10 Unexpected College Expenses to Plan For
July 22, 2015 : H&R Block
Editor’s Note: Textbooks, Greek life, sports tickets and student loan interest are all unexpected college expenses. The following post shares how to plan and keep the budget in tact.
Applying for college costs money: prep courses for the ACT or SAT, fees to take those tests, travel to visit schools and application fees to name a few. Once the acceptance letter arrives, it may be easy to assume you only have to worry about tuition, fees, room and board. But that’s not everything. Here are some unexpected college expenses that can add up:
If you can’t drive to the college, factor in the price of plane tickets – not only for the initial move, but for any recurring visits and trips home. Additionally, given airline bag restrictions, you will need to arrange for getting all of your stuff to school. That could be done by hiring a moving company to ship everything. Another option would be to wait and buy everything once you get to campus. Either way, there is a significant cost.
Even if you can drive to school, it is still a good idea to factor in the cost of gas, parking, potential maintenance and the possibility of recurring trips.
It’s safe to say you’ll need textbooks. According to James Montoya, vice president of higher education for The College Board, the average annual cost of textbooks ranges from $850-$1,000. There are ways to save – from buying used textbooks to scouring online sources. And, books can qualify as an education expense when claiming the American Opportunity Tax Credit, as long as they are required for enrollment.
It is also becoming more common for students to have supplies requirements, including technology, like a laptop or tablet. This may be claimed as a qualified education expense, as long as your school requires it for all students in your course of instruction. Otherwise, the cost of a computer or piece of technology cannot be claimed for any credit or deduction.
3. Dorm furnishings
You may think of buying new towels and sheets. But there could be surprise costs here as well. If your household shares a hair dryer, you’ll need a new one for school. Dorm rooms can be cramped, so new storage bins may be necessary. Don’t forget boring things like trash cans and toiletries, and big-ticket items like televisions and refrigerators.
Will you need transportation on campus or around town? Factor in the cost of gas and car maintenance or the price of a train or bus pass. One study from 21st Century Insurance found that on-campus college students spent $1,082 on transportation in a year. So this can definitely add up.
5. Sports and Entertainment
Tickets to college sporting events – sometimes an annual pass – usually aren’t free for students and can cost hundreds of dollars. The same may go for on-campus concerts or events.
Many colleges boast amazing recreational centers. Everything from weightlifting and cardio to pools and racquetball may be available. Make sure the recreation center fee is included in your school payments and research whether there are any additional costs for group exercise classes or intramural sports.
7. Greek Life or other activities
There is usually a fee to enter fraternity or sorority recruitment, and membership dues will be paid once you join an organization. There may also be incremental expenses like getting sorority or fraternity merchandise, buying gifts, purchasing new clothes for events and more. The cost can range from a few hundred dollars to thousands.
Other campus organizations may have fees associated with participation too, so double-check.
8. Eating out
You’ll probably have a college meal plan. You probably won’t use it for every single meal. Don’t get caught thinking a meal plan covers 100% of your food cost. There are plenty of late-night pizza deliveries and quick coffees to account for as well. According to one estimate, students spent, on average, $765 eating off campus in a year. Either be highly mindful of food spending, or put some extra wiggle room in the budget.
9. Health insurance and medical costs
If you are switching from your family’s plan to a university plan (which many schools offer), you may see a change in co-pays, deductibles and more. The result could be increased spending on medical services.
10. Student loan interest
This one is a little tricky, since it can easily go unpaid the entire time you’re in college. Here’s the long and short of it: when you take out a loan, the lender charges interest. The exact interest rate will depend on your lender. There are many different types of loans. For unsubsidized federal loans and private loans, interest will begin accruing from the day the loan amount is paid to you (or your university). So even if you are in school and not making payments, your loan is accruing interest, meaning you will have to pay more back.
You can make payments while in school on the interest amount. This will minimize how much capitalizes (gets added to the principal balance) and results in a lower payment once you graduate. So while paying this interest is an unexpected cost, it’s a good one to pay now instead of putting off.
Additionally, you can likely claim the student loan interest deduction on your tax return for those payments, up to $2,500. This assumes your modified adjusted gross income is less than $80,000 if you file as single or head of household or $160,000 if you file a joint return with your spouse. No deduction is allowed if you are married and you and your spouse file separately. Get more details from the IRS here.
Congratulations on starting college! With this financial planning, hopefully the worst surprise to greet you freshman year is a pop quiz in biology.