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Students: Is it worth saving money by living at home?

As I wrote about before, budgeting for college should include two budgets. One budget for the overall cost estimate of earning a college degree and the other is a monthly budget of expenses.

The overall project budget is your guide if you can afford college. This you should consider, whether your parents will pay for college or you need to finance college yourself. You need to consider the net price you are willing to pay for your education. This net price must match the net cost of any college you want to attend.

A lecture hall on the campus of Oregon State University
Photo by Kentaro Toma on Unsplash

The net cost will be different for every college you apply to. Only after the application, you will know what financial aid each college offers. Of course, you should be a savvy consumer and negotiate every offer and try to bring that price as low as you can. You can very well make the argument with your or your family’s budget, that you can not afford a particular school at their current offer. If they could increase financial aid grants it may be affordable to you.

The overall goal of this budget is to keep the total amount of student loans as little as possible. This will benefit whoever pays that debt, whether it is you or your parents, or both of you.

You also want to break down the cost into three categories:

  • Tuition
  • Room and board
  • Other expenses

The cost for room and board you can estimate for on-campus living vs off-campus living, vs living at home. The room and board category will be most impacted by the decision to live at home. Some other living expenses, such as the Internet, phone, or insurance can be impacted too.

Tip: Understand the institution’s policies. Some institutions require on-campus living for freshmen students.

Room and board for a public four-year institution cost on average $11,620 for the 2020-2021 school year. Private nonprofit four-year colleges and universities charge $13,120 on average. Off-campus housing can be cheaper, but usually not by very much. Depending on the distance to the campus you may also add transportation costs to your budget.

Saving money by living at home

Living at home can save you significant amounts of money. Most parents don’t charge their college student rent nor for meals and personal items. Although some families need the extra contribution to the household income.

However, you will most likely incur increased transportation costs which will offset your budget savings in housing. If you need a car you need to factor insurance, gasoline, and maintenance as costs into your monthly budget. You also want to calculate parking as a monthly cost.

If you rely on public transportation, you can save by buying a monthly commuter pass. You also want to calculate a little extra for the occasional rideshare or cab that brings you home late at night.

Exactly how much you can save by living at home depends on how much you would need to spend living on-campus or off-campus, as well as how much you need to pay for living at home. It often can be $10,000 a year or more. This may be 20% or 30% of the total annual cost to attend college.

Public Alley in Boston, living at home in the inner city
Photo by Kentaro Toma on Unsplash

Why do students live at home?

The typical narrative of college life is one of living in a town away from parents and family, maybe on-campus. However, the truth is that over 40% of college students live at home. There are many reasons why students choose to live at home.

Saving on total college cost

As mentioned above, housing costs can be 20% to 30% of the total cost for a college degree. This can make or break the affordability of a college education for low-income families.

When choosing between starting your adult life with a mountain of student loan debt or debt-free, for many students the choice is clear. Especially, as there is no guarantee that your income after leaving college will make it easy to repay the loans. Furthermore, there are many other financial goals one wants to achieve as a young person in their 20s. So it is much better to start debt-free into this phase of life than burdened by principal and interest payments.

Family Obligations and relations

For many students living away from the family is not an option. They need to live at home to help care for younger siblings or an elderly person in the household. This often enables parents to work, avoiding additional child care costs.

Some students are part of a family owning and running a small business, such as a store or a restaurant. The college student may need to contribute their labor to make the business work.

Some families are so close that they won’t consider moving apart. For example, life for a single parent with a single child would be greatly impacted by the child moving out.

If living away from the family is not an option, then that has a great impact on college choice. As it needs to be an institution that is within commuting distance.

Lack of campus housing options

Not all colleges are situated in a nice college town with a sprawling campus. Urban campuses especially have little space for dormitories. Renting an apartment in an urban environment can be very expensive, even when students share the apartment and the rent expenses.

Further, as a reaction to the COVID-19 pandemic, many campuses have closed in 2020.

COVID-19 pandemic pushes courses online

Many colleges suspended 2020 any presence in lectures and labs due to concerns for the safety of their students and to comply with regulations of distancing and wearing masks. Instead, the options of distant learning and online classrooms were greatly expanded.

Most extracurricular activities were canceled. Furthermore social life in cafes and bars was limited by the COVID pandemic. Paying for room and board or off-campus housing in a college town makes little sense if the campus life is non-existent. So many students decided to live at home temporarily or permanently and save on fixed expenses.

Disadvantages of living at home

While you can save a significant amount of money by living at home, the cost is not all you want to consider about your college education. Living at home changes how you budget time and social contacts.

Any savings in the cost of housing is offset by spending on commuting. Commuting does not only have a cost in dollar terms, but also in time. You will spend time traveling, which you can’t spend studying, at least not studying easily and undisturbed. Living on-campus or nearby allows you to go back and forth between lectures and individual study breaks. If you are commuting, you will make compromises, so that courses form a block of time because you don’t know where to go in the breaks in between. This often impacts extracurricular studies and collegial sports.

In attending college, your main objective is to get a great education. Learning does not only happen in the classroom or homework. A college is a place where you learn together with fellow students and can learn from each other how to learn. The inspiration by fellow students and the spirit in a community of learners is not to be underestimated. It is further an important life skill to learn and work in a team. If you are not gathering with others, this will be hard to practice.

The time in the learning community has longer-term implications too. Most students form close friendships during this intense time which lasts a lifetime. Besides personal friendships, there is also networking among peers. Especially in professions that require a college degree, networking means access to the job market.

Last but not least, if you must live at home your college choices are limited to only a few. For many, the cost of college is not affordable without huge scholarships or grants or the subsidies of in-state tuition. This already limits your choices to find the college that best fits your needs. But needing a college within commuting distance narrows down the list often to only a few to choose from.

