Budgeting for Books and Supplies

When comparing the two schools my son is considering, we noticed an interesting data point: one school estimated books and supplies to cost $800 annually; the other $1,146. One of the schools my daughter applied to estimates $1,800. While I can certainly understand that different meal plans or living options might be more or less expensive at different schools, it’s hard to understand why books would cost 50% or 100% more from school to school.

We’re trying to make apples-to-apples cost comparisons, but we’re getting grapefruit and bananas from the schools. Why would they have such different prices? First of all, according to several unnamed sources, these are not numbers that are calculated in any detail. (One former public university administrator said, “We make that up.”) But a big factor is financial aid: students generally can only borrow up to the total cost of attendance, and that includes the school’s estimate of the cost of books and supplies. If school A budgets $346 more annually for books than school B, students at school A can borrow an extra $346, all else being equal.

So how much should you budget for books and supplies? According to the College Board’s Trends in College Pricing, the average undergraduate budget for books and supplies for the current school year is $1,240. But the National Postsecondary Student Aid Study said that students spent $900 on average on course materials and supplies, and the National Association of College Stores said that students spent $484 on course materials, with another $612 being spent on technology and supplies, and that this total has been on a consistent downward trajectory over the past 10 years. That’s a pretty big range, and one thing to note is “supplies” often includes a computer which would definitely tip the scale. But it probably isn’t something you’d buy every year.

One can generally assume that books would cost roughly the same amount for the same major, regardless of schools, which is how you should compare them. Why might there be variances in book costs between schools? Much can depend on the professors. An acquaintance who is a professor at one of our local colleges mentioned she stopped using a textbook because its price went up to $150 and she didn’t think students should have to spend that much. She also mentioned that she, like many other professors, is increasingly using free online resources. At the same time, one of her kids who’s currently in college was assigned an accounting textbook that cost $600. Another factor that can drive costs up: students attending smaller schools in remote locations might have less used books available locally. Then again, there are numerous online options.

If you’re concerned about this cost, reach out to schools directly to find out. Often online syllabi or course catalogs include the books assigned for the class so you can calculate what your specific classes are likely to cost. You can also reach out directly to the academic department to ask, or ask a current student when you visit the campus. And then you’ll want to research how best to get the books you need: buy vs rent, new vs used, campus bookstore vs online, …

What’s in a 1098-t

(and what isn’t)

A 1098-t is a tax form that serves several purposes. It reports qualified tuition and fee payments made to your college, as well as scholarships received to offset those costs. But qualified expenses is a big tent-type of phrase that means different things in different situations. All by way of saying, your 1098-t is not an exhaustive list of qualified expenses. Continue reading What’s in a 1098-t

To Borrow or Not to Borrow

Planning for college cash flow can be tricky. It’s not just that the average public university costs over $25,000 per year whereas the average family has saved just over $18,000 total. There’s also the combination of tax credits and their attendant rules, a confusing menu of borrowing options, and misunderstandings about how aid formulas treat savings. Add multiple children with overlapping college years and it’s no wonder many parents throw up their hands in despair. One common theme I hear from parents is a version of, “We’ll just spend our savings until it’s gone and then borrow what we need.” This may or may not be the right answer. Continue reading To Borrow or Not to Borrow

Student Loans and Mortgages

There’s been a great deal of press in recent years about the impact student loans have on the larger economy, especially home purchasing. A Federal Reserve Bank of New York report showed a decline of 8 percentage points in home ownership among 28-to-30-year-olds from 2007 to 2015, and estimated that about 1/3 of that can be attributed to student loan debt. Because that’s all a little abstract, and because decisions families make now about college and student loans have the potential to cast a long shadow on the student’s life, I asked mortgage broker Tim McBratney of Pacific Residential Mortgage to explain how student loans affect the mortgage qualification process. He notes that the process has gotten more difficult with respect to student loan debt. Continue reading Student Loans and Mortgages

AOTC And New Tax Law

One of the big changes to the tax bill was making our young adult children less valuable to their parents from a tax perspective. The dependent exemption is gone and the child tax credit for 18- to 23-year-old dependents is only $500. The change does open a door to higher-income families for the American Opportunity Tax Credit, though.  The AOTC phases out at MAGI of $160,000, so it’s not unusual for families to be ineligible but to still find college unaffordable.

Here’s how the AOTC works, from irs.gov: Continue reading AOTC And New Tax Law

A Tale of Two Acceptances

(Or: Why You Should Talk to Your Kids About Money Before Applying)

My son applied to two schools: In-State-U and an Out-Of-State-U-With-A-Scholarship. I’m fairly certain that a big reason for applying to OOSU was that his sister is applying to a number of schools and he felt like maybe he’d be doing something wrong if he didn’t. He wants to attend a big school; he loves sports and wants a D-1 sports program to be part of his college experience. His GPA isn’t fabulous but he did really well on the ACT, so he did some research and discovered that OOSU has a big scholarship for out of state students that’s based solely on test scores. Continue reading A Tale of Two Acceptances

Does it Matter Where You Go to College?

In 2002, a paper in the Quarterly Journal of Economics by economists Stacy Dale and Alan Krueger showed that for most students, the incremental value of attending an elite college was virtually nil. Instead, the paper showed that similar students– especially those with similar test scores– fared similarly in life regardless of where they attended college. Happy news for the majority of us who did not and will not attend elite schools.

A new paper shows a slight twist to this story: while individual characteristics may be more determinate for many students, particularly upper middle class white males, for others, especially women, minorities and students whose parents did not attend college, school choice can make a big difference. Here is a great article summarizing the findings.