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.
On 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.
How 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.
How 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.