Clever Ways to Save When Your Kid Is off at College
Student discounts can be substantial, but they're just one way to ease the rising costs of inflation
By Penelope Wang
For parents of kids headed for college, you’re facing the financial squeeze of hefty tuition bills and the soaring costs of inflation. But there is a silver lining: additional ways to save, now that your kid is off to school.
It’s not just that you’ll be spending less on groceries and gas. “People often focus on the tuition costs, but there are other big-ticket items you might not be thinking about, which could add up to significant savings," says Shannon Vasconcelos, director of college finance at Bright Horizons Education & College Advising.
Here’s how to save money and take some of the pain out of footing the tuition bills.
Scale Back on Auto Insurance
If your student is attending college far away from home and doesn’t have a car, you may qualify for a “distant student” discount. Policies vary, but the discount typically applies for students living at least 100 miles from home, who are in school full time and under 25 years old. You could knock about 18 percent off your annual policy, according to insurance shopping site Insurance.com.
Another option might be to downgrade your child from a primary driver to an “occasional driver,” which generally means someone who drives less than 25 percent of the mileage put on the car annually.
You could also remove your children from your policy temporarily and add them back on when they’re home for the summer. But check with your insurer to make sure you can exclude a driver already on your policy who uses your home as their primary address. Another option: Check to see whether you can get a break on premiums if your children’s absence means you are racking up fewer miles on the family cars.
Even if your child takes a car to school—about half of students do—you may be able to lower the cost of insurance. Find out whether your insurer offers a good student discount, which typically is available to full-time students who maintain a GPA of 3.0 or higher. The typical savings amount is 16 percent, according to Insurance.com.
Consider a College Health Insurance Plan
Most colleges offer health insurance plans to students and require them to purchase or opt out by showing proof of alternative insurance. That’s true even though the requirement to have health insurance or pay a penalty under the Affordable Care Act was eliminated starting in 2019, Vasconcelos says.
“Colleges are concerned about liability and have always required students to have insurance,” she says. “But many families don’t realize that you’re automatically billed for the college health plan unless you opt out, so you could end up throwing money away.”
Fact is, young adults can remain on their parents’ policy until age 26, and for many people that makes the most sense. If you are getting insurance through your employer, most companies subsidize premiums for workers, so a family plan could be cheaper than an individual policy offered by the college. Your child can also retain the same doctors and schedule visits when home from school.
Some schools allow any student, regardless of insurance, to be treated at the campus health clinic. That’s good if your child is generally healthy and might need to pay a visit only for minor issues, like a sprained ankle or sinus infection.
But if your child is going far away to school and needs to see doctors regularly for a chronic condition or doesn’t come home often, seeing doctors out of your family’s insurance network could be costly. A local plan with in-network doctors could be cheaper in the long run.
Keep in mind when you’re comparing costs that college insurance is typically bundled with your tuition bill each semester. You won’t pay monthly as you do with traditional health insurance.
Seek Out Student Discounts
Before you shell out money for everyday expenses and extracurricular activities, you or your student should check to see whether there is a lower price for college students. There are hundreds of student discounts on everything from buying technology and going to the movies to shipping packages and taking vacations. Your child just has to show his or her student ID or use his or her college email address.
The discounts can be substantial. Most technology companies offer students a special price when buying computers, software, and other tech items. Students (and teachers) can get Microsoft Office, including Word, Excel, and PowerPoint, free of charge as long as they have a university email address. Apple offers special education pricing for current and first-time students and their parents buying laptops and tablets.
Students who set up their own Amazon Prime account get a free six-month trial. After that, Student Prime membership costs $7.49 per month, half the cost for regular members. It may also be easier to find breaks using Student Prime because Amazon says it works with hundreds of vendors to offer student deals. Amazon will also allow you to rent textbooks and save up to 90 percent.
ZipCar gives college students a break on membership through hundreds of universities. FedEx takes 20 to 30 percent off when students ship packages. You can find more student discounts at BrokeScholar and DealNews.
Take Advantage of Tax Breaks
There are some valuable tax breaks for parents with dependent students. For each student you have in college, the American Opportunity Tax Credit gives you a $2,500 tax credit for spending $4,000 on qualified college costs. The Lifetime Learning Credit provides a tax break of up to $2,000 per year for qualified higher education expenses.
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