Covering the cost of college may not be easy, but it’s definitely possible with the help of money you have saved, scholarships and grants, student loans, or all the above. There are also steps you can take now to free up cash to use towards tuition and fees, or to reduce expenses so you’re still able to save for other financial goals.
But which expenses are easiest to cut? Some of them probably depend on your personal spending habits and your lifestyle, but many are pretty much the same across all families with kids in school.
If you’re hoping to help pay for college and are looking for how to reduce expenses, here are nine important expenses that can (and probably should) get the ax.
1. Tuition and Fees
If you haven’t chosen a school yet, it’s not too late to compare colleges based on their tuition and fees, along with how much financial aid you qualify for. You may find that it’s significantly cheaper to send your student to a state school or even community college for the first few years, but you may also find that a more expensive school with more aid is a better deal.
Either way, you should strive to pay the lowest amount for the highest-quality education as possible. After all, by paying less in tuition and fees, you can keep your savings intact and borrow less in student loans.
2. Car Payments
Whether you are personally heading off to college or you’re gearing up to help pay for it, you can put yourself in a better position by avoiding car payments if you can. At the very least, you can try to drive the car you have now for longer with the goal of paying it off. That way, you won’t restart the clock on another five to seven years of car payments you have to make, which are often exorbitant.
Consider the average new car loan today, which comes with a monthly payment of $716 and lasts for more than 69 months according to Experian’s State of the Automotive Finance Market, a report from the 4th quarter of 2022. If you were able to pay off a loan like that before college and drive that paid-off car for two more years, that alone would help you save $17,184 you could use toward college expenses.
3. Subscription Services
According to C+R Research, the average consumer is spending approximately $219 per month on various subscriptions throughout the year. This spending can include subscriptions for entertainment (e.g., Hulu and Netflix), food delivery, fitness and more – and it all adds up.
Don’t cancel all your subscriptions. Start by cutting out the plans you use the least, and you’ll be surprised by how much you save. If you could cut the average subscription spending of $219 per month (or $2,628 per year) in half, for example, you would save $1,314 over the course of 12 months.
4. Insurance Costs
How much are you paying for homeowners’ insurance and auto insurance? You may want to check, and you can also see if another company can give you a lower rate.
This move can help you save big – many insurance companies offer significant savings if you’re willing to switch, and your current company may be pushing up your rates year after year. As an example, Geico says their customers save an average of $500 in insurance premiums annually when they make the change.
You can also look for different ways to save with your existing insurance company. If you don’t drive very much, you could ask your insurance agent about a reduced monthly rate based on your average monthly miles. This could help cut some monthly expenses and help build up your college savings over time.
5. Dining Out and Food Delivery
The Bureau of Labor Statistics reported that the average consumer spends $3,030 per year on “food away from home,” or dining out. This is on top of the $5,259 the average consumer spends each year on the food they eat at home, or their grocery bill.
While it’s okay to dine out sometimes, you can save money during college by limiting restaurant experiences and cooking at home more often. While some habits are hard to break, it can help to remove apps like DoorDash and GrubHub from your phone. You can also plan pitch-ins with friends instead of restaurant meals, and your efforts will eventually add up to more savings.
6. Banking Fees
Are you paying fees for a checking account? You shouldn’t be. After all, there are all kinds of accounts without fees or minimum balance requirements.
The same can be said for online savings accounts. There are a plethora of accounts that offer no regular fees and no minimum balance requirements, and many are offering competitive rates right now.
Also note that other strategies can help you avoid banking fees, including setting up purchase alerts to avoid overdraft fees and using autopay to avoid late payments. These are steps you can take in addition to making sure your bank isn’t charging any fees you shouldn’t have to pay.
7. Books and Supplies
Buying books for college is something you can’t really avoid, but you can try to save regardless. This step can be especially important since the average cost of college books and supplies is currently at $1,230 per year according to the Education Data Initiative. There are many ways to save on college textbooks, including buying used books on eBay.com or at your school’s bookstore, or sharing books with your peers. You can even rent used textbooks online with Chegg for long-term savings.
When it comes to college supplies, you can really reduce your expenses by trying to buy used instead of new. Like it or not, you can buy nearly everything you need for a college dorm room at Goodwill or your local garage sales. You may even be able to pick up inexpensive items at the Dollar Store depending on what you need.
8. Phone Costs
It’s not uncommon for Americans to have cell phone plans that cost more than $100 per month, but an even more worrisome trend is the prevalence of renting a phone. Many phone plan providers let you constantly upgrade your phone each year or every few years in exchange for a monthly rental fee, and this fee can be paid in perpetuity if you continue to upgrade again when you’re able.
Either way, you can reduce expenses in this category by comparing phone plans and not updating your phone each time you get a chance. Instead, consider paying off your phone completely to avoid the monthly rental fee.
9. Credit Card Interest
Finally, cut credit card interest out of your life if you want to reduce expenses and still save for college. Not only are interest rates on credit cards incredibly high, but this is money that’s practically thrown away each month and serving no purpose at all.
How much can you save by paying off debt and avoiding interest? If you had $10,000 in credit card debt at 19% APR and you were paying $200 per month, for example, it would take you 98 months to become debt-free and you would fork over $9,435 in interest over that timeline.
If you can pay down this debt somehow or even consolidate your debts with a 0% APR credit card or a personal loan with a lower fixed interest rate, you could get on the path to debt freedom and save money on interest payments every month.
The Bottom Line
It’s easy to “set and forget” your monthly expenses, especially with conveniences like autopay. But, once you take a hard look at what you’re actually paying per month, you may be surprised at the total. College is a big expense for many families, so being nimble with your finances is the key to making this expense more manageable. By reevaluating and reducing your monthly expenses, cutting out what you don’t need, and setting aside more towards savings, the possibility of paying for college will become more tangible.