How Out-Of-State College Affects Student Loan Debt & ROI

Moving to another state for college is a time-honored right of passage for countless students. It gives you the chance to spread your wings in a new city, without the safety net of your high-school friends. You get the opportunity to explore food, weather, and people you would never have encountered in your home state, and the challenges of starting over in a brand new setting will grow your confidence in incredible ways.

However, even though there are a ton of benefits associated with moving away from home for college, keep in mind that it’s probably going to be significantly more expensive than staying in state. It’s important to be aware of these expenses in advance, to avoid any unwelcome surprises. With that said, here are three ways going to an out-of-state college will affect your student loan debt:

1. Your tuition will be higher.

For the 2015-2016 school year, students paid an average of $9,410 per year at public in-state colleges and $23,893 per year at public out-of-state colleges. And, if you choose to go to a private school (either in-state or out-of-state), you can expect to pay an average of $32,405. Higher tuition means you’ll need to take out larger loans and you’ll pay more in interest over time.

The good news is, in many cases, you can qualify for in-state tuition after just one to two years. The residency requirements will vary depending on your state, so be sure to look into these details when you’re choosing your school.

2. You’ll need to cover relocation expenses.

You can also expect significant moving expenses if you choose to go to school in another state. Even if you don’t use your student loans for this purpose specifically, you’ll still need to use money that could have gone to other school-related expenses, like books or room and board. Make sure you budget for any and all expenses associated with the move – including a moving truck, a shipping service, a storage unit, and gas, food, and hotel rooms if you’re driving.

3. You can expect to incur expenses during school breaks and holidays.

You also want to keep in mind that you’ll need money to cover travel costs like airline tickets for your trips home during the holidays and school breaks. And, if you live on campus, your school may require you to put your belongings in storage during the summer. All of these expenses will add up, contributing to a higher cost of your education overall.

4. You may have a lower college ROI.

College ROI looks at costs and returns of attending college and earning a degree. It considers a variety of factors including tuition, degree type, and post-graduation salary. Because going to an out-of-state college means paying higher tuition on average, you may possess a lower ROI than if you decide to go to an in-state school. When taking out a student loan to cover tuition, it lowers the ROI after graduation because the real costs of the degree will actually be higher.

Before you decide to attend an out-of-state school or an in-state school, consider what the school is doing for its students in terms of debt. Many colleges are taking measures, such as offering grants, helping students monitor their loan balances, and offering extra support to help students graduate on time, to lessen student debt. Not only is less loan debt better for students, but it’s also better for universities. The less debt students have, the fewer defaults the university will have.

If you are worried about taking on debt and lowering your college ROI, there are a few strategies you can put into action yourself:

1. Apply for scholarships. There are literally thousands of scholarships available every year – and they aren’t reserved exclusively for valedictorians or students with the highest test scores. You can be awarded a scholarship based on your heritage, family background, location, special talents, and career goals, so be sure to explore these options thoroughly to reduce the cost of your schooling.

2. Take advanced placement courses in high school. If you’re still in high school, you have a great opportunity to get ahead. Take advanced placement and college-level classes now to save money on your tuition. Some schools offer online AP courses that you can take after school or during the summer, so make sure you talk to your teachers and guidance counselors about the options that are available to you.

3. Work while going to school. There are pros and cons to working while attending college, but generating ongoing income is hands-down the best way to reduce the number of student loans you’ll need to secure. Consider that in 2015 the average annual cost of tuition at a public or state college or university is just over $9,000/year. That equals roughly $750/month over the year or $188/week. Working even part-time while attending college may cover this cost entirely.

4. Financial Planning You also need to make sure that you get your finances in order. If you haven’t been tracking your money, now’s a great time to start. Get organized using free services like Mint or Personal Capital, where you can put all of your accounts (checking, savings, student loans) in one place and see the balances.

5. Stay Focused. It may be difficult to reign in your spending once you’re earning a salary, especially if you’re a doctor or lawyer. But if becoming debt-free is your main goal, you’ll have to commit to a budget and monitor your spending.