Reigning in Back to School Debt
Bills.com suggests ways to bone up on making school bills affordable
SAN MATEO, Calif., Sept. 5, 2007 - With back-to-school season in full swing, America's parents need to budget carefully to stretch their buying power and stay within their financial means -- and Andrew Housser, co-founder and co-CEO of free online consumer portal Bills.com (www.bills.com) has suggestions for how to do it. According to new figures from the National Retail Federation, the average consumer will spend $94 on supplies, $129 on electronics and $340 on clothing, shoes and accessories for this year's back-to-school season. The average family will ring up $563.49, up nearly 7 percent from last year's average. In total, U.S. consumers will spend $18.4 billion sending kids back to school. These costs are only the start-up expenses for new calculators, computers, pencils and clothes. They don't take into account all the other costs of the school year, which might include:
- Supplemental textbooks.
- Field trip and activity fees.
- Picture and yearbook fees.
- Fees and uniforms for sports, plus a sports physical.
- Requested donations from parents.
"The latter category is being called 'stealth tuition' for public schools," Housser said. "Today, many public school districts are drastically under-funded. These schools rely on parent donations for items as common as salaries for librarians, physical education teachers, art teachers and classroom assistants (paraprofessionals); textbooks and classroom supplies; office support staff; and infrastructure improvements to campuses." Children attending private school rack up even more fees. Tuition averages $4,000 at religious schools and $10,000 at nonsectarian schools. A few schools cost up to $25,000 a year -- for a private elementary school education. The best advice for paying for kids' educations? Budget, budget, budget. Follow these steps to make children's school costs more manageable:
- Add it up. Compile costs for all the items listed above per year, per child. If kids attend private school, include tuition. Also include hidden, optional costs, such as after-school lessons, clubs or activities; hot lunch or milk charges; summer camps or lessons; and before- or after-school care.
- Evaluate. Look at the total annual number. Is it affordable for your family? "If not, start eliminating extras," Housser advised. Trade childcare with another family to eliminate care expenses. While school hot lunch costs about $2 per day, or $40 a month per child, a homemade lunch can cost just $1 -- a savings of about $180 per year, per child. Encourage children take up a craft or hone their reading skills instead of taking costly lessons. And, seek out scholarships for field trips, lunch or fund-raising events from your school.
- Maximize resources. Most children probably don't need $340 worth of clothing each fall. Make backpacks make do for two or three years instead of automatically replacing them annually. Take used clothing in good condition to a consignment shop -- you'll effectively be able to trade up a size. "Wait a few weeks after school starts, when sales begin, to buy most of the kids' new wardrobes," suggested Housser. "Comparison shop at retail and Internet store sales, thrift stores, yard sales and on eBay for the best deals on used clothes that aren't second best."
- Involve kids. Explain to children that the family is establishing a budget for school costs. Enlist their help in choosing what activities they will pursue. Set an amount for school-clothes shopping and let them decide where to spend it -- while parents keep veto power.
- Divide and conquer. Divide the final annual budget figure by 12. "Include this amount in your annual budget and save it each month in a dedicated account," said Housser. "When bills and fees come due, you'll be prepared."
"With careful planning, school costs can fit into a budget," Housser added. "And understanding the high cost of learning will motivate your children to work hard to attain career success themselves someday. Based in San Mateo, Calif., Bills.com is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. The company blogs about consumer finance issues at http://www.bills.com/. Since 2002, Bills.com and its partner company, Freedom Financial Network, have served more than 15,000 customers nationwide while managing more than $350 million in consumer debt. The company's co-founders and CEOs, Andrew Housser and Brad Stroh, were named Northern California finalists in Ernst & Young's 2006 Entrepreneur of the Year Awards.