As an out-of-state student at the University of Michigan, my family is always looking for ways to save money on my college expenses. Tuition is on the rise, mandatory textbooks can be hundreds of dollars, and flights to the Midwest can double within a week. However, there might be great opportunities to save money that I, along with millions of other college students, have missed out on by paying for room and board at universities.
According to College Board, room and board fees for the 2016-2017 school year averaged to be roughly $10,440 for both in-state and out-of-state students. I remember the enormous stresses that came with on-campus housing: hoping for a friendly roommate, a location that wasn’t a bus ride away from campus, and one of the dorms that was on the cheaper side. This makes off-campus housing seem to be a less expensive and less stressful option, but unstable monthly rents and utility fees often cause new difficulties to arise. In some housing markets, one of the best choices to make for students living in a college town is to invest in a home, rather than on-campus housing.
This may come as a surprise to some, especially since young Americans have been pushing back home buying until much later in life, decreasing the homeownership rate for the Millennial generation to a new low. However, with the help of parents paying for college tuition, dorm rents could easily be converted into tax-deductible mortgage interest payments on a home. Take a look at the price difference between monthly rent fees and the cost of buying a home on or near by your college campus. There may be more benefits and opportunities for saving than you’re aware of.
Some of the major advantages of buying a home rather than paying rent on a dorm or apartment monthly rents include stability and fixed expenses. With a home, there is no need to worry about relocating to a new place every year, struggling to move all of your belongings, or finding roommates who you can trust to commit to a lease. Apartment and dorm rents often increase year-to-year, but with a home, your monthly mortgage is much more likely to remain stable. Depending on the size of the house, rooms can be rented to other students to bring in more money to put towards the house’s mortgage or other expenses. If the home is smaller, students can take advantage of using it as storage space for long breaks, saving more money on shipping items home or paying for a storage service. Depending on the housing market, there are other financial benefits of owning a house as well, such as tax benefits or appreciation in value.
Furthermore, living in a house as a college students brings other advantages that are not only monetary. Although dorm living can be a fun college experience, there are many more realistic life lessons to be had in living in a home. You can learn about investing in real estate, budgeting finances, and all of the other responsibilities that come with home ownership. This can be fun too. Having the freedom to decorate and furnish a house in your own way and having access to your own kitchen are adventures in themselves.
Whether you’re a student trying to save money on your living situation for next semester, or a realtor who lives nearby a college town, crunch the numbers of monthly rents and home ownership costs and see how they compare. You never know - there might be a housing market for college students you’ve been missing out on!
- Danielle, Marketing Intern