At this time of year, many parents of high school seniors are happily watching as their student applies to various colleges. You are thrilled that your student is interested in earning a higher degree, and know that this will help lay a great foundation for future success. You smile as they apply to the college of their dreams, and even applaud loudly when the acceptance letter arrives. But a thought might be lurking somewhere in the back of your mind about how you are going to pay for all of this.
Unless your student has exceptional academic, artistic or athletic skills, it is probable that you are going to have to pay for at least some part of their educational expenses. Even with generous scholarships and grants, sending a student to college can sometimes put an extraordinary burden on a family’s financial structure. Many families are concerned about other students, caring for their own parents, and building retirement savings. With inflation impacting every area of life, some budgets are already stretched to the maximum. So, the question arises, “How much should parents really be expected to pay for college?”
That is why the money talk is so important. Before accepting any college offer, it is crucial to have a frank financial discussion with your student. Have an open conversation about the family’s financial situation, and then discuss the costs of college. Here are some important points to cover during your money talk:
- What it could cost to attend the colleges on your student’s list: Look at the Net Price Calculator for each college, to determine what the average student is likely to pay out-of-pocket. Then, add in all the miscellaneous costs such as travel, food, entertainment, and data plans. If you don’t have financial resources to cover these amounts, you might have to rely on student loans.
- What kind of budget your student might have: You should discuss now how much money you will be able to supply for your student’s living expenses. Keep in mind that you still have to run your own household. You don’t want to rely on credit cards to cover ongoing expenses, especially in light of current inflationary pressures.
- Will your student work: Some students might have to apply for the federal work-study program, or find a job on their own. While many students can juggle work hours and class time, some students have difficulty achieving a workable balance. They might also need to work during the summer and various breaks, while their peers are enjoying great vacations.
- Are there scholarships available: If your family does not have sufficient liquid resources to cover college costs, make sure your student is searching for every available scholarship to help defray some of the costs.
- Who will repay student loans: This is another key conversation to have now, not after graduation. Look at the total amount you are planning to borrow to pay for this college, and then look at student loan calculators to see what future repayment costs might be. If you expect your student o make these payments, say so now, and discuss what impact that will have on their future budgetary capabilities. Do you really want your student living with you again after college, while repaying those loans?
If the numbers don’t work, it is best to make hard decisions now about which college to attend, rather than waiting until your student starts attending classes, and the bills become overwhelming. Families with younger students can also share the wisdom of these conversations, so they can start their college planning process as well.
CFAA helps with the financial aid process, from completing the FAFSA and completing the CSS Profile to reviewing the SAR, responding to requests for verification, comparing financial aid offers and understanding student loan options. Schedule a CFAA new client free strategy session or a 15 Minute Power Chat to learn more about finding ways to pay for college. To get the latest financial aid information and college application to-do lists, look for my bi-weekly JustAskJodi emails and check out my monthly CFAA e-newsletter.