For most people, housing is their largest single monthly expense. A judicious choice in where and with whom to live during grad school can really help you balance your money. Moving isn’t easy, but if you find that you are spending too much on your living quarters, you can make a one-time decision to change that situation for the better.
Making housing decisions is likely to be most difficult in your first year before you are familiar with the local market. Through the course of your first year, take careful note of where your peers live and ask them how much they pay in rent. Then, when your lease is up, you can make a more optimal housing decision than your initial choice. Even if you live in the same place for many years and like living there, research your other options; cities change, and a better housing fit for you or a better price may have become available.
Further reading: Apartment Hunting
Rent vs. Buy
The default choice for grad students is to rent. Typically, grad students desire flexibility and are not financially prepared to be homeowners. Because buying a home is so expensive up front and there is the possibility of housing prices dropping, it only makes financial sense to buy if you have a reasonably long time horizon for living in the home. (The rule of thumb is five years, but this can vary quite a bit with the local housing market.) Therefore, renting a home is the more frugal choice in the short term, but buying a home can be more frugal in the long term. If you rent out one or more rooms in your home to roommates, your home can even become a source of extra income and a form of investment.
Resource: New York Times Rent vs. Buy Calculator
Alone vs. with Others
It is virtually always less expensive to share your living space with others, whether that is with your family or roommates. You can split not only your rent but also utilities and save time by trading off common-area chores. Although many single grad students prefer to live alone, they should calculate exactly how much they are paying for that premium and consider if they would value spending that money elsewhere more. Your university may have a database similar to craigslist where you can find roommates who are also students or university employees, which is a great initial screening tool.
Further reading: Find a Roommate and Financial Freedom
On-Campus vs. Off-Campus
Universities often offer on-campus graduate housing to international and sometimes domestic students. In some high cost-of-living cities, the on-campus housing is subsidized and therefore highly desirable and competitive. You should ask older students already living in on-campus housing for tips on how to gain entry. At other universities, on-campus housing is a convenient but more expensive option in comparison with off-campus housing. However, paying more for rent may be a frugal choice if it sufficiently reduces your living cost in other areas such as transportation. If you are living in on-campus housing and desire to move off-campus, start looking for housing options a few months in advance of the end of your current lease.
Further reading: Our House Is a Very, Very, Very Cheap House
Location, Location, Location
While location is tantamount when buying a home, it is also of importance when renting. The proximity to your university and other factors about the neighborhood you live in will greatly influence the price of your rental. Renting closer to work or on a more convenient route will cut your commuting costs and time and may even facilitate your ability to work in the evenings or on weekends. If you are investigating living car-free, the location of your home becomes even more important for its proximity to public transit, work, and retailers.
Size and Amenities
How many square feet you can get for your housing dollar will vary greatly depending on the city you live in, and you may have to adjust your expectations of personal space if you are moving up in cost of living. Carefully consider the amenities that your housing may offer you – a gym, pool, clubhouse, parking – and whether you would use them before committing to a higher rent.