Paying for College is a Tough Topic For Teens and Parents

Paying for College is a Tough Topic For Teens and Parents

Paying for college and who pays for what and when is among the most challenging topics between teens and parents. In your family, does everyone understand who pays for what and when for college costs? For most families, the answer is no.

Most families aren’t talking early enough or often enough about who pays for college. Not enough families are openly asking enough questions of each other when it comes to who’s paying for what college costs and when. In its most recent survey of college costs, the College Board reports that the average cost of attendance for in-state students at a four-year public institution for the 2020-2021 academic year averaged $26,820. This means that even an in-state, public college education is a six-figure decision. It warrants clear conversation about who’s paying for college costs or how college costs will be shared among parents and the student.

Do yourself a favor when it comes to determining who’s paying for college.

Paying For College Easy Madison WiOn or before your child’s 12th birthday, please have this conversation: “We think it’s important for you to go to college, or at least consider your college options. Here’s what we’re going to do to help…” If your student is older than 12, then have the conversation as soon as possible once you and your spouse or significant other come to agreement about who pays for college and your family’s college cost arrangement.

Families that fail to address the college cost question suffer from consequences of poor communication and poor planning. Even if it’s uncomfortable, speak openly and in quantifiable terms about all three components of this college planning question: who, what and when. Who pays for college? What college costs are covered by parents, and what college costs are covered by the student? When (and under what conditions) will college costs be covered? None of these variables is optional when it comes to paying for college.

Why it’s tough to talk about paying for college.

When you shop for a car, new or used, you can assume that the price you see on the window sticker or scribbled across the windshield is not the final price you will pay. Factoring in a trade, the actual price may be 5, 10 or even 20% lower than that of the sticker. We all have a ballpark price in mind when we visit an auto dealer, or we can access one in a blue book. Houses are largely the same, but without the possible trade-in value. The people who determine college costs, however, seem to go to great lengths to prevent you from feeling any sort of comfort level or command of what you’ll pay for college. College tuition may be $25,000/year, but you really have no idea what you will pay with everything thrown in. In fairness, great strides have been made by institutions of higher learning (with considerable arm twisting from the federal government) to get you a ballpark figure early on in the college planning process using tools such as net price calculators.

Outline who’s paying for college and which college costs are covered by whom in writing.

Paying For College Madison WiHow do you talk about who will pay for what for college (and when) if you don’t know how much college will cost? Starting college research early helps you develop solid cost estimates to work with. College websites are now much more helpful in helping you to get a sense of what you’ll pay for college.

Once you’ve done your college research, write it down, and do the math. Make it clear to both parents and to the student who’s paying for which colleges costs and what the totals are per year. Create a college cost template based on what you as a parent can and are willing to contribute. This template spells out the college financing categories (or portions thereof) for which each party will be responsible. Here are four examples:

  • “Mom and I will pay for all tuition, fees and books at an in-state public university. Everything beyond that is yours.”
  • “We will contribute $30,000 per year for four years. If you go somewhere more expensive or take more than four years, you’re responsible for the balance. And no, we will not ‘refund the difference’ if you graduate in three and a half years or choose a very inexpensive option.”
  • “It’s 50-50 all the way.”
  • “We’ll pay for everything, but we want you to work at least ten hours per week so you learn how to manage your time, just like in the real world. You can keep what you earn, but you have to work.”

As one college planning example, my parents paid for tuition and fees plus a book allowance and required each of their three sons to pick up the tab for room and board, plus spending money. Each of us chose public universities, but the idea was that we would have the option to attend a more expensive private institution without incurring significantly greater debt. For the most part, room and board is the same at Harvard as it is at Des Moines Area Community College.

You’re essentially creating a college financing contract, and it’s perfectly acceptable to include performance clauses. Setting basic benchmarks such as “satisfactory progress in all courses” or “maintain a 3.0 cumulative GPA” works well. Whether or not you put this onto paper is up to you, but the basic premise of “If I do this, I expect you to do that” helps eliminate surprises.

Bring to the college planning conversation your own experiences and arrangements with your parents, but keep in mind that working your way through college has become significantly more difficult as college costs have escalated. In fact, this approach can actually be counterproductive if a student devotes so much time and energy to earning money that she is left with little time to study. She ends up working extremely hard to pay for something that has less than optimum value.

Many families simply tell children not to worry about college costs, or not to worry about it while searching, but this can cause confusion. Instead, have the college cost conversation wrapped up prior to senior year. If the message is, “Don’t worry about it for now,” the impression you leave may be that money is no object or that a student really shouldn’t worry and therefore not plan and save for her college financing portion.

College planning questions to consider when it comes to paying for college.

Paying For College Help Madison WiHow does an intended major impact this question, i.e. am I as a parent more willing to support a future anesthesiologist vs. an anthropologist?
If a student delays admission by taking a “gap year”, how does that change things?

  • Who gets credit for merit scholarships?
  • How about study abroad programs? Who pays for that?
  • What stipulations are there for semesters beyond the traditional four years?
  • How does a possible journey into grad school factor into all of this?

Making the effort to have open, honest conversations about money and college financing is far better than the consequences of NOT having these conversations. Be bold. Be open. You’ll be glad that you were.

We’ve helped thousands of students and families over more than 10 years, and can lend insight to your college cost and college planning conversations. Email me anytime or schedule a free consult to get your college questions answered.

The college money talk nobody wants to have but everybody should

The college money talk nobody wants to have but everybody should

Talking about college and money has probably edged out sex and drugs on the list of conversations parents LEAST want to have with their teenager. Maybe it’s because there’s no marketing campaign to go with it. So consider this a start toward that end. Parents, have the conversation with your kids about college and money!

college money conversation

Avoiding college planning pitfalls means being willing to have the challenging conversation about college and money, who pays for what and when.

