According to Chronicle of Higher Education, Almanac, 2003-2004, the spending way of a student is divided into 6 ways. There are discretionary, room and rental, tuition and fees, books and supplies, transportation and other expenses. (Chronicle of Higher Education, Almanac, 2003) It has found that today's students have more discretionary income than ever before. Different studies report show that students have between $600 and $1,100 a month in discretionary spending. (O'Donnell & Associates, LLC, 2004) Students don't feel the need to complete college in 4 consecutive years, and many fluctuate between full-time and part-time study over a period of 5 to 7 years.
Annual Student Spending
(Sources: Chronicle of Higher Education, Almanac, 2003-2004; Campusclients.com; Student Advantage)
Figure 2.1 shows the annual spending behavior of undergraduates.
2.2 Type of Spending Source
2.2.1 Discretionary
One of the ways major spending for students is discretionary. Nearly 40 percent of their spending is on discretionary items. Many sources state that college students spend over $20 billion annually. The vast majority of college students have a cell-phone and a computer. By most accounts, they spend more money online than any other demographic group in our country. Overall, today's students have money to spend on products that appeal to them. (O'Donnell & Associates, LLC, 2004)
According to figure 2.1 above, the discretionary for college student is occupied the chart by $8,400 per year, which is almost 40% compared to other source. It show s that students have the ability like to purchase the thing that they desire or what they want, but no the goods helping in their studies and all of the spending sources are undergraduate students that are from 18 to 24 years old.. In these times, students, especially women would like to purchase what they want and what they like. This is caused by the psychological factors that appeared in every teenager. So the discretionary has been changed since 1990s.
2.2.2 Room and Rental
According to the figure 2.1, the rental and room is the second largest expenses for a student which study in a college or university. Most students do not stay with their parent because most of the location of universities and colleges was located at a rural are.
Convenience is a reason to pursued some of the students to stay at the hostel compared to their home even is near or a few hours drives. It is due to the environment of the university and college which can let them to concentrate in their studies. Other than that, most of the students more enjoy a free lifestyle without their parents controlling in their life. Moreover, a little part of students is willing to stay near with their university because of time consumption. They are willing to spend some money to rent a room, rather than spend a portion of money for their transportation.
This article is about why invest in a student property that surround the university area in UK. It said that although the university aims to provide at least the first year of stay is limited, some people will often need to rent students in the private rental sector. Even if the students were first year in student hostels, but they usually go to rent their own homes for rest of the semester because it is at least two years more to graduate. So the market for student property is there but what about the investment potential.
According to research from Halifax Estate Agents of 20 University towns across the UK recorded an increase in house price of 20 or more over the year to June 2007 close to double the average national increase over the same period. In fact the top 20 university towns also trade on average at a premium of almost 37 to the average UK house price.
However the survey also showed that eight of the top 20 ranked universities trade at a discount to the average house price in their county and thus potentially offer good value for house buyers. Rental returns on student property look more than reasonable. Yields in university towns can be as high as 9 gross Source Daily Mail 11 April 2008 and with many students now accustomed to paying rent all year round void periods during the summer do not have to pose the problem they once did. (Moneyextra.com, 2009)
According to the information above, is stated that student property is a potential growth property since 2005 because many undergraduate students, including foreign students is taking their studies at UK. In addition, it will attract more developer and investors to participate in these areas. As many students start to stay around the university area, it will relate to the student spending. So, spending on rental and room or houses is a necessary for an undergraduate student in these times.
2.2.3 Tuition and Fees
As we can see in the figure 2.1, tuition fees and other expenses fees are also necessary for a university or college student. Every semester, it is compulsory for every undergraduate to pay their tuitions fees and other expenses fees in university. In United States, the tuition and fees has been stated in the US's Consumer Price Index. It shows how the Bureau of Labor Statistics measures price change for college tuition and fees in the consumer price index. According to the Bureau of Labor Statistics, college tuition and fees, a component of the tuition, other school fees and childcare index, is included in the education and communication group of the Consumer Price Index (CPI).
Both the tuition and other school fees index and the college tuition and fees index are published monthly at the U.S. level. The education and communication index is published in all publication areas on each area's publication cycle. The tuition and other school fees index includes the four components shown with the relative importance of each index. These data are for the U.S. city average of the CPI for All Urban Consumers (CPI-U) as of December 2007 (Bureau of Labor Statistics, March 6 2008).
Item
Relative Importance
Tuition, other school fees and childcare
2.736
College tuition and fees
1.373
Elementary and high school tuition and fees
0.402
Child care and nursery school
0.781
Technical and business school tuition and fees
0.071
Table 2.1 shows relative importance of spending source for undergraduates.
