Your goal should always be to go to a good college that you can afford. You should never feel that you have to go to the cheapest college just to save money, or to an expensive college just because because of its name. What is an affordable college? That’s easy, it is any college that you can attend without borrowing money.

In order to determine if you can afford a particular college, first make a list of the money that will be available to you, and then subtract all of the costs to attend. If the costs are more than the available money, you can’t afford that college.

What money will be available?

This section looks at the most common sources of money to pay for college. It includes not only money that is available now, but also money that will come in while you are attending college. Here is a list of the major sources of money.

Family savings – this includes money such as a savings account at a bank, 529 plans, and savings bonds.

Graduating debt free means that neither you, nor anybody else, borrows money to pay for your education. So regardless of how much equity your parents have in their house, or how well funded their retirement accounts might be, those items should not be included in this calculation.

Do not let them take out home equity loans or borrow from their retirement accounts. 

Family contributions – this is money your family will contribute each year while you are at college. It is generally money from salaries, as money from savings was included in the category above.

Money from jobs – there is no reason why you can’t work while you are at college. Generations of students before you have worked during college and graduated on time. You need to be working enough hours to cover your costs while still ensuring you maintain a full workload at college. However, it is important to find a balance between the number of hours you work and your schoolwork. You don’t want to fall behind and end up taking more than 4 years to graduate. 

You should work part time during the semester and full time between semesters. As long as you make enough to cover your costs, you will be in good shape. 

When estimating how much money you can make from working, you will need to make some assumptions about how many hours you will work and what your hourly salary will be. Once you start working, you can adjust those values.

Merit awards – this is money the school awards you based on academic or sporting ability. Be careful when looking at these amounts in your offer letter.

 A $40,000 a year school that gives you a $20,000 merit award is the same price as a $20,000 school that doesn’t offer you any award. Don’t get too excited about the merit awards. It is easy to think “wow, such-and-such college thinks I am so wonderful; they have offered me a $20,000 merit award”. Look at the final cost of attending and then choose a school based on whether or not you can afford that number.

Scholarships – you should start to apply for scholarships before your senior year of high school and continue to apply for them throughout your time in college. This should be like a second job for you.

Quick tip number 1 – look for scholarships that require an essay. There will be a lot fewer students applying for those versus “no essay required” scholarships where you just provide an email address. 

Quick tip number 2 – don’t ignore smaller scholarships. Winning 5 smaller scholarships of $1,000 each gives you the same amount of money as winning 1 larger scholarship of $5,000.

Grants – these are awarded based on family income / need. Unlike loans, grants do not have to be repaid. You should determine early on if you are eligible for any grants and make sure you apply for them. The most common grant awarded to lower-income students is the Pell Grant.

Expenses

Once you have determined how much money you will have available, you will next need to look at the cost of attending college. Many of the expenses will be about the same for each college, with tuition being the item that varies the most. Here are the most common items you should consider:

Tuition – this is the item most people focus on when looking at the cost of a college. But keep in mind that the price you see listed is more like a “Maximum we will charge” amount than a fixed price that everybody pays. 

You should consider it a starting point, and depending on your circumstances, your actual offer letter from a college will usually include some sort of award which will lower the tuition amount. 

Just watch out for colleges that list “Direct” loans on your offer letter and try to use them to make it look like the cost of attending will be reduced. It won’t. All loans have to be repaid

You will see something like this:

Tuition $18,000

Room $15,000

Meal plan $9,200

Misc $1,450

Total cost $43,650

Merit award $21,500

Direct loan $5,500

Total $16,650

So this college will cost $16,500 a year to attend, correct?

No, this college will cost $22,150 a year to attend. Having to take out a $5,500 Direct loan does not reduce the cost of college. You still have to pay over $22,000. I have seen many acceptance letters that use this tactic. Some will include a note that the $5,500 is a loan, but the fact that they list the cost of attending as $16,650 is misleading. 

Lodging – this, along with tuition, is going to be one of your largest expenses. The cost varies from college to college and whether or not you live on campus. Some colleges don’t give you an option and make all freshmen live in one of their dorms. 

There is not a lot you can do about this expense in the first year or two other than possibly live at home (if allowed). However, in your junior and senior years, you may be able to get a job as a resident advisor and not have to pay for lodging. In addition, you may also get a stipend to help pay other expenses.

Meals – This cost may be included with lodging and listed as Room/Board. If it is not included, you will need to remember to include this expense when comparing colleges. 

Medical – Even if you already have health insurance through your family, there is likely going to be some sort of medical fee at your college. This is so that they can pay for the health center, the nurses and doctors that work there, etc. The first time you are sick or have a minor accident, you will be glad they are there. If you don’t have medical insurance, you can expect to see a fairly large additional expense listed to provide you with coverage. 

Transportation – this is especially important if you are going to an out-of-state school. If you will need to travel to and from college 3 times per year and each flight is going to cost $350, then you need to factor that addition $1,050 into your cost of attending.

Books – Are you used to paying $2.99 for a kindle book, or $12.99 for a paperback? Well, you are going to be stunned when you see how much college books cost. Here is a random example:

Human Anatomy & Physiology, Elaine Marleb and Katie Hoehn – $204.99 ($313.32 List)

Summary

Once you have your offer letters from the colleges you applied to, you can calculate what it is going to cost to attend each one on a yearly and 4 year basis. 

If you will have enough from savings, family contributions (without them borrowing money) and working to attend a given college, then that should be a college that you consider. If your calculations show that a college is going to cost substantially more than the money you have available, then you should eliminate that college, as it is unaffordable. I know it sounds harsh and that you may have your heart set on a certain college, but please don’t fall into the trap of borrowing money to attend college only to spend the next 20 years trying to pay off those loans.

But what if you have a situation where your calculations show that a college is only just out of your reach? Let’s say it is going to be $2,000 more than you think you can afford. Should you eliminate it from consideration? I cover that situation in the next post.

How to pay for a college that is just out of reach

Your thoughts

Leave a comment below on your thoughts on college affordability. If you have already graduated and have student loans, let others know how those loans have impacted your life.