Why do families avoid having the college money conversation? Lots of reasons based on my experience with hundreds upon hundreds of college-bound families.

First off, no one really knows what it will cost. We’ve all heard scary news stories about skyrocketing college costs, but we avoid getting to the bottom of what we’re really talking about here. Is it a hundred grand, or a quarter of a million dollars? How much will merit aid lower the cost? What financial aid might we be eligible for? Families are afraid to have the money talk because they feel completely inept and unprepared.

The people who determine college pricing go to great lengths to prevent you from feeling any sort of comfort about, or command of, the final price. Tuition may be $25,000/year, but you really have no idea what you will pay with everything thrown in. In fairness, great strides have been made by institutions of higher learning (with considerable arm twisting from the federal government) to get you a ballpark figure earlier in the process, using tools such as net price calculators.

In its Trends in College Pricing 2014, the College Board reported that the average estimated budget (often called Cost of Attendance) for an in-state public university is $23,410 for the 2014-15 academic year. For a private non-profit four-year college that number is $46,272.

I have heard the following phrases more than once from intelligent, well-meaning, loving parents to their children:

  • Don’t worry about college costs.
  • We’ll help you however we can.
  • We’ll talk about this later, when the time is right.

A friend once told me she didn’t think it was any of her children’s business what she and her husband were doing to prepare for college expenses, because their financials matters are private. I agree that my kids don’t need to know what we have saved for retirement or how much we earn, but I do believe it is in the best interests of all involved to be transparent about expectations and responsibilities.

One of the most common conversations I have with the families I work with revolves around college costs. So many factors go into what college will cost, not the least of which is which school you choose. We start by breaking down misperceptions, such as “public institutions will always be cheaper than private” (not true), and “we’ll never get any aid, so I’m not even going to fill out the FAFSA”. (Big mistake!) Step by step, we eat the elephant a bite at a time, and examine it for what it really is: a super huge investment that will pay big dividends, if it’s done right.

When it comes to college and money, who pays for what and when?

saving for college decisionsOn or before your child’s 12th birthday, please have this conversation:

“We think it’s important for you to go to college, or at least consider the options you have. So here’s what we’re going to do to help…”

If your child’s older than 12, don’t panic. But have the conversation. SOON.

The answer to this question is incredibly personal. THERE ARE NO WRONG ANSWERS. Don’t avoid having the conversation because of what you assume “most families are doing” or because of your discomfort with what you’re able to do (or unable to do) as a parent to contribute to college costs.

When our oldest son was a toddler, my dear wife and I had a series of conversations about our respective philosophies about paying for our sons’ college education. We had two different philosophies within the same household! My wife insisted we pay for the entire cost of college, including room and board and incidental expenses, because this is what her parents had lovingly and generously done for her.

Then we faced facts about how college costs have changed in the past two decades. And we openly acknowledged that we started having children later in life than her parents, putting us that much closer to retirement, another expensive investment to prepare for.

I then shared my personal feelings that our two sons should have some skin in the game.

Through a lot of dialogue between us, some of it pretty tense, other conversations merely intense, we arrived at a unified position that we could then share with conviction and in detail with our two sons, in plenty of time for them to make their own preparations to put up their share of the costs, or at least make a dent in the first couple of years.

If you ask my boys how much they need to save for college, my older son, who’ll be a college freshman this fall, knows the number to the five-spot. And my younger son, a freshman in high school, at least has a solid idea. He knows what his responsibilities will be, what we’re covering, and a pretty good dollar-amount estimate for each chunk.

Families that fail to address the question of “Who pays for what and when?” risk the collateral damage that is caused by poor communication and the poor planning it leaves in its wake.

Talk openly about college and money and who pays for what and when.

Who. What. When. None of these variables is optional.

Some options could look like this:

  1. “Mom and I will pay for all tuition, fees and books at an in-state public university. Everything beyond that is yours.”
  2. “We will contribute $30,000 per year for four years. If you go somewhere more expensive or take more than four years, you’re responsible for the balance. And no, we will not ‘refund the difference’ if you graduate in three and a half years or choose a very inexpensive option.”
  3. “It’s 50-50 all the way.”
  4. “We’ll pay for everything, but we want you to work at least ten hours per week during college, so you learn how to manage your time, just like in the real world. You can keep what you earn, but you have to work.”

What you’re doing is creating a contract. And it’s acceptable to include a performance clause such as maintaining a 3.0 and making progress towards a degree. Whether or not you put this onto paper is up to you, but the basic premise of “If I do this, I expect you to do that” will go a long way toward eliminating surprises.

Okay, now it’s college money conversation homework time.

college planning critical questions

A Free Guide to Avoid pitfalls like NOT having the college money conversation, plus 5 other Critical Questions and answers.

In your situation, who pays for what & when? Be prepared for open (and at times uncomfortable) dialogue about your desired “contract” and especially the values you hope it conveys to both student and parents (i.e., sharing in the sacrifice, providing the student with ample options, making sure your family can also cover the cost of other family priorities, etc.)

DOWNLOAD MY FREE GUIDE FOR THIS AND MORE ABOUT COLLEGE.

This content is an excerpt from a FREE GUIDE I wrote for parents with college-bound students, called “6 Critical Questions To Avoid Common Pitfalls When Planning for College.” Download the entire guide and get all 6 questions and answers. It’s my gift to you, and I believe you’ll find value in it.

If you’d like help with the college money conversation, or other college topics like ACT test prep, college applications guidance, merit aid, finding the right college and more, Schedule A Free Consult. Let’s get the college conversation started.