According to the information above, the college tuition and fixed fees accounts for about 50 percent of the weight of the tuition and other school fees index and is the largest component of this index.
The base period weight for each CPI item group is the out-of-pocket expenditures households incurred for that item. The weight for college tuition reflects annual consumer expenditures for undergraduate and post-graduate studies at 2-year colleges, 4-year colleges, major universities, and professional schools (law, dental, medical, etc.). The CPI sample of colleges and universities priced was selected proportional to expenditures for students as reported by households located in the 87 areas sampled by the CPI.
Tuition and fixed fee charges for academic terms are eligible for collection once the new prices have been set and are payable to the college. Colleges put the majority of tuition and fee changes into place just before the start of a new academic year, so most of the changes for the college tuition index will be captured in the late summer or early fall of each year.
2.2.4 Books and Supplies
The other expenses for undergraduate students will spend for the study in university life is books and supplies. The things to remember is that textbooks are extremely expensive (costing anywhere from $200 to $700 per semester), and that they're required. While there may be a copy of each book at the library, they may not be reserved for in-library use, making them difficult to come by. (Hanson, 2009)
According to figure2.1 shown above, the total annual student spending is $21,241USD. But for the portion of books and supplies that students will spend in the annual spending is just 3.7 percent of $21,241 annually. In other article and information, books and supplies for current undergraduate not just books and stationary only, but including computers, accessory, software and some hardware that need to be used by the students in their studies or maybe their exam.
Information has been found in the Graduate Student Council of the Massachusetts Institute of Technology regarding about the undergraduate student cost of living. It estimated the costs of books and supplies by forward-projecting a cost of $920 per year using CPI, Consumer Price Index data. Comparing with data for undergraduates, these costs are consistent with a student taking approximately 5 classes per semester. (Graduate Student Council of the Massachusetts Institute of Technology, 2009) Suppose a graduate enrollment over the course of a semester as a doctoral program, the average for 2007-2008 of books and supplies is estimated at $ 212 per year. The 2007-2008 Making MIT Affordable guide from Student Financial Services estimates $1,114 per year for undergraduates, or $223 per class using our estimate of 5 classes a semester for undergraduates.
In addition to textbooks and related supplies considered in the 2004 Practical Planning Guide, we factor in $1,800 for a computer, distributed over 3 years ($600/year). MIT IS&T recommends a number of systems for students (through the Dell Premier academic purchase program available through MIT ECAT), the least expensive of which lists for $1,500. The $1,800 figure is determined by including shipping, tax, necessary software (Microsoft Office or equivalent), media, and the most basic peripherals over 3 years. (Graduate Student Council of the Massachusetts Institute of Technology, 2009) Usually, business students or law students don't require purchasing much systems or hardware that need to be used during their studies period. But other students that taking engineering, IT, chemistry, and other science subjects require to use certain hardware for their studies.
Figure 2.2 is the estimated cost of textbooks and supplies as a percentage of tuition and fees in year 2003 to 2004 (Source: Department of Education, US)
2.2.5 Transportation
In this spending pattern, different portion of students have their own way to go to university or college. Some students have the ability to own a car, some of which only a motorcycle, some of whom still rely on public transport. This portion of spending doesn't affect much student spending because most of the students were live in the university hostel or somewhere around the area. By doing that some of the students able to prevent to pay the transportation fees. By vehicle or transportation: 60.9% of students used motorcycles and 24.7% walked, 14.4% of students travelled by other means. (Tanvatanagul and Tanvatanagul, 2007)
In the economic way, fuels are the material that used in the worldwide for many purposes. So it will be the factors that affect student's transportation spending annually because when the world economy and financial crisis happened around these periods, the fuels price will be affecting by the crisis and will increase the price. According to the economy experts, it may rise again in this few years. But it still remains a question for everyone and many studies is still conduct during this time. So, it may affect students spending as well if the fuels price rise.
In year 2007 to 2008, the Malaysia government has been taking the step to increase the public transportation fees due to fuel or petrol price increase in that year. So, it might be affected the undergraduate students that even took public transport to their university. Then, it will affect the student spending as well. In other hand, if the petrol price remain stable, it also doesn't look good for the students who own any vehicle. They have to spend some of the money to maintain their vehicle to keep it in a good condition. So, it can become a deadly impact to students because of their limited resources to spend during their studies period in university or college.
2.2.6 Other Expense
Other expense referred to expenses that they need or don't in the life as students such as, shampoo, electrical and water bills, lotions, shower foam, facial cleaner, tooth paste and many more. All this item will be categorize in this part of spending. So, it just stated a little portion of spending in the chart. The total spending in this portion is just covered about $749 annually, which is just 3.5% in the annual spending of students. (O'Donnell & Associates, 2004)
