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Budgeting for college as an adult

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. 

Why budgeting for college is important for adult students

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 University of Phoenix, 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 Education Data Initiative. 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. 

Ways to pay for college 

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 University of Phoenix, 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.

Creating a personalized budget

Once you understand what your degree program will cost and how you will pay for it, it’s time to identify and track your living expenses to see how you might save or reallocate funds to better meet your goals. This means it’s time to create a budget.

A budget is a tool that shows what money you have coming in and what funds you have planned to go out. It can be a simple spreadsheet with lines for each expense, including your required monthly bills (like rent, car, insurance, utilities, debt payments) as well as variable expenses (like food and gas). If possible, allow for some fun spending so it doesn’t feel too restrictive.

If you find it difficult to outline it all like this, you can follow the 50/30/20 budgeting method instead. Following this, you would assign 50% of your take-home pay to necessities, 30% to wants and 20% to savings.  

From there, you’d need to track that you’re spending as outlined in the budget. Some choose to use apps that can help with tracking. Many banks and credit unions offer budgeting apps or tools to help with this.

Saving strategies for adult college students

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.

Managing debt while pursuing higher education

For students who need to borrow money to pay for school, or who may (also) have outstanding credit card debt, it’s important to get clear on what’s owed, what will be owed and how you plan to pay it all off.

When you have preexisting debt

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.

When you want to improve your personal finance to avoid debt

University of Phoenix 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. 

Build an emergency fund for unexpected expenses

Once you have your debt under control, a plan to pay for college and a budget for daily expenses, it’s time to look at one more important piece of the personal-finance pie: the emergency fund. This is dedicated money for unexpected expenses, such as hospital care, car repairs or other unforeseen bills.

Conway recommends that students start small and slow when it comes to this vital safety net. Consider saving a small percentage per paycheck or taking on occasional extra work to build your emergency savings fund. Even setting aside $20 a paycheck is better than nothing. While it may take longer to get to a more comfortable place, building up to and having at least $1,000 set aside can bring peace of mind and practical results when facing unexpected expenses.

“It’s nice to have that cushion, but most people don’t,” Conway says. “If you make a concerted effort to build one, though, you may feel less financial stress in the future.”

How UOPX can help with budgeting for college

While budgeting for college is a personal process, University of Phoenix offers several tools and features that can help.

For starters, the University offers a Tuition Guarantee. That basically means students lock in a flat tuition rate when they enroll — it won’t change over the course of their degree program, if they don’t take breaks or switch programs.

Prospective students can also gauge their financial commitment through the University’s Savings Explorer tool.

Other resources include:

Request more information about degrees and certificates at University of Phoenix!

Headshot of Grace Stetson

ABOUT THE AUTHOR

Grace Stetson is a freelance journalist and communications strategist dedicated to sharing vital stories with the greater Santa Cruz Community. She writes for various universities and publications throughout the Bay Area, and she coordinates political campaigns in Santa Cruz County. When not at work, Grace is volunteering at the SPCA or Second Harvest, exercising or getting lost in nature with a good audiobook.

Headshot of Chris Conway

ABOUT THE REVIEWER

As Director of Financial Education Initiatives and Repayment Management, Chris Conway works with departments across the University to provide resources that allow students to make more informed financial decisions. She is also an adjunct faculty member for the Everyday Finance and Economics course at the University, and she chairs the National Council of Higher Education Resources College Access and Success Committee. Conway is committed to helping college students make the right financial decisions that prevent future collection activity.

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This article has been vetted by University of Phoenix's editorial advisory committee. 
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