Keeping kids in the loop on financing college

Recently, I was out with a group of parents whose first born children are entering their senior year of high school. Knowing that we just took our son back to college for his sophomore year, one of the parents asked, “Do you have any advice for us in navigating senior year and the college search?”

My answer: “Yes. Be very open and upfront immediately with your children about whatever your financial situation is regarding college.” Another parent with an older child agreed with me.

Why you should discuss college finances with your child

When asked why this was my first piece of advice, I explained my belief that it’s better for everyone to have a realistic view of costs up front to appropriately set expectations as this should influence what schools you visit and to what schools students apply. There are thousands of schools and application fees add up quickly. Both time and money are limited. Having some common understanding at the outset can help you decide how you use your resources.

While many parents are saving for college, a College Ave survey showed less than half of all parents had a plan to cover the full cost of college before their child enrolled in college.

Avoid disappointment

Why set yourself up for a disappointing “we can’t afford it” speech later in the year? Shouldn’t everyone dream big? Absolutely. But going in, your kids should know realistically how much – if any – you’re planning to contribute and how much will be on them to fund. Conversely, if you have all the funding you need for your child’s college (maybe you’ve diligently saved in a 529 college savings plan or have a wealthy relative who’s planning to help pay), make sure your child knows this as well. A recent study by the Art & Science Group showed cost was a significant factor in a student’s college decision.

A huge financial decision

In “The Price You Pay For College,” New York Times Money columnist Ron Lieber points out the college decision is likely the second largest financial decision people make in their lifetimes (the first being taking out a mortgage). He also says no consumer decision inspires more confusion and emotion than the question of what to pay for college. And the process is complicated by a financial aid system that works differently at different schools and which can be wildly unpredictable.

A common theme that fuels dreams:  public universities cost less than private ones, but private schools offer more financial aid. Like most things in life, your specific circumstances will dictate. Having the money conversation early on will also help when your child begins receiving their acceptance letters and financial aid offers. While it sounds simple, each school presents its financial aid offer differently. It’s important to understand how to read financial aid offers. In addition, you should consider any additional costs that might not be immediately apparent such as location and proximity of the school (will you need to factor in travel costs for your student?) and if your student’s specific major has additional fees. 

Whoa! Before we get to majors and specific costs, aren’t there a whole bunch of other factors to consider? Of course there are – and these topics are lengthy enough to deserve articles of their own. The first being whether or not college interests your child. Maybe your child wants to pursue alternatives to a four-year degree or other workforce options.

What to consider when choosing a school

This post assumes college is your child’s goal. There are many things to consider in choosing a school and it’s important to discuss all of these early on. What is your child interested in studying? Which schools offer respected programs in that field of study? Big school or smaller school? Public or private university? Distance from home. Resources/activities available on campus. The list of factors to consider can be daunting. Discussing which factors are important to you and your child can help narrow the list of schools.

Should institutional prestige be a factor? In “Where You Go Is Not Who You’ll Be: An Antidote to the College Admissions Mania,” Frank Bruni makes a compelling case that what students do in college is a bigger factor in determining success than which school they attend. Also, he explains flaws in college ranking systems and questions our society’s obsession with pursuing highly selective, elite colleges. Malcolm Gladwell devotes a chapter in his book “David and Goliath” on why going to a prestigious college with intense competition may actually be a disadvantage for some students. Both provide viewpoints that buck the current college search trend of applying to 10-20 schools on a carefully curated list ranging from stretch to safety schools.

Finding your family’s definition of success

I agree with Bruni and Gladwell. I believe that talented and motivated students can thrive in a variety of environments. Also, I believe it’s more important to minimize student debt, even if that means passing on an expensive, prestigious university. 

Making the right choice likely depends on what goals your child has and what’s your family’s definition of success. As we talked about college, finances and life goals, here’s how our family defined success: our son becoming a happy, responsible, financially independent adult.

Engage with us: In the comments, what advice do you have for parents navigating senior year and the college search?