college costs

Why College Costs Can Be Twice What You Expect

If you’ve figured out a way to pay for a slew of upfront college expenses – like tuition, fees, room, board, books and supplies – you might think most of the spending you’ll need for higher education is over.

Sadly, that’s far from reality.

A report in the Fiscal Times once estimated that the true cost of a four-year degree can reach twice the advertised sticker price.

Think about that for a moment. It sounds insane, but it’s actually all-too-true: if you’re not careful, college expenses can wind up being two times what schools say.

So let’s address why it is that college costs can turn out to be double what they’re advertised.

Upfront Costs and Pre-College Costs

The published price of a college usually focuses on four categories: tuition, fees, room and board. Colleges that want to be even more transparent about costs will include the costs of books and supplies, travel and personal expenses.

But because so much hype is devoted to talking about tuition and fees in particular, students and parents tend to hone in primarily on this cluster of expenses.

However, simply tallying up the upfront costs of college — the tuition, fees, room and board — misses much of the whole picture. You’re just seeing the tip of the iceberg.

What about everything that comes ­prior to college enrollment? Aren’t real dollars being spent on everything from SAT and ACT exams to pre-college programs to help give students an admissions edge? Of course they are!

That doesn’t even account for costly test prep courses and tutors, cross-country campus visits and road tours, as well as pricey college applications. (If you doubt how expensive pre-college life can be, or if you just want to know how to conquer those bills, check out College Secrets for Teens.)College Secrets for Teens by Lynnette Khalfani-Cox

And what about all the “hidden” costs of college that students incur along their four-year (or longer) journey to graduation? They are very real expenses too, as you’ll see if you ever go to a four-year school or put a child through college.

To properly plan for and realistically examine college costs, you absolutely must view these expenses from three different vantage points. There are:

  1. Pre-college expenses to consider;
  2. Upfront college costs you must know about; and
  3. Hidden college costs to take into account

In College Secrets for Teens, I reveal the multitude of pre-college expenses you might encounter and how to sidestep or minimize them.

College Secrets explores how to eliminate or reduce upfront college costs – as well as the hidden costs of college.

Hidden College Costs

You must understand the “hidden” costs of higher education. Even when colleges seemingly put it all out there — telling you every possible upfront expense you must pay — that’s really only a fraction of the expenses of college life.

This is true for all institutions of every type: private and public, non-profit and for-profit, small liberal arts colleges and big research universities, two-year and four-year institutions, and more.

It’s largely because of the hidden costs of college that a joint study by Citigroup and Seventeen magazine found that six out of 10 undergraduates (61%) say college life is more expensive than they anticipated.

Even colleges that let you have a payment plan, where you divide up all your total costs over the course of the academic year, aren’t being as transparent as possible about college expenses.

For instance, let’s assume a public or private school is $30,000 in total — for tuition, fees, room and board. And let’s further assume that you’re paying the full price, out of your pocket. (We know from the earlier discussion on tuition discounting that this isn’t likely for most students; but stay with me for a moment, just for the sake of illustration.)

At $30,000 a year, a school with an installment plan might let you pay $3,000 per month over 10 months. Sounds reasonable, right?

Well, if you fall for this kind of logic, it’s the same as believing a car salesman who tells you that a $30,000 car will “only cost you $300 a month.”

What that salesman is referring to is the monthly car payment alone.

But what about gas, monthly car insurance, or oil changes and maintenance that need to be done on a regular basis? And did the salesman mention that $30,000 is the “base” price for that shiny new vehicle? Probably not initially, because he doesn’t want you to focus on the fact that you’ll be paying more — a lot more, in fact — for any “accessories” or “upgrades” you might want.

Naturally, all those things cost extra money.

Just like you’ll pay ongoing expenses for the privilege of driving that new set of wheels, so too are there ongoing expenses associated with being a college student. So the “upfront” costs are just one category of bills. There are a lot more.

Now, don’t hit the “Panic” button just yet! Nor do I want you to fall out of your chair thinking that college is truly going to drive you into bankruptcy.

The good news is that even though the real, total cost of going to college is typically far more expensive than most colleges let on, that doesn’t mean that you will have to shell out all those funds. Remember: College Secrets is designed to help you spend less, not more money.

So go into the college or university of your choice with eyes wide open – and with the right mindset about saving money.

Student-Generated Costs, School-Generated Costs and Hybrid Expenses

In future articles, I’ll give you specific insights into “hidden” college costs that you won’t find in any university viewbook or fancy college brochure. In fact, even college financial aid officers, as helpful as they might be, don’t give you this information.

The “hidden” expenses I’ll reveal to you can be broken into four categories:

  • Expenses generated by the student, primarily based on lifestyle and personal choices
  • Expenses generated by the college or university, mainly as revenue generators
  • Hybrid expenses that are a mixture of both student generated and school generated costs
  • Miscellaneous or oddball expenses that defy pure categorization, and that can come out of left field, throwing a monkey wrench in your budget if you’re not aware of them.

Suzanna De Baca is a vice president of wealth strategies at Ameriprise Financial, where the typical client is an affluent individual with $250,000 to $1 million in investable assets. Even with clients that have sizeable amounts of cash on hand, she finds that college costs can still catch some parents unaware.

“The Number 1 financial mistake people make in planning for college is not starting to save soon enough,” says DeBaca. “The second biggest mistake is underestimating the true total cost of college.”

By being realistic about what to expect, and anticipating total college costs – including a slew of hidden educational expenses – you won’t make that mistake and drive yourself into unnecessary college debt.

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