Paying for College: Working Together to Avoid Heartbreak
By Joe Messinger, CFP®
April 9, 2020
Every year we have to have this conversation. We would love to NOT have to have this conversation ever again. Every year, we hear the same heart-breaking stories from parents many of whom have never connected with Capstone before. Their senior high school student is making the final decision about where to go to college. They are shocked by the prices of the schools who accepted him or her, and their student is balking at going to a more reasonably priced school. In the students eyes, they did all the hard work to get into prestigious schools that they were encouraged to attend. Paying for college can be a parent/child battleground. Parents need ammunition to help their students be prepared for the realities of paying for college.
The biggest roadblock to an easy process…not starting early enough.
We don’t just mean starting to save early enough. (Although starting to save as early as possible (birth!) is very important.) We mean having the conversation early enough. Understanding the real cost of college early enough. Making sure you, your spouse, and your child are all on the same page early enough.
Get started early with a money conversation. How much do you expect your student to pay for either through work study, loans, or through the scholarships they earn? How much are you willing to provide? Our “having the money conversation” blog is a great starting point for this conversation.
Both parents and students need to understand some basic things.
Without a common understanding about how much it will cost, how much you will have to spend, how to take advantage of tax credits, scholarships, loans, etc., and what life after graduation will look like for your child, the battle will be great indeed.
What do we suggest?
First, parents need to understand how college funding works and the realities of today’s costs. The sticker price of college is irrelevant if you are an informed consumer. Don’t let a college visit in your student’s junior year be the first time you discover the dream college will cost $60,000 per year (or more)!
You will need to do a little homework. Read the college’s website to discover what their costs and financial aid policies are going to be. Try their “net cost calculator.” Read blogs to understand how scholarships work and discover tips you can use to plan and pay for college. Take advantage of special events like college fairs or planning webinars as a tool to help you learn. The more information you can gather the better prepared you’ll be.
Use this knowledge (shared with your student) in the parameters of your college search. The cost MUST be part of the conversation.
Hope is not a strategy, and some grim realities must be taken into consideration. We often say that the price tag is just a starting point, but if the cost is $60,000, bringing the price down to an in-state public school level is probably not going to happen. If the parents and the students are on the same page early on, the search and decision become much easier.
A strategy that has worked for some of our families is having the student commit to being a resident assistant (RA). These highly coveted positions can cut the cost of college by 10 to 15 thousand dollars per year by providing housing and in some cases a meal plan! You cannot be an RA your first year, but years two, three and four you can. This could shave a total of 30 to 45 thousand dollars off the total cost. This could bring the cost within reach and that is the kind of commitment some students have so they can attend their dream school!
Understand the realities of a “name brand”
We often hear something along these lines–my student was accepted to both “Exclusive University”, costing $50,000 per year with no financial aid, and “State College”, costing $20,000 per year with substantial merit aid offers. Families are left weighing the value of the college’s name and reputation versus the mountain of debt they will need to take on. How to decide? We would recommend you consider a few things. First, college reputation does not mean it is a good fit for your child or will serve them well. We would also recommend you read Frank Bruni’s Where You Go Is Not Who You’ll Be. Sometimes an expensive college can be worth it, but the strength of that school’s specific program your child is pursuing has got to provide you with a strong return on your investment.
April of your student’s senior year is too late to really help.
Students are expected to make their decisions by May 1st. You have your offer letters and need to decide. If you have had the college money talk as a family and agreed to a College Pre-Approval™ amount the decision process really comes down to comparing the awards side by side to see which ones fit the budget.
Now, if you are a regular reader of my blogs, these dilemmas may not apply as much to you. You understand the reality of the cost of college. You are armed with some tips about how to find colleges you can afford. You have tried to make saving for college a priority. Your student ALSO understands all these truths.
But what keeps us up at night is the parents who never received the message with the important information they needed. Please take a moment to tell a friend. Share what you’ve learned or point them in the direction of helpful tools. Every parent can use this information. Things can be done to make the process easier, but they can’t be started in April. Together we can end the student loan debt crisis by sharing our knowledge with each other. Thanks for spreading the word!
Originally published 4/2018
December 13, 2019