Let’s face it. Financing an education is an expensive endeavor. We’ve all read horror stories of students graduating with hundreds of thousands of dollars in debt with serious concerns about how they will pay it off. This doesn’t have to be your story! There are ways to help your college-bound student and your family make practical fiscal decisions when it comes to financing a college education.
Communication is key! It’s important to have discussions about financing your child’s college education early in the process. In fact, it’s never too early to have these conversations so that both of you are clear about your family’s financial picture and everyone’s role in paying for college. This is a tough conversation for many people. If you’re like me, you grew up with the understanding that your parent’s finances were none of your business! While you don’t have to give your child every detail, it’s important to have open, honest, and direct discussions about what she can expect from you and what you expect from her as it relates to financing her college education.
Here are 5 questions to consider:
1. Who’s paying for school?
Some families are unable to support their child financially or have limited resources available to help pay for college. Let your child know up front what these limitations are. However, don’t let the “sticker price” of the college or university dissuade your child from applying. Consider what types and how much financial aid the schools provide before determining if the school is a good fit academically, socially, and financially. No matter what, make sure to complete the FAFSA and any other financial aid applications that the college may require to be eligible for loans, grants, or university scholarships.
2. How will you pay for school?
Will you use a 529 or some other type of Education Savings Account? Will you take out loans? Does your job offer tuition assistance for your dependents? Do you have savings that you will use to pay for school? All of these factors are important in making a financially responsible decision about which college your child will attend. Especially when you consider the financial aid package the colleges may be offering in combination with what your family plans to contribute.
3. Are there limitations to your contributions?
Is your contribution attached to a particular school (e.g., I’ll only pay if you go to an in-state school)? Or is there a fixed dollar amount that you are willing or able to contribute to your child’s education costs? It’s important that your child knows these limitations at the beginning of the college search process. This will be helpful when reviewing all the offers from the schools that he has applied to.
4. Who’s paying the initial fees?
Applications can be expensive. Sometimes, applicants can receive fee waivers to pay for the cost of applying to a specific school, but most students are paying for the application fees independently. These fees can range from $30-$90 per application. Once your child has made his final school decision, who will pay the deposit? Will you help with these costs or do you expect him to pay for these fees?
5. What other factors should you consider?
When considering how much a school costs, think about other factors besides tuition and room/board. If your child is not within driving distance, how will she get home? Do you need to consider airfare as part of the cost of attending college? Will you expect her to work part-time while she’s in college to help finance her education and social life? Will you be giving her an allowance each month? Who’s responsible for that Starbucks bill?
The bottom line is nobody likes surprises when it comes to money—unless you’re winning the lottery! Early and direct communication about the expectations for everyone’s role in financing your child’s education is important. If, like most families, money will be a determining factor in deciding which school your child will ultimately attend, let him know this before he applies and not when he’s deciding between all of the acceptances he’s received. This is an exciting time for your family. Communicating with each other can make this a much better process for the whole family!