As the cost of college continues to rise, reconsider some of these expendable expenses.
By Marc A. Wojno, Senior Associate Editor, Kiplinger’s Personal Finance
The sticker shock when you first see the bill for tuition, room and board, and all those nebulous fees is bad enough. With the excitement and stress that accompanies the move to college, it’s easy to let down your guard and pony up the plastic for a whole lot of other expenses. Sure, you want what’s best for your child, but you don’t have to say yes to every item on his or her wish list.
Cable TV. Cut this additional expense by accessing a wide variety of current entertainment and news online. You can stream programs from your computer or a Web-enabled device, such as an Xbox 360 gaming console, a Playstation 3, a Wii or a TiVo:
–TV Shows. XfinityTV.com and Hulu.com, for example, let you stream TV shows free. You can also catch recent episodes of your favorite shows at the networks’ own sites. Hulu.com now offers Hulu Plus, which for $8 a month gives you access to seasons of more than 1,000 current and classic TV shows, thousands of movies (including films from the Criterion Collection) and limited commercial introduction in 720p high definition. College students can get a two-week free trial if they sign up with their .edu e-mail address.
–Movies. Netflix offers for $8 a month unlimited TV episodes and movies streaming online through a Web-enabled device.
–Sports. WatchESPN (formerly ESPN3.com) streams live broadcasts of professional sports, such as professional baseball, basketball, golf, soccer and tennis, and of course college basketball and football. You can stream WatchESPN content to an Xbox 360, but you must have an Xbox Live Gold membership, which starts at $5 a month, or $60 a year (same goes for streaming Netflix content with the Xbox 360).
A car. In a nine-month academic year, according to AAA, the average small sedan would rack up about $3,200 in expenses, including costs for gas, standard maintenance and insurance. Parking permits and any tickets or breakdowns would add even more to the bill. Keeping the car parked at home could lower insurance premiums, too (see VIDEO: Kids, Cars and College).
A credit card. The average freshman who has a credit card has nearly $755 in card debt, according to a recent study by Sallie Mae. To curb the frivolity of first-year credit card spending, Uncle Sam is now enforcing stricter credit card rules. Anyone younger than 21 is required to prove his or her ability to repay any debts or have a parent (or someone else 21 or older) co-sign the card application.
Help your student stay in the black by withholding your signature until he has a long track record of fiscal responsibility. A debit card is a good way to get started. For tips on how to discuss personal finance, see What College Students Need to Know About Money and How to Get Kids Motivated About Money Management.
High bank fees. Open an account for your child at a bank that is close to campus and has nationwide coverage. If your child uses an account with the hometown bank, she could spend up to $5 when she withdraws money from an out-of-network ATM. If she withdraws money, say, once a week, she could spend up to $260 a year on fees. Or consider opening an online checking account with a bank that doesn’t charge ATM fees or that refunds ATM surcharges by other banks. Be sure to read the fine print: Some of these banks do not refund ATM fees beyond a certain amount, and some require the account holder to maintain a minimum account balance every month.
When choosing a bank, also find out how much it costs, if anything, to transfer funds online from your account to your student’s. This will save you from having to mail checks. Another option is to open an account with a credit union that belongs to a surcharge-free network. Click here to locate one.
Overdraft protection. You now have the option when you open an account to opt out of overdraft protection. That means the bank either will not permit you to withdraw funds if your balance is too low or will ask whether you want to pay a $35 fee and proceed with the withdrawal. This is not a one-time decision; you can switch your preference if you decide you want the bank to cover overdrafts. Checks and recurring payments that cause you to overdraw the account are not covered even if you opt out, so you can still incur hefty overdraft fees.
A big meal plan. You’ve heard of the Freshman 15, so avoid loading up your child’s meal account with enough money to feed the football team. Often, the money you spend on a meal plan does not roll over from year to year — if you don’t use the money, you lose it. Best to start low and see how much your student eats. Many colleges give you the opportunity to replenish meal-plan funds midyear. You could also supplement your kid’s meal plan with gift cards to the local grocery (or pizza joint). Or you can buy gift cards at GiftCertificates.com.
Campus health insurance. If you have family health coverage, your child may still be covered under that plan when she goes to college. If your plan does not cover out-of-network costs, a campus health-insurance plan may be a more cost-effective option. Be careful, though: Some college policies have low coverage maximums, which could leave you with thousands of dollars in uninsured expenses. See Kids, College and Insurance for other options.
Private loans. The hefty price tag on higher education makes it hard to avoid student loans, but if at all possible, steer clear of private student loans. They usually carry variable rates (as opposed to the fixed rates of federal loans), have fewer repayment options and allow students to rack up high balances. (See Be Wary of Private Student Loans.)
You still have time to apply for federal student loans to cover the bills this school year (see Cracking the Financial-Aid Code). And look for scholarships — they’re easier to get than you might think (see Master the Financial Aid Process).
See the complete list: