Off-campus living (and spending)
Assuming you’re drawing from a 529 plan, which covers tuition, fees, books, supplies and equipment "required by the school" — and that's the key phrase — room and board is fair game. But what if Junior wants to live off campus with his buddies? If the cost exceeds the 529 plan room and board allowance for each school, you might be stuck paying the difference. That’s a real possibility in places like Washington, D.C., or California, where colleges’ estimates are consistently lower Opens in new window than the actual rental tab.
In many college towns, going off the school’s grid can end up costing less (that not-so-renovated place above the Indian restaurant) or more (the spanking-new tower complex with a full gym, swimming pool and parking lot) than living on campus. It might mean swapping a meal plan for plans to make their own meals (and wash their own dishes). It’ll put your child (and their roommates) on the hook for utilities. Also keep in mind that typical off-campus rentals are for a full year, not the school year (one plus: few or no restrictions on when to move in or out). And unless the school is in a city, distance from campus can make a car — and its related costs — more important. Finally, don’t forget furniture (assuming the place isn't furnished) and common upfront expenses like first month's/last month's rent, security deposits or pet fees (if the house gets a llama mascot, for instance).
Sure, your child will make a case about reducing costs by splitting rent four or five ways with his or her comrades. But you have your own case to make about a realistic financial plan for living the dream life off-campus. (It’ll also be a forward-looking lesson on independent living.)
A reading rainbow (of expenses)
Books and supplies are not really hidden costs, but it’s easy to underestimate just how much to budget for. From German lit paperbacks to advanced calc hardcovers, digital downloads or photocopied "readers" choc full of articles, a lot could come down to the student’s course load (digital photography? Get me eBay!) and specific professors’ requirements (don’t assume past is prologue — or even that syllabi you can snag before classes start will be accurate). The good news: Thanks in part to the rise of e-books and rentals, the average annual cost of course materials Opens in new window has fallen from just over $700 to just under $500. (Of course, your child is above average, right?)
Even so, it’s a safe bet that overall college costs will only go up, whether your bursar bills are around the corner or 18 years away. Your child's 529 plan covers books, but available money in the plan might not outpace the size of required purchases. And, if you don't have a 529 or other college savings at all, you'll need to think about how to make up for the shortfall. So, don't let convenience be the enemy of your wallet. Find alternatives to the campus bookstore. And don't wait until a first lecture to get the syllabus — contact the professor ahead of time, and get a jump on what’s required.