If your child is heading to college soon, you may be worried about how they’ll manage money. As a college student, your child may have increased demands on their budget, including costs associated with extracurricular activities. Because of this, many students may overspend, especially during their first year of college.
Setting a college allowance can help your child pay for extras and teach them to handle money more effectively. But how much spending money for college does a student need? It depends on your child’s location, activities, and other factors.
What Does Financial Aid or an IRA for College Expenses Cover?
When you and your child discussed how to pay for college, you likely considered financial aid options. Your child may have qualified for grants, scholarships, and student loans to cover some or all of their education costs.
That said, financial aid may not pay for everything. In general, financial aid is intended to cover tuition, room and board, textbooks, transportation, and mandatory fees. It typically doesn’t pay for extras, like entertainment, dining out, club memberships, or other non-essential expenses.
If you’re tapping into your IRA for college expenses, you’ll encounter a similar scenario. While it’s possible to avoid your IRA’s usual 10% early withdrawal penalty if you use withdrawn funds for qualified college expenses, such as tuition, fees, or textbooks, that money can’t be used to pay for extras either.
Even for the most frugal student, unexpected costs can pop up. Nobody can predict when their car will need a new muffler or if they’ll get sick and end up with an unexpected medical bill. Having a monthly spending allowance can help them plan for those expenses and learn good money management habits.
Average College Monthly Allowance
When considering a monthly allowance for college students, it’s essential to understand the total cost of college and the demands on a student’s budget.
According to The College Board’s Trends in College Pricing and Student Aid Report, the typical college student will spend the following for the 2023-2024 academic year:
| Public Four-Year University (In-State, On-Campus) | Private Four-Year School | |
| Tuition | $11,260 | $41,540 |
| Room and Board | $12,770 | $14,650 |
| Books and Supplies | $1,250 | $1,250 |
| Transportation | $1,290 | $1,100 |
| Other Expenses | $2,270 | $1,880 |
| Total | $28,840 | $60,420 |
What is a reasonable monthly budget for a college student? As you can see from the above, college students spend around $2,075 per academic year on additional expenses beyond tuition, room and board, books and supplies, and transportation. That amount may cover clothing, laundry, toiletries, entertainment, etc.
Considering that semesters are usually four months in length and students complete two semesters per year, we find that the average monthly spending for college students is approximately $260.
Deciding on a Monthly Allowance for College Students
As a parent, you may be considering giving your child a college allowance to help them with extra costs. But how much spending money for college does your child need?
While $260 per month may be the average a typical college student spends, your child may have additional expenses. Depending on the situation, your child may have to pay the following:
- Fees and equipment for intramural sports
- Pledge fees for fraternities or sororities
- Clothing for a different climate
- Specific dietary needs, such as allergen-free snacks
- Transportation and clothing for an internship
Talk to your child about their spending needs and how much you can afford to contribute. Be honest and upfront about your own budget; if you don’t have enough money in your savings or are behind on your retirement contributions, you may not be able to afford to give your child an allowance. That’s okay! Just be candid about your situation so your child can plan ahead.
Also consider what college costs are tax deductible for parents. Your family might be eligible for certain tax breaks, such as the American Opportunity Tax Credit (AOTC), which provides a total credit of up to $2,500, or the Lifetime Learning Credit, which provides up to $2,000. These credits could help offset the cost of a college monthly allowance.
5 Other Ways A College Student Can Earn Spending Money
If you don’t cover their entire monthly college allowance — or if your child wants more spending money — discuss ways they can cover the difference. Some options include:
- Getting an on-campus job. On most campuses, colleges hire students to work in the dining halls, tutoring centers, and labs. Your child can get an on-campus job that accommodates breaks and exam schedules and earn extra spending money. To find available opportunities, your child should visit the college’s career planning department.
- Finding a part-time job off campus. If on-campus jobs are scarce, your child may have better luck securing a job off campus. Local retail and foodservice locations often hire college students, or they may find paid work from small businesses needing office help. Your child can use Indeed and SnagAJob to find part-time opportunities.
- Picking up a side gig. Side hustles can be excellent income streams for college students. They can work as much — or as little — as they want, and they can take breaks during finals week or holiday breaks. Popular side gigs for college students include:
- Delivering groceries for Instacart
- Dog walking on Rover
- Tutoring on TutorMe
- Graphic design on UpWork
- Babysitting or home sitting through Care.com
- Selling unused items. If your child has clothing, electronics, books, collectibles, or old toys that they no longer use, they can turn those items into cash by selling them online with PoshMark or Gazelle.
- Working during the summer. Working during the academic year may not be realistic for students with demanding classwork. To increase their spending money, they can focus on working during the summer breaks. Summer jobs for college students can include:
- Camp counselors
- Lifeguards
- Retail associates
- Foodservice and hospitality
- Professional internships
Financing Your Child’s Education
When it comes to a college allowance, it’s wise to help your child manage their money. Before they head to school, set them up with a budgeting app like Goodbudget or You Need a Budget. Learning how to budget as a college student will help them track their spending, identify areas where they need to cut back, and save for future goals.
If you need help financing your child’s education and are considering private student loans, check out ELFI’s undergraduate or parent student loans. You could qualify for competitive interest rates and terms, helping you save money over time. You can use the Find My Rate tool to get a rate quote without affecting your credit score.
