Schwab MoneyWise ®

Costs Beyond Tuition

Ways to control and reduce costs

Our Two Cents

Have your college-bound student research what expenses they will have when they live on their own, and then sit down together and create a budget.

There are a lot of flexible expenses to consider as you outline expenses and create a college budget.

Including teens in this process can help them gain a greater understanding of (and appreciation for) what a financial undertaking college is. It can also help you identify ways to reduce the total cost of college.

Flexible costs to consider

  • Living arrangements—Will your teen be living in a dorm, in an apartment or at home?
    • Factor in all the associated costs when choosing between a dorm and an apartment. For example, a dorm includes utilities, while an apartment usually does not.
    • Does your family live within commuting distance of the school? If so, having your child live at home can significantly cut costs.
  • Books—College textbooks can be incredibly expensive. Encourage your student to buy used books when possible and to take good care of them so they can be sold back at the end of each semester.
  • Food—If your teen lives on campus, is there a meal plan that could save on food costs?
  • Insurance—Be sure to find out whether your child is still covered under your health, auto and other insurance plans. If not, check to see if the college offers plans at affordable prices.
  • Transportation—Does your teen need a car at college? Is public transportation a better choice? Are there monthly discounted passes available for public transit?
  • Travel—If college is far from home, you'll need to decide ahead of time how many trips home each year your teen can make. Who will pay for this? Keep in mind that 529 plans do not consider transportation a qualified expense.
  • Personal care—Your teen may need to resist high-end haircuts and the like in college. Instead, encourage your teen to shop around for services that fit within the budget you establish together.
  • Discretionary spending—Set the expectation that life away from home may not be as comfortable as life at home. For example, money may need to go toward a computer and Internet service rather than TV and cable. Entertainment expenses may need to be curtailed for a while. Be sure to discuss with your teen the problems with credit card debt, to which college kids are very susceptible during this time of new independence. Keep in mind that most credit card debt is the result of nickel-and-dime spending—not major purchases.

Creating a flexible budget

Creating a budget will help you and your teen plan and set initial priorities. But remember, a budget is a living document. You and your student will probably need to revisit the budget after school has been in session for a few months.


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