Paying for College: Smart college shoppers do comparison shopping

Several years ago I asked a high school senior who was headed to a small liberal arts college how much college was going to cost her (i.e., her parents) for her first year. She gave me the stock answer: "Well it will be about $33,000. That's the comprehensive fee (tuition, fees, room and board)." I thought to myself, what about the other 35 expenses she was likely to encounter? She (and possibly her parents) had no clue that her real costs were going to be considerably higher.

Besides not knowing the costs, this high school senior revealed she and her parents hadn't seriously considered other schools. Community colleges were "out of the question," as were public universities, and she had only taken a look at two other private colleges. She didn't know what her major would be, but she felt very grateful. She was an only child and her parents were reasonably well off. (That's code for little or no financial aid). In other words, they didn't do much, if any, comparison shopping.

Smart college shoppers take a different tact. They don't assume they will send their child to a four-year private college, or a four-year public university, or even a community college that's conveniently located 10 minutes from their home. Instead, they engage in comparison shopping because the costs and values can vary greatly, depending on which state you reside, the private and public colleges you are considering in the United State and abroad (yes, smart college shoppers consider universities outside the United States), the time it takes to graduate, the amount of financial aid you can obtain at each school, and many other factors.

The colleges they consider can be compared in many ways: their academic programs, their locations, their social scenes, their resources for research, etc. But they can also be compared in terms of their costs. Students and parents sometimes think they don't need to worry about a reasonably detailed budget until accepted at a particular school. But budgets are good for more than controlling costs once a student starts college. They can help parents and their college-bound children understand what different schools will cost. Comparative budgets can also help families reach a consensus about which schools are financially viable without a lot of heartbreak.

Most people greatly underestimate their real costs. I've shown parents how to get an accurate estimate – and while it is usually more than they expected, they are grateful to be forewarned versus surprised midway through the college year.

For example, one parent I worked with took an interesting approach. He sat down with his son and showed him the extensive budget we'd developed. He later told me, "The light went on when my son saw that his top choice was going to cost $100,000 more over four years compared to his second choice."

Now I know putting together a detailed budget, even when using a spreadsheet, can be a time-consuming exercise. First you have to identify the costs, when they will be incurred, and the likely amounts you will have to spend on each expenditure. Second you need to estimate the funds you have to spend on your education, and how frequently these cash resources will become available. Third, and this part get tricky, you need to honestly assess your spending habits since they can have a big impact on your total outlays. I've already done much of this work for you, so if I can help, check out my website below, and don't hesitate to contact me.

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