A student who has paid a deposit can feel obliged to continue with that institution to avoid wasting it. The payment matters to the household's remaining cash, but an amount that cannot now be recovered does not necessarily favour one future choice over another. The question is which consequences still change when the student chooses.

The Green Book defines sunk costs as incurred costs that cannot be changed and excludes them from forward appraisal. Its context is government decision-making. This article uses that limited concept in a fictional college comparison, while keeping household affordability, contractual obligations and educational suitability as separate questions.

Reconstruct the two possible futures

Suppose a student has already paid College A a deposit of 1,000. The verified fictional terms say it is non-refundable, but counts toward A's 20,000 tuition if the student attends. College B would charge 18,500, with no further deposit or switching charge. Assume other future costs and educational benefits are identical solely to isolate the arithmetic.

Ledger Attend A Attend B
Historical payment already made 1,000 1,000
Tuition still to pay 19,000 18,500
Total spending including history 20,000 19,500
Difference in future spending A costs 500 more B costs 500 less

The deposit has not disappeared under B; it remains in the historical total. Nevertheless, B requires 500 less additional cash. Adding the lost deposit only to B while comparing it with A's remaining balance would count the same historical payment differently in the two columns and distort the decision.

This result does not mean deposits never affect decisions. If the deposit were recoverable only on a particular route, that recovery would be a future difference. If withdrawal triggered an additional charge, include that too. The key distinction is whether the amount can still change, not whether a bill happens to use the word deposit.

Add the real differences back carefully

Now suppose switching to B requires a new travel and document expense of 700. The future total for B becomes 19,200, compared with A's 19,000. On these invented cash assumptions, A requires 200 less from now onward. The earlier 1,000 remains unchanged in both histories; the new 700 changes the comparison.

List each future difference once: accommodation obligations that cannot be cancelled, recoverable payments, confirmed grants that depend on attendance, and genuinely incremental moving expenses. A cost that is unavoidable whichever college is chosen belongs in both options. A possible expense should be labelled as a scenario rather than presented as a confirmed liability.

Verify refund and withdrawal terms with the institution or an appropriate adviser. This example does not establish actual rights, cancellation deadlines or enforceability. A student's belief that a deposit is lost is not enough evidence to classify it as irrecoverable.

Keep affordability and fit in the decision

Historical expenditure reduces current savings even when it cancels from a forward comparison. If the family now has only 18,700 available, the 19,000 option has a funding gap. The accounting concept does not create money or justify borrowing. Check feasible funding and payment dates before treating an option as available.

Educational differences also remain important. A cheaper future path may have different course content, support, location or progression conditions. Record those differences explicitly instead of assigning an invented salary premium to make a preferred choice look financially optimal.

Use the refundable money ledger to classify deposits and recoveries before this forward comparison. The final worksheet should retain the full spending history, a separate table of consequences that can still change, and the constraints on each feasible option. That preserves accountability for money already spent without allowing an unrecoverable payment to make the next decision automatically.