Borrow Only What You Need, But How Much is That?
Cell phone and data plan, if not included in a family plan.
Health insurance, if not covered on the parents’ policy.
Appropriate clothing for different seasons.
Sorority or fraternity - if your student decides to join a Greek organization, there can be costs involved.
Entertainment - how many times does the student plan to go out each month, are there free movies and entertainment on campus, what is the cost for pizza parties and other entertainment?
Personal expenses - school supplies, hygiene items, daily coffees, snacks, hair care - it can be surprising how quickly seemingly small items add up.
Value of any federal work-study program the student can participate in through the school to earn money.
Private scholarships you have won on your own.
Additional money the family and the student can earn through part-time jobs.
Gifts from grandparents and other relatives.
3. Decide on a Loan Amount and Type of Student Loan: Once you have made these calculations, you should have a much better idea of how much money is needed. Try to borrow only that amount through parent or student loans. Use federal student loans first, and then do careful research to determine which private student loan lenders offer the best interest rates and repayment terms for your family situation.
Once you receive the money and have paid the school, work with your student to put a strict budget in place for spending any balance. Make sure the money is only used for reasonable purchases; it should not be spent simply because it is available. If there is any extra money left over, it should be saved to apply to the next semester’s tuition bill.
Keep track of your student’s spending so you can go through these calculations again for the next semester and school year. Look at areas where you think your student might spend more or less money. Make reasonable forecasts for expected tuition increases and additional costs as your student takes more advanced classes. Try to keep borrowing as low as possible so that you don’t place an unreasonable burden on your family or your student. You must keep a close tally on how much is borrowed so that you can reasonably estimate what your monthly payments will be upon graduation.
Although there are different types of repayment plans available, especially from the federal government, you want to make sure your students have a realistic probability of being able to make those payments with the money they will be earning.