Having the College Money Talk With Your Child

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Joe Messinger

By Joe Messinger

April 10, 2023

We hear these stories every day. Parents take their high school junior to a reputable college or university to walk the campus and take a tour. Their student is thrilled with the school–loves everything about it. They start to get their heart set on attending, only for their parents to realize (too late in the process!) that the school’s cost of attendance isn’t financially feasible. 

The result? Either devastation for the students told by their parents that they can’t go to their dream school that they worked so hard to get into, or massive student loan money borrowed by both the students and parents to make attendance happen. No matter which way you slice it, this isn’t an ideal situation. 

It doesn’t have to be this way!

As a Certified Financial Planner and co-founder of Capstone Wealth Partners, I encourage parents to have the college money talk with their student before they even start the college search. Speaking with them regularly about different schools, and what they might be looking for in a college experience, can start as early as middle school or their freshman year of high school. Ensuring that they have a clear understanding of the net cost of college, and what that yearly tuition will cost them in student loans after they graduate, is critical in empowering them to make a savvy financial decision when the time comes. 

After all, when you go shopping for a car, you don’t go shopping without a budget in mind. You don’t test drive a Porsche only to discover what it will cost after you’ve already fallen in love. When you go to the dealership, you already know a new Porsche will set you back at least $50,000. If that’s out of your price range, you don’t even bother test driving it so that you don’t have to say “no” to something that was never an option to begin with.  

In the same way, having these conversations with your student before you start going for college “test drives” keeps everyone on the same page. Make no mistake:

This is an emotional buying decision.

College admissions folks are good at what they do, and they have a great product to sell. Their marketing team starts advertising to students early in their high school careers to help ensure that attendance numbers continue to climb with each graduating class. 

So, how do you help to offset the glamor of college brochures and campus tours with the not-so-fun college money talk? Let’s dive in.

Get Uncomfortable

Money is an uncomfortable thing to talk about. Most of us learned personal finance by attending the school of hard knocks. A few money missteps in our young adulthood helped to shape the decisions we make today. Some parents feel that their college-bound student needs to be allowed to make those same mistakes, and so discussing family finances isn’t something that’s considered. 

We’d like to change that. 

National college debt statistics are astounding, totalling over $1.749 trillion dollars. New graduates are crippled with student loan debt payments that can range from a few hundred to several thousand dollars each month. They may end up paying these loans off until well into their 40s or 50s, making it difficult (if not impossible) to set their children (your grandchildren) up for financial success.

Even if generational wealth isn’t a priority for your family, the truth is that paying for college isn’t the same as it was even 10-20 years ago. The college funding landscape is forever shifting, and the cost of college continues to climb. This makes it imperative for families to have candid conversations about the net cost of college, and what type of financial assistance students can expect from their parents (if any). 

To start these conversations, it’s important to keep a few things in mind:

  1. This is uncharted territory for many. It’s okay to be honest with your kids, especially if you’ve never talked candidly about money before. Be open about what you’d like to discuss, and why it’s important to you. 
  2. There may be an element of embarrassment (on everybody’s part). All parents wish they would have started sooner when it comes to saving for college. All students feel sheepish once they realize what a big financial burden this may be for their parents (and for themselves). Cut past the embarrassment to get to the facts. Cover what you have saved, what you’re willing to help with, and identify the funding gap your students are expected to handle with loans, a job, or savings.
  3. College isn’t a given, and drowning in student loan debt isn’t a forgone conclusion. Let college be a powerful lesson in consumerism for young adults. They get to decide what type of college experience they want, and they can seek a university that offers them the most free money (grants and scholarships) to attend. Ultimately, their dollar speaks volumes for themselves and for what the next generation of college attendees is willing to pay for their education. 

Structuring the Conversation

This “college money talk” isn’t just about money! It can help to have a brief agenda pulled together before diving in with your college-bound kid. Here are a few key points to cover:

  1. What does your student want? Do they know what they’d like to major in? Have an idea of what they’d like life to look like after they graduate? These factors can influence what type of school makes the most sense, and what premium they and you are willing to pay.
  2. Determine what aspects of a college experience feel like a good fit/environment for them. A Big 10 School will be different than an Ivy League, which will be different than a small liberal arts college. Identify what type of environment feels like a fit for your student. Do they want to experience college sports? Get a part time job? Travel abroad? Have small class sizes? Everything and anything is fair game. 
  3. Define your (the parent’s) budget. What do you currently have saved for your child’s college education, and how much are you willing to help with year over year? Don’t wait until during the “college money conversation” to have these numbers. Sit down together to determine what makes the most sense for your family, and balance these expenses with your other goals (like retirement). 
  4. Talk about the net cost and the funding gap. It’s inevitable that there will be a gap in funding that your student will need to consider. Unless you have $200-300k in cash available to fund their college education, this will need to be a topic of discussion. Be clear with your student about the fact that this “gap” can differ at different colleges. Some universities never offer merit scholarships, while others may be willing to offer your talented and gifted student a near full ride. The power is truly in their hands depending on where they choose to apply.
  5. Get creative. This is where the fun begins! When you have the conversation early with your student, you’re able to cast a wide net to find the perfect fit for your family. You can search through thousands of colleges and universities in the United States to find the ones that meet your financial needs and have the type of environment where your student will thrive. You can also make decisions about whether or not a 4-year university makes the most sense. Many trade schools or community colleges offer less expensive programs that empower your student to transfer to a bigger university later on. This can be an effective cost saving measure. 

Get It On The Calendar

Put it on the calendar, or it won’t happen! We built College Aid Pro™ to help families shop smarter for college. If you’d like to have a more concrete discussion, we recommend using our free MyCAP program to structure your college money talk. You can run cost projections for various colleges on your student’s “dream school” list, and talk through possible financial aid options all by running easy, user-friendly reports. 

Adapted from a post by Joe Messinger at Capstone Wealth Partners.

At Savingforcollege.com, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.

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