Several years ago, a CPA called my office to ask for my help with one of his clients who was a professional with a well-paying career but just hadn’t put a priority on saving for college for his daughter. The senior in high school was making her final decision about where to go to school. She had gotten into a number of prestigious colleges with prices to match. Cost was never a conversation that her father ever had with her. He was shocked by the prices of the schools she was accepted to and the student was resisting considering a more reasonably priced school. Situations like this are all too common and heart breaking. The student felt she had done the academic work and had her heart set on a certain school when she got in. Parents and children can do battle over these kinds of situations. Parents need to help their senior understand the realities of paying for college.
Not starting the process early enough is the biggest obstacle. It’s not just a matter of saving enough or early enough. It’s about having the money conversation early enough and understanding the real cost of college early on. Adults in the household and their student need to participate in the money conversation. How much is the student willing to help through work-study, scholarships they earn or loans? How much are you able and willing to contribute?
Parents and students need to be on common ground. Unless you both have an understanding of how much it will cost, how much you have to spend, and how to access tax credits, scholarships, loans etc., as well as life after graduation, you may be in for battle.
What do we advise?
Parents need to get an understanding of how college funding works and of the costs in today’s market. The sticker price of a school is not necessarily what you’ll pay if you are informed. Don’t visit a college in the junior year, let your child fall in love with it, and then discover that dream school will cost $60,000 (or more)! You’ll need to do some prior homework. Go to the college’s website to discover what their costs and financial aid policies are likely to be. Use their “net cost calculator” or ask for your Free Money Report on this website. Learn how scholarships work, read blogs for tips, attend webinars and college fairs. Getting educated means being prepared. Share your knowledge with your student and discussing cost is a must. Parents and students need to be on the same page for the college search to go smoother. Understand that a $60,000 school will not magically turn into the price of an in-state public school.
One strategy that has helped some families is having the student will willing to be a resident assistant(RA). These highly sought after positions can cut the cost of college by 10 to 15 thousand dollars per year by providing housing and sometimes a meal plan. RA positions are available in years two, three and four. This can cut the cost of college by thousands over four years and bring the cost within reach for a dream school if the student is willing to make a commitment.
What about the “name brand” of a college. Is it worth spending $50,000 on an exclusive university vs $20,000 on a state school? Cost doesn’t necessarily insure a good fit for your student. The strength of a school’s specific program that your child is interested in has got to provide a strong return investment.
If it’s April and you have acceptance letters it’s time for a decision. Hopefully you’ve had the money talk with you child and it will come down to comparing the award letters side by side to see which ones fit your budget. So, if you have saved for college, learned how to find colleges you can afford and understand the what can be done to make this process easier you’ll be prepared rather than shocked. You can’t start in April of the senior year to get the most out of being able to reduce student loan debt. A good starting point that you can share with others also searching for colleges is the Free Money Report on this website.