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Is It Time to Talk to Your Teen About Paying for College?


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Gone are the days when a student could work full-time during the summer to pay for the following year’s college classes. Now, most people interested in higher education must consider alternative sources of funding, such as taking out loans.

Most parents want to help, but it’s not always realistic for middle-class families to contribute to their kids’ college education. In 2020, the median household income in the U.S. was $67,521 (a 2.9 percept decrease from 2019, in large part because of effects of the COVID-19 pandemic). A year or two of university could easily cost the same amount.

If you have college-bound teens, it’s essential to assess your family's financial situation and determine a budget for higher education. Consider what options are available to cover tuition and what potential loan repayments will look like after your student’s graduation.

When it comes to talking to your child about paying for college, it’s never too early to begin — even a freshman or sophomore in high school should know what to expect. Here are some points to consider.

When Should You Have the Money Talk?

You may think you can put it off until it’s time to fill out college applications, but it’s best to have the conversation early. Talk about the affordability of college and discuss all the possible funding sources, such as college savings accounts, contributions from relatives, potential financial aid, outside scholarships and, as a last resort, loans.

As part of the conversation, guide your teen on how they can start earning and saving money. A summer job will allow them to save $2,000 to $3,000 or more. They can also work part-time after school or on the weekend cashiering at a retail store, waiting tables at a restaurant or babysitting neighborhood kids. If your student gets a monthly allowance, encourage them to begin saving for future expenses.

Your student’s savings will likely only be enough to cover spending money extras, such as books, meals away from campus or gas for their vehicle. However, some will be able to contribute to tuition, and you’ll need to make your expectations around this financial commitment clear.

It’s important to be upfront with your student about your family's financial parameters and what you expect them to contribute — that way you'll be starting on the same page when it's time to apply to and choose a college.

Find employers that hire teens >

The Difference Between Public and Private

When it comes to college costs, fees vary dramatically. In 2020, the average total cost of attendance (one year of tuition, room, board and fees) for an in-state student at a public university was $26,820. If your student wants to attend a public school out of state, tuition may be double. The total cost of attendance at private colleges and universities averages $54,880 per year.

You may think in-state public institutions are the way to go. However, keep in mind that private universities often have more money to give away in the form of grants and scholarships. When you help your child with their college search, encourage them to explore all their options to discover the best fit. Chances are you won't pay full "sticker price," so you should also consider location, school size, academic programs and more.

Read "Sticker vs. Net Price: Understanding the Real Cost of College" >

How to get in-state tuition prices at an out-of-state college >

How Do You Create an Action Plan?

Once you've had a preliminary conversation about paying for college, sit down and create an action plan with your teen. Estimate tuition costs at a couple of universities that might be on the table down the road, starting with schools in your state system.

You should also consider other expenses, such as:

  • Food and housing
  • Laundry
  • Dorm furnishings
  • Clothing and personal items
  • Textbooks and electronics
  • Phone bills
  • Travel home
  • Entertainment and other "extras"

How much are you willing to put toward the costs, and how much will your student need to cover? If you’re contributing money, are there any conditions? For instance, you may ask your student to maintain a 3.0 or above grade point average. You may have to revisit spending needs each year or between semesters.

As you create your action plan, remember to check specific costs at schools your student is considering. Each college is different, but most list estimated costs or include a tuition and housing calculator on their website. You can also make use of online resources like the U.S. Department of Education's College Scorecard, Tuition Tracker and College Tuition Compare.

A Few Financial Topics to Discuss

During high school, you can work with your student to make sure they have the tools needed to be financially responsible — now and later in life.

If they don’t already have one, now is the time to open a bank account (with separate checking for their ATM card usage and savings). Show them how to track their spending and "balance their checkbook" (even if they don't actually write checks) so that they are careful not to spend more than they bring in from an after-school job, gift money and their allowance.

Together you can come up with a formula for how much money they should be putting into savings on a regular basis; they may also want to earmark a certain amount for charitable contributions.

While your teen is probably not ready for their first credit card, it’s still a good idea to talk about how credit cards work. Explain how a credit score, which ranges between 300 and 850, is an indicator of one’s bill payment history, debts and other financial histories. When they're older, they’ll want a high score to get a loan and buy a new car or home. Anyone can request a free credit report annually from Equifax, Experian and TransUnion.

Will Financial Aid Be an Option?

Start by learning about the different kinds of financial aid available to college students, including institutional scholarships from the schools themselves and scholarships from outside sources. Assistance varies from public to private universities — some offer need-based aid while others use merit (your student's grades, test scores and other achievements) to determine eligibility.

Your student will apply for financial aid when they apply for admission by completing the FAFSA (Free Application for Federal Student Aid) and other paperwork required by the individual colleges. Some students receive work-study as part of their financial aid package.

To cover college costs, many students and their families opt for student loans. In the U.S. today, more than 45 million people have student loan debt, with the average amount sitting at $32,731. Talk to your student about the pros and cons of taking out loans to help pay for college, the differences between federal and private loans, and the importance of looking for other means of financing first to ensure they minimize their overall debt.

Paying for College — Why You Should Talk to Your Student Today

Whether your student is a high school freshman or soon to be a senior, those college days will come up fast. Don’t wait until graduation to talk about money! From cutting expenses to covering costs, if you address and plan for the college investment as a family, you'll help your student take an important step toward adulthood — while also making sure the college choice they eventually make is the right fit for them and for your family's budget.

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