27 Mar Should Parents Be Responsible for Paying All of the College Costs?
Probably since colleges were first established, parents have wondered just how much of the cost they should be expected to pay. Pay too much, and the child learns nothing about financial responsibility. Pay too little and the student may not be able to amass sufficient financial resources independently.
So what is a parent to do? Legally, parents are not actually required to pay for college, except in those instances where it is mandated as part of a divorce settlement. Prior surveys show that just seven in ten parents were in fact saving any money for college, with most amounts saved not even being enough to pay for one year of education at the most reasonably priced schools. A miniscule 29% of parents planned to fully pay for their children’s college costs, while most expected to pay about two-thirds of those expenses.
Recent events may darken the prospect of parental financial assistance even more. The Coronavirus pandemic has thrown the country into a financial tailspin, with “non-essential” workers being told to work from home and businesses shuttered for an unknown period of time. Unemployment benefits and government subsidies may not cover routine family expenses, while wild stock market fluctuations steadily erode any savings. 529 plans invested in equities have lost a great deal of value, and a rapid recovery is uncertain. Older parents may have seen their retirement savings wiped out, and may not have the financial flexibility they once thought they had.
Some state governments and colleges previously announced free tuition programs to encourage applications. But who knows if funding will still be available to cover those programs once the costs of dealing with the pandemic are fully known?
The question now might not just be whether parents should be responsible for paying college costs, but whether they in fact can. Given all these concerns, the best course currently is to really take some time to discuss college with your student and fully understand the impact of the financial decisions that need to be made. Here are some points to take into consideration as you hold these conversations:
• You must talk about financial realities: Your high school junior or senior needs to become very aware of your family’s current financial situation, as well as your ability to pay for college. This may radically affect the initial college choice for your student. Talk about how the world’s financial situation has impacted your family, and update the balance of any savings plans. Then sit down with your child and calculate the anticipated out-of-pocket costs for each college on their list. Most colleges have a Net Price Calculator for this purpose, but keep in mind that the result is only an estimate of future expenses based on current financial variables. If you don’t have the money available, your child might have to pitch in with more money, attend a lower-price college until your financial situation changes, or postpone college for a year.
• Learn everything you can about financial aid: Financial aid can be a valuable lifeline in finding funding for college. Be prepared to file the FAFSA in October by gathering all your financial documentation from last year. If your situation changes dramatically this year, save everything related to it so you can submit additional information to the financial aid offices. Some colleges also use the CSS Profile, which may require additional information from a non-custodial parent.
• Be very careful about taking on student loan debt: Even though some support is being given to student loan debtors, the money that students and parents took out to pay for college could now have serious implications for many families. Be very stingy about the money you and your student borrow, to protect yourselves down the road.
Finally, it could be even more important this year to do a full-court press on the search for scholarships. This might require some extra research and application time, but it could be a worthwhile activity for home-quarantined families. Most parents want to help as much as possible, but today’s financial environment has made the need for open conversations about college very real.