WideModern_studentscommuting_081313.jpg

Budget, Save for College Commuting Costs

Rules for 529 plans may prevent students from using college savings to pay for transportation.

WideModern_studentscommuting_081313.jpg
By SHARE

For some college students, figuring out how to get from A to B can be just as difficult as getting A's and B's.

Most students at Glendale Community College in Glendale, Calif. drive to school, says Patricia Hurley, financial aid director at the school. While there is public transportation, commuting by public bus could require students to transfer several times during a 10-mile commute. And for some students, it could still cost as much as $90 per month.

College students who may not have the option to live on campus and commuters who live off campus need to budget for transportation expenses and build the cost into their college saving strategy.

[Explore ways to save on college costs.]

Start budgeting and saving by looking at daily transportation expenses. These are the costs beyond the purchase of a car that drivers expect: parking permits, insurance, fuel and maintenance, says Dan Davenport, director of financial aid at the University of Idaho.

Paying for transportation expenses, however, can be tricky. Students are allowed to use federal student loan money for transportation expenses, but they can't withdraw money saved in a 529 plan, a tax-advantaged college investment account, without incurring a tax penalty.

As soon as families know transportation is part of the college savings equation, they should start saving in a regular savings account for the expense or have teens work to cover their transportation costs.

Another part of that equation is the location of the school itself. The University of Idaho is a rural school. Anyone with a job off campus will need a car, Davenport says.

To account for transportation expenses, many schools include transportation costs in the cost of attendance estimates posted online. The University of Idaho estimates its students will spend $1,116 per year on transportation.

[Find out which schools have the most commuters.]

For Glendale Community College students, Hurley estimates the cost for transportation is about $1,200 for students living with their parents and about $1,300 for students living on their own, based on a statewide survey from the California Student Aid Commission.

Students living on their own are likely covering more of their car expenses, she says. Insurance can also be cheaper for students still on their parents' policy.

Experts agree the purchase of a car is generally not considered a qualified education expense for distributions from 529 plans or for federal student loan borrowing. Families need to think about whether they want to buy a car outright or get a car loan and make payments while the student is in school.

Payments must be made from a student or parent's income, savings outside of a 529 plan account or through other means.

To save money, Hurley recommends carpooling to save gas costs and splitting parking permit fees.

Some families who originally intended for their student to drive to campus may change their mind after evaluating costs. University of Idaho students who aren't working off campus can forgo driving if they can find a way to get to and from home during holidays and semester breaks, Davenport says.

When possible, other families may choose for the student to live on or near campus to eliminate vehicle expenses.

At the University of North Texas, there is an abundance of off-campus housing available within two miles of the university, in addition to dorm rooms on campus. But that doesn't necessarily mean students should live on or near campus.

[Consider these things before bringing a car to campus.]

Students and parents have to look at their individual family situation as well as crunch all the numbers, said Paul Goebel, senior director of the student money management center at the university, via email. Paying more in rent to live near campus may defeat the purpose of moving.

Goebel says students should look carefully at all costs and expenses affiliated with the decision to live on, off or near campus. "Depending on the mode of transportation and eating preferences, commuting students may tend to spend more for gas or eating out."