How to Build a College Budget

The cost of a college education has risen faster than inflation and remains a significant financial concern for many families. Average tuition and fees at an in-state public college was $10,116 for the 2019-2020 year, according to U.S. News data. For out-of-staters, that amount was $22,577. At private colleges, tuition and fees ran $36,801 for the 2019-2020 year.

Creating a college budget can help ensure that you don’t overspend and have enough student loans, grants or job earnings to get you through the end of the semester.

Here’s how to build a college budget:

— Note tuition and housing costs.

— Calculate the cost for books and supplies.

— Consider transportation expenses.

— Add up discretionary spending.

— Analyze your expenses.

— Track your expenses.

— Graduate on time.

— Think of college as an investment.

Read on for more advice on creating a college budget.

[Read: How to Survive as a Homeless or Hungry College Student]

Note Tuition and Housing Costs

Your college spending plan should start with an understanding of the sticker costs, which are tuition, fees, room and board. Published prices can vary anywhere from about $22,000 annually at a public in-state four-year college to about $50,000 annually at a private college, according to an analysis of 2019-2020 average estimated undergraduate budgets from the College Board.

Don’t forget to file the Free Application for Federal Student Aid, or FAFSA, to qualify for financial aid to lower your net costs. Students who qualify for aid may pay considerably less than the sticker price.

Calculate the Cost for Books and Supplies

Next, add the cost of textbooks and school supplies. Be sure to plan on a laptop and printer. It is best not to skimp on your electronics or books as having the right tools will help you get the most out of college. On average, books and supplies are a small fraction of the tuition and housing costs but will still cost more than $1,200 at a four-year university, according to the College Board report.

[Read: Best Budget Apps.]

Consider Transportation Expenses

Whether you plan to walk, bike or take the bus, add the cost of transportation. Ideally, you should arrange to live where you don’t need a car or perhaps just an occasional short-term car rental or ride-hail purchase. However, if you are planning on owning a car, be sure to factor in total costs, including payments, fuel, repairs and insurance.

Alternatively, you can save a bit by getting a motorcycle. Just remember to pay extra attention to safety. After all, on a motorcycle you are invisible but not invincible.

Add Up Discretionary Spending

Include the cost of clubs, sports, Greek life and even a semester abroad if that becomes possible post-pandemic. Summer plans may mean additional expenses for travel. Vacationing is rarely cheap, so it is important to factor summer plans in your college student budget. Finally, everyone needs to live, so add entertainment, clothing costs and something extra for discretionary spending.

All of these expenses should be organized on a spreadsheet to make it easy to reorder, edit and tally up individual expense items. As a bonus, the spreadsheet and budgeting skills you develop will come in handy throughout post-college life.

Analyze Your Expenses

Once you have a sense of your expenses, analyze where you have flexibility to lower your costs. If you haven’t committed to a college yet, note the relative prices and potential net costs of the universities on your radar.

It is sometimes less costly if you live at home and commute instead of living on campus. In fact, living at home may be a necessity during the coronavirus pandemic. Also, forgoing a car or motorcycle is another way to save significant expense.

Small expenses can be reduced, too. For example, purchasing used instead of new textbooks and buying a coffee maker instead of visiting Starbucks daily can save you money. A student can often get free meals by working at a restaurant and save on health insurance by staying on a parent’s health plan until age 26, as allowed by the Affordable Care Act.

These are just some examples of how significant savings can be found by being thorough and relentless in analyzing regular expenses. It is worthwhile to redo this exercise annually as the nature of expenditures change.

However, remember to optimize for return-on-investment instead of just saving every expense. Any college expense, such as the cost of an advanced class or project, must be measured against the lifetime benefit of building your resume and skills.

[See: 9 Secrets to Save Money on a Shoestring Budget.]

Track Expenses

Once you have a college student budget, the next step is tracking expenses to make sure you truly understand how much you’re spending. When devising a system for reviewing expenses, remember that any such system is not foolproof but should generally capture most of the financial costs. Leave yourself some financial wiggle room to adjust your budget in case expenses turn out higher than planned.

When it comes to tracking expenses, electronic payment methods make it thorough and simple. This is especially true when combined with budgeting tools such as Mint or Clarity Money.

College students should be careful with credit cards. A high-limit credit card makes it too easy for a college student to overspend and end up indebted. One way to mitigate that risk is to use a lower limit credit card that is monitored by a parent and paid off monthly. A credit card is best used as an expense management tool instead of a way to borrow money. If you do need to borrow, consider other lower-interest sources such as federal student loans.

Graduate On Time

About 44% of first-time, full-time bachelor’s degree students who started a four-year college degree in 2012 finished within four years, according to the National Center for Education Statistics.

Do your best to have your major and choice of college figured out to minimize the chance of switching majors or colleges and adding additional cost and time to your degree. If you are unsure of the major or choice of college, at least make sure your credits will transfer to likely alternatives. Also, if your grades are borderline, be proactive in seeking a tutor or other academic help to avoid repeating a class or losing an academic scholarship.

Remember, each additional year in college adds to the cost of a four-year undergraduate degree, so it is important to keep on track and graduate on time. It is worth considering forgoing the extra income from a job during school or reducing hours worked in order to graduate sooner.

Think of College as an Investment

Given the enormous cost of college, it is sometimes easy to focus on the costs and forget the opportunity college provides in life. It is important to choose your college and major wisely since they will help determine the return on investment from college.

Remember: Regardless of whether you want to be a pediatrician, paralegal or puppeteer, it is important to be motivated not just in studying the field, but in making a living in that field. Success is a life well lived, supported by a career that is purposeful, enjoyable and provides a good living commensurate with your goals in life.

More from U.S. News

8 Big Budgeting Blunders — and How to Fix Them

9 Secrets to Save Money on a Shoestring Budget

10 Expenses Destroying Your Budget

How to Build a College Budget originally appeared on

Update 07/23/20: This story was published at an earlier date and has been updated with new information.

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