Sometimes during the college search process, we parents think the paying for college piece is solely our responsibility. We don’t mean who pays for what. We mean understanding how the process works.
Parents can fall into the trap of thinking we don’t need to share the finer points about the mechanics of paying for college (loans, repayment, what we have saved, what we can cash-flow, etc.) with our students because it is either too confusing or we think our student is not interested. Or we just don’t want to burden them with that information.
The truth? Many students tell us that they actually crave this information. They want to understand how it all works. They want to use their knowledge of scholarships, loans, and financial aid in their college search. How can they figure out how much a college’s sticker price might be? They want to understand their financial responsibility now and in the future.
Students hear stories about young adults in debt. They recognize it’s a big expense, but without our guidance, they can’t form a sense of how to plan and pay for this “big thing” in the future.
“We’ll make it work.”
Too often, we hear horror stories about parents who tell their student that if they just get into ABC College, the parents will figure out a way to pay for it. The student then focuses on a specific school without anyone really understanding the final cost (perhaps assuming they will earn a scholarship), and the parents end up shocked by the actual bill and scrambling to pay rather than break their promise.
We all hear the stories about the huge student loan debt burden in the United States. Our kids hear these stories, too! It is true that adults age 25 to 34 have the most debt. However, older borrowers (age 35 to 61) had the greatest increase in the amount of debt—close to $67 billion in additional student loan debt. These are parents borrowing to pay for their children.
When the student and the parents work together from a common knowledgebase of how they plan to pay for college, how to find the right schools, and how the actual costs are calculated, then the process is smoother and the potential for heartbreak is lessened.
So, what do we suggest?
We suggest you have your student join you for Smart Money Moves for the College-Bound. If they can’t sit down for the live event, have them watch the recording you’ll receive afterwards. We’ve offered this free program for years as an easy way to get up to speed with a nationally known college money expert. This workshop provides a great foundation for understanding the terminology and the processes.
If your student would prefer to do some reading or watch a video, check these out:
- How Does Paying for College Work? Your Guide to Tuition from Student Loan Hero
- Paying for College website from the College Board
- How Financial Aid Works from US Department of Education
- Paying for College video series from Khan Academy
The Money Talk
In addition, have what we call the “money talk” with your student so everyone is on the same page. You can find a blog here about what we mean. This talk will answer family-specific questions like:
- How much have you saved?
- Will you budget money each month out of your paycheck?
- How much will the student be responsible for?
- What and how much aid do you qualify for?
- How much will it cost?
- What is the 4-year plan and the future effect?
Students want to know how about their participation:
- Will I be expected to work during school and over the summers, and is that money for me to spend on incidentals or is it to be used to pay tuition?
- Will I need to take out student loans?
- How does a loan work? (They have some idea because they receive some “economics” instruction during high school, but you can make it more real by discussing the impact of repayment on a monthly after-college budget.)
- What does our overall plan mean to my financial future upon graduation?
What if my student actually is NOT interested in the paying for college part?
Well, frankly, you can’t afford to not include them in this part of the process. If student loans are part of your plan to pay for college, students need to have a firm understanding of how that loan will impact their future. Their choices now have real impact later so they must take responsibility and be involved. This very real exercise in paying for something “big” will be so important to paving a path to good decision-making in the future for your student. We’re always here to help, and good luck!
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