When you shop for a home or car, you don’t go shopping without a budget. Shopping for college shouldn’t be any different. Too many parents discover too late how much college costs and haven’t talked to their child about how they plan to pay for it. If you can (and want to) write a check for $50,000 per year without a problem, then this message may not apply, but if not, read on!
Money is an uncomfortable thing to talk about. In fact, many parents would rather talk about SEX with their kids than MONEY! This is because you may feel embarrassed about your financial situation. Maybe you haven’t saved enough and wish you had started saving earlier. Maybe you don’t talk about your expenses and your standard of living. You are NOT alone. Take the following tips to heart and you may find it easier to have “the talk”.
Schedule time to have the “College Money Talk”
If you don’t put it on the calendar, it won’t happen. And no, don’t wait until senior year of high school when your child is starting applications and you’re getting ready to fill out the financial aid forms. Start talking with your child when they start high school, start talking about college, or before.
Look at the facts of your finances with your child
Sit down and share the following facts along with your college experience and why that might shape your view. Don’t be embarrassed or apologetic. If you made financial mistakes in the past, share them so that your child might learn.
- How much have you saved and will save – calculate out how much this will be worth by the time they start college
- How much will you be able to pay out of pocket – evaluate your budget to see if there are ways to be able to contribute more
- How much do you expect your student to be responsible for – set expectations around whether they should plan to work to help save and pay for school, whether you expect them to contribute by taking out loans (and what that means to pay it back after they graduate), and whether you expect them to get scholarships
- The college budget – add up all the savings, cash, student contributions, grandparent contributions, loans, and any other resources you have, to create a shopping budget and let your child know the consequences if you don’t stick to it
Talk about how much college costs
Cost to your family is a function of the price of the school you attend and any financial aid you might get. Walk through an online calculator with your child that helps you understand what your Estimated Family Contribution (EFC) might be. This is the amount the government calculates you to be able to afford – and it’s almost always shockingly high.
Look at a couple of school websites’ Net Price Calculators to see what the total Cost of Attendance (COA) for those schools are. Consider that prices will rise each year and total up how much 4 years (or more) might cost. Take a look at costs in addition to Tuition and Room & Board like transportation, books and supplies, and other fees. Look at the results of the Net Price Calculators to see what a projected financial aid package might look like.
Help them decide what they want out of college
Does your child have a major in mind and a specific career goal? Do they have a preference for location, size of school, and kind of experience they want? Cast a wide net and be ready to consider alternative schools to graduate in 4 years, or strategies like attending community college for 2 years in order to bring down the cost.
For your free copy of “5 Insider Tips to Save on the Cost of College”, email firstname.lastname@example.org!