As students across the country settle into the first few months of the fall semester, the excitement and energy about returning to campus can start to give way to another set of emotions: anxiety about how to pay the bills.
Each year, millions of students struggle to afford sufficient, consistent, and nutritious food, and millions more struggle with their monthly rent or housing costs. This year, though, students and families across the country are contending with another set of expenses: rising utility bills that may exacerbate their financial burdens and could threaten to derail their academic journeys.
As almost anyone who has opened their electricity or gas bill statement over the past several months can attest, utility bill rates have skyrocketed. In fact, electricity prices have risen over twice the rate of inflation in the past year alone, driven by energy-hungry AI data centers that strain the electric grid, climate change and extreme heat, tariffs and disruptions in international energy supply chains, Congress and the Administration rolling back clean energy investments, and other factors.
The strain is being felt nearly universally across the country, and the massive budget bill passed by Congress is likely to make the problem worse.
Yet even prior to the recent spike in costs, students were struggling to afford utilities. According to newly analyzed data from our 2023-24 Student Basic Needs Survey, 1-in-5 (19%) of students reported that they had “not paid the full amount for utilities (such as gas, oil, electric, water, internet, phone)” in the past 12 months.[1] Among students who face housing insecurity, 42% reported struggling to pay for utilities.
These unexpected expenses, which can add up to hundreds of dollars more per month, are spiking at a time when rents remain a major concern for the nearly 3-in-4 students who do not live on-campus.[2] According to data from Moody’s, rents for student housing grew by 5% in 2023 and another 4.3% in 2024, and have grown at a faster pace than other multifamily housing over the past two years, further driving students into debt or forcing them to work more or forgo other essential needs. The cost of food, child care, and other necessities—not to mention tuition—continue to climb as well.
High utility costs present a unique problem for students, whose financial support for non-tuition costs is often dictated by their institutions’ ability to reliably estimate those costs ahead of time. As part of their “cost of attendance” (COA) estimates, institutions are responsible for accurately assessing indirect charges like off-campus housing and essential living expenses that then determine students’ eligibility for financial aid. When the price of various expenses (like utilities) outpace those COA calculations, students face a shortfall that financial aid rarely covers in real time.
Despite being required by statute to include “rent or other housing costs,” which should include utilities, in their housing estimates for COA, institutional COA practices vary widely and often vastly underestimate the actual costs students face, thereby artificially lowering the amount of financial aid they can receive. Given the unrelenting rate of increase in utilities, even institutions that do factor in monthly bills within their housing estimates may not be doing so quickly enough to keep up with rising prices.
Federal law does provide students with some recourse when they face unexpected costs, though the processes are opaque and imperfect, and resources are often scarce. Through a process known as Professional Judgment (PJ), students can appeal their COA or their financial aid package to potentially receive more funding. But PJ is only effective when students know it is an option, and when financial aid offices are equipped to use it, which they are often hesitant to do on a broad scale out of worries of federal scrutiny or simply high workloads, particularly during the start of an academic term. The Federal Student Aid (FSA) Handbook may also discourage some institutions from acting to support students facing unexpected increases in utilities. The FSA Handbook specifically lists “utilities” among “standard living expenses” that may not warrant the use of PJ if they are “recurring costs.” However, utilities that are spiking unexpectedly are anything but standard or predictable. It is fully within the purview of a financial aid office to issue a PJ to offset unexpected increase in utility costs like those happening across the country.
Unfortunately, Congress has only made the problem of rising prices worse. With the passage of the One Big Beautiful Bill Act (OBBB), which cuts trillions of dollars from public benefit programs and curtails the ability of some students and parents to take out federal loans, students will have far fewer lifelines. Second, the new law includes a specific provision that removes a pathway for families receiving assistance from the Low Income Home Energy Assistance Program (LIHEAP) to more easily qualify for higher SNAP benefits.
Fortunately, states, institutions, and federal policymakers can still step up.
First, colleges should be mindful of how they set housing and other COA estimates and ensure they accurately reflect what students actually must pay each month beyond rent. This means, at a minimum, updating COA annually using real data on local utility and rent costs—like MIT’s Living Wage Calculator for housing—and erring on the side of ensuring students get more support, not less. Institutions and state grant agencies should also take proactive steps to notify students of their resources and rights, like “Professional Judgment” (financial aid appeals), and accommodate their needs when an extra monthly burden exceeds their allotted aid.
States and institutions should robustly fund their emergency aid programs, if they have them (or create emergency aid funds if they do not already exist). These programs ensure that at least some students have another avenue of financial support when upcoming winter heating costs or other utilities spike. Finally, given that students struggling with utilities are also far more likely to face other basic needs insecurity, schools should continue to engage in proactive outreach about the availability of public benefits, including SNAP and LIHEAP, to help them afford their numerous financial expenses.
Congress should act as well. In addition to investing in bringing more clean energy onto the grid, lawmakers should immediately reverse cuts to SNAP, Medicaid, financial aid, and other programs gutted by OBBB which will continue to increase costs to students. In addition, lawmakers must ensure that funding for programs like LIHEAP, student financial aid, and the Basic Needs Grant are increased through the Congressional appropriations process, and families are made aware of their potential eligibility. Congress should also revive a national program of emergency aid for students, which proved successful in helping students specifically address housing costs and remain enrolled during the pandemic.
For students working low-wage jobs and supporting families, these extra and unexpected charges can further push them to the financial margins and be the difference between staying enrolled and dropping out. Those who claim to care about addressing rising costs for families should remember that rising utility and energy costs are a college affordability issue as well.
[1] Calculations from The Hope Center Student Basic Needs Survey
[2] Calculations from The National Postsecondary Student Aid Survey 2020 (NPSAS:20, retrieval code: itlxuv); According to NPSAS, 25.8% of students attending 1 institution live on-campus, 44.4% live off-campus, and 29.8% reside with parents.