Reducing College Expenses

Are student loans the next financial bubble we’ll face? Could be. The statistics are staggering.

Tuition and fees have have increased nearly 130% in the last twenty years (source IRS & College Board data).

According to the College Board’s Trends in College Pricing total costs (including tuition, fees, room and board) in the 2011/12 school year were $17,131 for students attending four-year public colleges and universities in-state and $29,657 out-of-state. For students at private schools the tab was $38,589. Plus students will spend another $4k for
textbooks, supplies, transportation and other expenses.

Those higher costs are causing students to borrow more to finance their education. Total student loans are expected to top $1 trillion (yes, with a “T”) before 2012 is over. There are already more student loans outstanding than all the credit card debt combined.

And, it’s not just student loans. Undergrads are running up their credit cards, too. Over 20% had balances exceeding $3k. (Source: Sallie Mae, How Undergraduate Students Use Credit Cards, 2009)

So I spoke with Derek Haake, the founder of Compushift.com. Derek received a degree from The University of Texas at Arlington, then an MBA and JD from the University of Akron. He started Campus Shift looking for a better way to save on textbooks while in college. Along with helping students find the least expensive source for their books, Campus
Shift also provides discount deals on food, concerts, campus activities, and clothing.

Given his expertise in the things that students buy I asked Derek about some of the ways that college students can reduce expenses.

Q: After tuition, what are the biggest expense categories for college students?

Derek: After tuition, the biggest expense is a student’s living expenses, but these can be managed by proper planning. The second biggest expense for the new student is their purchasing things that they really do not need such as the biggest and best meal plan on campus. From there, entertainment expenses and spending money are probably equal to or right at the same cost for most students as textbooks.

Q: Which categories offer the greatest chance for savings for a student?

Derek: Smart living i.e. living off campus, renting a house with classmates, and buying things from the University that you need / will use are probably the places where you can save the most money. Also, using the fact that they are a college student can save them on their daily expenses. Flash that student ID wherever you go and receive your student discounts and be sure to stay up to date on any campus deals.

Q: Is it generally cheaper for students to live on campus or off?

Derek: In most cases off campus is cheaper. First of all, a student can share rent with other classmates of a house or apartment, which can be a fraction of the cost of living in the dorms. Living in a house can also greatly reduce the cost, as many times rental prices of a home are less than that of an apartment. With the current economy, house rental prices are surprisingly inexpensive in a lot of communities. Finally, a student, if they want a meal package for on
campus, they usually can still get one, even if they live off campus, but, buying groceries buying non-perishables and other things that will get used and not “luxury items”, will save them substantially.

Q: What expense tends to be the most surprising to students?

Derek: Textbooks are one of those costs that a lot of students, especially those that are first-time college students in a family are surprising. Outside of college, students don’t have to buy books, and the $1000 per year that the average student spends can be a major surprise to a lot of students. Living expenses in a college town generally can be managed, and most people have an idea of how much these expenses will be, but these costs add up quickly.

Q: Paying for a college degree is a major expense. How can students increase the odds of finding jobs that will pay enough to make the expense worthwhile?

Derek: Students can look at fields that are hiring especially hiring new graduates. Fields like medicine, engineering and business often will have high placement rates. Your other hard sciences will always be in demand at some level, but students should anticipate going to graduate school before they are able to truly find a job that will become a career for them.

Keep on Stretching those collegiate Dollars!