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While a number of jobs require higher education, prospective students sometimes hesitate to take that next step toward a degree because of finances. Budgeting for college can feel especially challenging when you’re an adult already juggling the expenses of daily life. But making a financial plan can help clarify what’s possible, motivate your return to school and make it financially feasible.

The question then becomes one of how to start budgeting. Ultimately, building a budget for college will involve a personalized blend of evaluating your finances, exploring ways to reduce tuition (through scholarships, loans and financial aid) and learning how to manage or prevent debt. 

After deciding to go back to college, your first objective may be to figure out how much college will cost and how budgeting for college will look for you. Tuition will vary depending on which institution you choose to attend. (Some programs, for example, have fixed tuition while others do not.) Once you decide where you want to enroll and how much the tuition is, you can begin to build a budget.

Christine Conway, the director of financial education initiatives at ���۴�ý, has worked with hundreds of students on budgeting for college during her 14-year tenure. In her view, the best thing to do is have a plan. This is especially important if you’re looking to avoid taking out student loans, or at the very least, borrow as little as possible.

“We help to create a plan for students that shows the total cost and how they can plan to pay for it,” Conway says. “Ideally, you can find ways to pay for college without borrowing.”

While it may be ideal to not borrow (which means taking out student loans through Federal Student Aid [FSA] or private lenders), it’s not always possible. In fact, the average federal student loan debt is $37,853 per borrower as of August 2024, according to the . That number is higher, on average, for those with private loan debt.

No matter if you choose to borrow through FSA, private sources or a combination of the two, Conway offers a vital piece of advice: “Only borrow what you need.”

Responsible borrowing means being aware that every cent you borrow is one you will have to pay back — with interest. Therefore, it’s important to view student loans as a vehicle for paying for your education and take steps to borrow as little as possible.

Conway adds there are many other benefits to planning ahead when it comes to your college budget. Among these, you’ll develop a clearer understanding of how you will pay for school and what you will have to spend in other areas of your life, including bills, family expenses and savings. 

Today, prospective students have options when it comes to building a financial plan for college. “The biggest question students often ask themselves is, ‘Can I afford this?’” Conway says.

If answering yes involves borrowing money, it’s probably a good idea to start by deciphering loan options. Research the current interest rates and terms for the most common types of federal student loans:

• Direct Subsidized Loan: Available to undergraduate students with demonstrable financial need, these loans don’t accrue interest while you’re in school at least half time and until after a six-month grace period following your last date of attendance. (They don’t accrue interest during a deferment either.)
• Direct Unsubsidized Loan: Available to undergraduate, graduate and professional students, regardless of financial need, these loans accrue interest immediately.
• Direct PLUS Loan: Available to parents of dependent undergraduate students, as well as adult graduate or professional students, these loans carry higher interest rates and fees.

Private student loans, meanwhile, carry their own repayment terms and can carry fixed or variable interest rates. If you pursue a private loan, you may need a co-signer, and you should review all terms carefully to avoid surprises like interest rate hikes.

So, loans are available, but should you take out one? Conway recommends looking ahead to make your decision. In other words, don’t just think about how much your higher education costs now. Also consider your future income and how much of that will go toward repaying your loans. She encourages students to not borrow more money than they plan to make during the first year after graduation.

Aside from loans, prospective students can explore other ways to pay for school, such as scholarships and grants. At ���۴�ý, students can also leverage the Savings Explorer^® tool to see how work and life experience can translate to college credit, or connect with enrollment and financial services representatives to discuss options for cost-saving measures.

Although understanding how you’ll cover expenses is one part of creating a budget, the other part is figuring out where and how you can minimize or eliminate expenses.

When it comes to budgeting for college, some savings opportunities could include:

• Identify and cancel unnecessary subscriptions: Go through your debit or credit card statement to identify the recurring expenses you can do without.
• Scale back on entertainment and dining out: You don’t have to become a hermit, but cooking at home and finding low-cost or free entertainment most of the time can save you money in the long run (and boost creativity!).
• Buy used: If you need to buy books for class, furniture, school uniforms for the kids or other essentials, consider secondhand options.
• Explore student discounts: Your institution may offer a selection of student discounts at major retailers. Other venues may offer general student discounts (like at the movies).
• Take public transit when possible: Biking, riding the bus or taking the light rail (where available) are ways to save money on gas, parking and car maintenance.

If you’re considering enrolling in college and you’re an adult with other debts, do what you can to minimize that debt first.

Start by taking a close look at your income and expenses. Are there ways to siphon off some of your income to pay down your debt? If so, consider one of these two popular methods:

• Snowball method: The goal here is to pay off your credit cards from the smallest to largest balances. Start by listing them in that order, calculate the total amount in minimum payments owed each month, and decide on an additional amount you can allocate toward the debt. Pay the minimum amounts due on every card, except the card with the smallest balance; apply any extra funds towards that card. Rinse and repeat until you’ve paid off all the balances. Doing this provides a psychological win that can motivate you to keep paying down debt.
• Avalanche method: The goal here is to pay off your credit cards from the highest to the lowest in terms of interest rate. Begin by listing them in that order, calculating the total amount in minimum payments owed each month, and deciding on your payment amount, just like the snowball method. Pay the minimum amounts due on every card, except the card with the highest interest. For that one, apply any extra funds toward its balance. Once that card is paid off, move to the card with the next highest interest rate and continue until all balances are paid off.

If you can’t spare any income to pay down your debt, you still have options to consider. For example:  

1.     Ask yourself what monthly payment you can afford with your current income. Even if you have to siphon some off the entertainment or “extra” portion, it may offer you long-term relief in debt reduction.

2.     Consider taking on side work, time permitting, to use extra funds to pay down debt.

3.     Reach out to your creditors to see if there are options that might be able to reduce your current payments.

���۴�ý students are eligible for two tools to better understand how to start budgeting.

The first is called iGrad^®. This tool, available to both current students and alumni, guides participants toward better money management. On the site, students can take a five-minute assessment, so they can receive personalized content and courses to guide them toward better personal finance practices.

The second tool UOPX students can access is a finance course called Everyday Economics and Finances. In it, students learn about topics including credit scores, debt management, budgeting and retirement planning, as well as what tools they can use for measuring their financial situation now and in the future.

“Most students in this class tell us they wish they had learned most of this stuff in high school,” Conway says. “I hope that students take these tools to heart and learn to protect their money.”

If you’re curious about other tools that might be useful to your budget, you can look into budgeting, investing and credit monitoring apps as well.