightower Advisors, LLC or any of its affiliates make no representations or warranties, express or implied, as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information. Resource Consulting Group and Hightower Advisors, LLC or any of its affiliates assume no liability for any action made or taken in reliance on or relating in any way to the information. This document and the materials contained herein were created for informational purposes only; the opinions expressed are solely those of the author(s), and do not represent those of Hightower Advisors, LLC or any of its affiliates. Resource Consulting Group and Hightower Advisors, LLC or any of its affiliates do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax or legal advice. Clients are urged to consult their tax and/or legal advisor for related questions.