College Options

As college approaches parents everywhere are making preparations for sending their kids off to the big scary world of higher education.  Many decisions must be made before college starts in September. 

• What major will I have?
• Will I have a job?
• How do I make friends?
• Where will I live?
• Much much more........

I want to address just one of these: "Where will I live?"

You can start out in the dorm life.  I spent my first year in the dorms and it was not terrible.  I made friends and had a good time.  I also paid a lot of money to live there. 

Here is breakdown of the cost:

Dorm (2008 Univ. of MT rate)

$2,929.00 for semester (4 months) = 735.25 per moth

If you decided to turn that 735.25 into a mortgage payment you could buy a home that is worth $116,324.51.  That is assuming that you finance 100 percent and your loan is a fixed 30 year rate at 6.5%.  It wont be much but it will be a lot more than the 150 sq ft that the university is going to give you for the same price. 

At the end of your college career you now have a home that you have been paying on (and hopefully fixing up).  You can live there after college or you can sell it and pay off some of your student loans.  Assuming that rel estate goes up with the price of inflation and that that rate is 3% then your home is worth about $130,924.26 after 4 years.  That is a difference of $14,599.75.  Imagine of you could knock off 15 grand from your student loan the day you graduate college.  This saves you thousands in the way of interest over the life of your college loans. 

My next question would be: Why isn't everyone doing this?

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