San Marcos is a good sized town that is a true "college town". Not too small, but not huge by any means. The landscape is pretty, with lots of little hills, trees, and the river to enjoy. Students spend a lot of time, it seems, involved in water related activities and going for a swim after class on a hot Texas day is popular.
San Marcos' downtown is charming and there are various options for eating out, hanging out, and shopping at eclectic little shops. You might have to leave San Marcos for more exotic food choices though.
The rental rates seem to be comparable to rents in San Antonio (an hour away) and a bit cheaper than Austin for sure (nearest city to the North) so I would say that San Marcos' cost of living is reasonable. It's a pretty little town with larger cities in either direction close by for weekend adventures.