Financial planning is an important aspect of attending college. Many college students are woefully unaware of college costs or how to manage college finances. This article briefly covers three areas students and parents alike may want to consider while trying to plan for the unexpected costs of college.
Planes, Trains, and Automobiles
Parents of students receiving full scholarships to attend colleges and universities across the country are all too often surprised to discover that the “full-ride” does not include an actual ride. It is important to include coverage of costs connected with travel from home to school in your financial planning.
Parents of students attending out-of-town colleges can anticipate purchasing round-trip plane, bus, or train tickets on an average of three times per year; summer break, Thanksgiving, and–unless you’re like Ebenezer Scrooge’s dad-Christmas. Those with students in schools within driving distance of their homes will of course spend less on travel, but should still factor in ever-increasing fuel costs when setting aside a fund to address their student’s annual travel costs.
Anticipating the Unanticipated
“I was relieved to hear that a laptop equipped with all the software required for my daughter’s major was included in her college tuition,” said Daniel M., parent of a Berklee College of Music student. “But before her classes even began, the computer was damaged beyond repair. It was up to my wife and me to replace it–and that was $1800 we didn’t have at the time.”
A semester later, when an academic organization his daughter was a member of was chosen to represent the college overseas, Daniel’s pride was replaced by anxiety upon learning he would have to fund her flight, accommodations, and spending money. Drawing from his 401(k) saved the day, but his anxieties could have been avoided had he and his wife better financial planning for the unexpected expenses not covered by their daughter’s financial aid package. Lost student IDs, meals outside of those eaten in the dining hall, campaign materials for a student government bid, emergency room visits–they’re just a few reasons why smart parents anticipate the unanticipated costs of college life by saving accordingly.
The Luxury of Irresponsibility
Most students–after tuition, room and board, and books and supplies are all paid for–often anticipate a semester refund, sometimes in excess of $1000. Unfortunately, that does not mean your student will use the leftover monies to prudently prepare for expenses they will incur while away from home in the months to come. Expecting the average 18-year-old to handle a financial windfall wisely is not very realistic of the average parent. Instead, anticipating an inevitable excursion to the mall, for the trendiest tech gadgets, hottest smartphone, most sought-after gaming console and games, or coolest campus fashions might be a more predictable outcome. A refund check can disappear in a day or two, with nothing substantial to show for it.
Once the check is spent, you can invariably expect a warm and lengthy phone call–albeit to ultimately ask for more money–from your fiscally-feckless progeny. College marks the last stage in a student’s life when the lack of financial responsibility does not undoubtedly end in financial ruin. Spendthrift ways can cause little consequence, and rainy day funds are unheard of during that time. Shrewd parents, nevertheless, won’t fail to view their student’s college years as the ideal opportunity to instill within them the knowledge and skills necessary to ensure that when they leave college they’ll possess sensible spending and saving habits.