While this list of disadvantages is long, don’t be discouraged. It is likely better to seek a college education with these restrictions than not seek one at all. And being aware of the disadvantages, one can embrace the opportunities given to network and learn jointly because you know what is at stake.

Living in an urban city street
Photo by Izaak Kirkbeck on Unsplash

Advantages of living at home

The biggest advantage of living at home as a college student is making the budget for college work. An affordable college education is better than one that traps a young adult in large student debt. Any college education is likely better than the regret that one could not afford it.

If it is important to you to play your part in the family then that is alright. Going off into the world and exploring it on your own is not the only value that matters in life. It is also not the only way to make experiences that will shape your life. If your family needs you for financial or in-kind contributions and that choice is OK with you, you should follow that calling.

Going off to a different part of the country to attend college can disrupt friendships and relationships at home. Although, it is not just your choice. If your best high school friend will leave town for her college, staying but may disrupt this relationship anyways.

Let’s stress one more time, that avoiding financing college is an impactful choice. Leaving college debt-free offers the ability to start a career without restrictions to need to make significant money to pay back the student loan. One significant option is the ability to add a graduate degree, even if that may need some financing. This is the more sensible option because graduate students can better predict their future income than with a bachelor’s degree. 

Budgeting advice for families with students living at home

Put your budget in writing

As with any personal budget, writing down your plan on how to earn and spend money is a good idea. A budget is not a fleeting thought. It needs to be written down. You can choose paper templates, a spreadsheet, or any budgeting app you like.

It is further important to track your budgeting plan. Only with tracking the actual expenses against the plan can you be confident that you are on track to reach your goals.

Create a college degree affordability budget

Attending a four-year college is a major investment in education, which needs to be planned for. In the planning phase of attending college, you want to create a budget template for earning the desired college degree. You will use this template to create one version of your budget that includes your affordability limits. 

Then you will create one more budget for each college you consider attending and apply to. Initially, you can include the tuition rates as advertised by each college or university. However, don’t yet rule out colleges that are over your affordability limit. Once you receive offers from colleges you update each version with the net cost of the student aid package offered. This should be your basis for negotiating with the college if they can improve the offer to make it more affordable to you and your family. Also, ensure you separate grants and scholarships from the student loan amount the college may offer you.

Talking about money is important

If your family can support you in your college plans, you need to have a frank conversation about what the family can afford and what the family expects you to contribute.

Parents need not make their entire budget transparent, but it certainly is an opportunity to teach the college student good money management skills.

Create a monthly budget for the student’s finances

Once you are enrolled in college, you need a regular monthly budget to plan and track your personal finances. This should be the student’s responsibility. Although it can be a good idea to talk about this budget with your parents, just to benefit from their experience with money management.

As a student, opening a separate bank account and applying for your first credit card is also a good idea. This way you can learn to be responsible with your money. As an added benefit you will start building a credit history, which will help you build a great credit score.

Learn about debt financing and student loans

Financing any purchase with credit is something that should not be taken lightly. Financing a college degree with student loans is especially impactful.

First of all student loans are consumer debt. You personally vouch for paying back the loan. They bind you for life more than any other loan. A mortgage for a house can be foreclosed, any personal debt can be shed in bankruptcy court, but student loans can not be forgiven because the person can’t pay.

It is essential to understand how much you need to pay back between the loan principal and the interest. You want to understand how long you’ll need to pay how much a month to become debt-free again.

Furthermore, think about what-if scenarios, such as not finishing your degree.

Common questions for commuting students

What percentage of college students live at home?

In normal times 30% – 40% of college students live with their parents. For first-year students, this is a few percentages higher than average. However, in the COVID-19 pandemic, this percentage has likely increased.

How much spending money will your college student need?

When parents pay a student’s expenses, often the question arises, how much a student’s allowance for discretionary spending should be.

Of course, this depends on the lifestyle of the parents and the student. If you follow our advice that the student keeps a monthly budget, then you can initially plan with $75 – $200 per month as an allowance.

After the academic year, you can review this amount and adjust. It is also a good idea to set the amount low and encourage the student to find some work to have an income of their own for variable expenses. This is not to punish the student or to be overly stingy with money. A job teaches a student valuable skills she will need in her future working life, such as working with colleges and a manager, being reliable, and saving income for medium-term expenses such as travel.

How can I reduce my carbon footprint as a student?

The current generation of students is conscious of their impact on the climate. As a student, you can reduce your carbon footprint by reducing travel or using less polluting methods, such as public transportation, or biking. You can further ensure that your home is well insulated and use heating and warm water frugally. Also make sure you use efficient energy appliances and be conscious that a lot of the Internet used for games and online services has a large carbon footprint on the network and server-side, which is invisible to you.

Does a student need a savings account?

The principled answer to this question should be yes. Everyone needs a savings account. The first purpose of a savings account should be an emergency fund. While students often can rely on family to help them out in a financial emergency it is a better idea to set aside an appropriate amount right away and let the student budget this money independently.

If the question is if a student needs to save money for medium or long-term financial goals, then the answer in most cases would be no. Certainly, it is pointless to save money on one side and to accrue student debt on the other. The interest on the debt will always be higher than the interest on a savings account. If the student has an income of her own and it exceeds her spending habits, she can certainly save money and potentially invest it for long-term goals.


A budget for college students living at home looks different from those living on campus or in the college town. Living at home saves a significant amount of money and can make a college education affordable. The major trade-off is the fixed expense for housing and food for transportation costs.

Besides the money savings, there is a price to be paid in lack of college choice, because the institution needs to be within commuting distance or offer full distance learning. The lack of academic life can be compensated by careful networking and deliberate participation in extracurricular activities.

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