26 Apr Talk to Your Student About College Finances
There are many life topics that parents need to cover with their children in order to help them better manage life’s challenges – love, marriage, and money are all high on the list. But one topic in particular that many parents seem to shy away from is college finances. There seems to be some unwritten taboo around this topic, where it is not talked about until the child is a senior in high school. All too often, there is a huge surprise when the parents unexpectedly announce that they do not have enough money to pay for college and the mad dash is on to find sufficient financial aid to send the student to a desired college.
It doesn’t have to be this way. Parents can take their time over the course of the child’s life to impart important money lessons. Make them age-appropriate, be sure the college money question is out in the open, give your child the chance to learn to use debt appropriately, and things should be much easier at college application time. Here are a few milestones along the way:
• Elementary School: No it’s not too early. Even young children can begin to learn the value of money. You may want to start by giving your child a small allowance that he or she can save up for special purposes. Don’t be afraid to say, “We can’t afford that now.” Show that saving money allows you to purchase items, and put a value on this process.
• Middle School: Don’t make college promises you can’t keep. Too many parents tell their children they can go anywhere they want, and end up putting the family into a financial tailspin when the bills start coming due. Make a point of saying, “This is what we can afford to do for you, and this is what you will be expected to do.” If your child has designs on an expensive college, discuss ways in which that goal might be achieved.
• High School: Start looking at the cost of colleges when your student is a freshman so you will all be familiar with the investment required. Share stories you see in the news about student loan debt and discuss ways it can be avoided or better managed. Once your student starts applying to colleges and receiving financial aid awards, take time to review them together to make a decision that is both emotionally and financially sound.
• College: The life lessons must continue. Give your student a budget for the college year, and don’t go beyond it unless there is a pressing emergency situation.
Looking for more ways to talk to your student about college finances? My new book, Secrets of a Financial Aid Pro, provides insights into talking to your children about money at all different ages, and helps readers understand the different types of college financial aid that are available. Pre-order now and take advantage of some terrific bonus offers.