Yesterday I wrote about the initial decision students have to make when they decide to go on to post-secondary education. Once you decide whether you want to stay at home or live independently while going to school your next set of options opens up. Obviously if you choose to live at home your biggest quandary becomes what to do with all the extra disposable income you have as a result of bunking with the folks, but things become a little more complicated if you have chose to take your first independent steps.
There are three main options that I have seen for students and parents to consider when looking at housing options for leaving to go to school. The first, and the one I would recommend is to live on campus in residence. The second is the traditional rent with roommates model. The third choice is perhaps the most financially lucrative option, and that is to have your parents invest in buying a property and then rent it from them.At some point we will be writing more in depth articles about residence as Justin and myself here at myuniversitymoney both lived in residence for the majority of our university stay. For right now I will say that although it likely will cost a little more than cutting corners while renting with friends, residence is more than worth the extra cost in the experiences and connection-building opportunities it provides. The fact that residence basically forces you to get involved on campus and interact with a huge array of diverse young people cannot be quantified in terms of benefits. It was by far the most important part of my university experience.
To measure the pure economics of the situation, residence at the University of Manitoba where we went to school now (2011) costs about $6,000-$8,000 depending on single/double occupancy and meal plan. This is with the majority of your groceries, your internet connection, your hydro and taxes thrown in. For comparison sake the University of Saskatchewan lists their costs at $4,200-$7,000, University of Alberta $5,000-$9,000, and McMaster $4,300-$7,000. So, fairly consistent across the board (I would have guessed McMaster to be higher just based on living expenses in the area versus the prairie schools).
To accurately compare these costs against living off campus is very difficult since living expenses in Toronto or Calgary are going to be very different than those in Winnipeg, but the methodology and example should still be useful to you. I lived 4 years on campus and one year off so I am fairly confident in the accuracy of my personal comparison. Living off campus I lived in a 3 bedroom house with two roommates. My living expenses broke down like this. We split the house costs so the numbers you see are my third of the total bills.
Hydro: $75 (averaged throughout the year)
TV: $10 (I had some creative ways of keeping television costs low…we’ll call it a ‘grey area’)
Rise in gas bill due to living off campus: $60
Total: $810 per month
If we compare this to residence living (7,000/8 months= $875). You can see there is a bit of a savings. We probably could have shaved a little off our hydro, water, and grocery bills if we would have worked harder at it, but you’d have a tough time finding a better deal on rent. I think about the most you could probably save living off campus versus living on campus is $150 a month or so.
But this is not the entire picture. For myself and most of my friends, we tended to leave the city during the summer months for job opportunities (I’ll expand on these adventures another time). For this reason the residence 8-month contracts were ideal. When you rent in Winnipeg the vacancy rate is so low that it is impossible to find anything resembling an 8-month contract; therefore, you have to sign on for twelve months. There is always the chance you can find someone to sublet the apartment during the summer, but dealing with landlords, crazy housing managers, tardy potential renters and a million-and-one other headaches can be a major pain in the butt. For this reason, I think living on campus could actually be the cheaper overall selection when looked at in a year-round comparison for many students.
Perhaps the most interesting option if you have parents that have some extra capital and a head for investing, is to look into buying a house for you and possibly your friends to stay in. I have seen a few of my friends do this and it seems to be a very smart investment. The risk factor is actually very low as housing around a campus is always in demand and the prices rarely go down. If you are really ambitious you can buy a bit of a fixer-upper (what university students really need ‘the perfect’ house?) and have you and your buddies pay some of the rent through sweat equity in fixing it up. The idea is that your parents can buy it, you and your buddies can get a good deal on rent (say 10-20% below market value) and your rent will pay the mortgage. There is the chance that you and your entourage will put holes in the drywall and break the hand railing, but there is no better time than the present to learn home repair basics. I think this could be fairly lucrative if handled properly. One of my friends’ parents that bought a condo 15 minutes away from the University has probably seen the place double in value since he bought into it 6 years ago. That is a pretty good Return On Investment (ROI).
As you consider what the best student living options are for you I encourage you to really consider not only the financial factors, but what choice might best fit your lifestyle and what you want out of the university experience.