One of the big expenses many of us associate with raising children is a college education. As the cost of college rises, and as more students graduate with crippling student loan debt, many people are wondering how they can prevent a debt-laden future for their children — without putting their own retirement at risk.
If you want to be ahead of the game when it comes to paying for college, the key is communication. You need to talk to your child about paying for college well in advance.
Here are some tips for making the most of your conversation:
Not setting expectations is a common problem for parents, which leads to confusion — and bigger costs — later on down the road. Parents think their kids will bear most of the cost, while kids expect their parents to.
It’s important to set expectations as early as possible. Experts suggest talking about college by the time your child is in ninth grade. My son just started sixth grade, and I’ve already started talking to him about it.
Some key topics to address include:
- Where it makes sense to attend school: Talk about whether it’s realistic to attend a high-priced school, especially if your child doesn’t plan to enter a lucrative career (like one of the STEM fields).
- How much you can afford to pay: Be honest about what you can pay. My parents told me early on that they would pay for my room and board, but that I was responsible for tuition. My husband and I have offered a similar deal to my son.
- What you expect your child to pay: Research what different colleges are likely to cost. Let your child know a number that he or she is expected to come up with, so the whole thing seems more “real” to him or her.
It’s not always easy to have this conversation, but it is important. And, because the cost of college will only go up, it’s important to start preparing as soon as possible.
Start Saving Up
A big part of the college funding discussion with your child has to center around what he or she can do to prepare for the future. This means talking about ways to save money.
My son contributes money to his 529 plan each month; my husband and I contribute as well, but we like him to put something toward the effort. Take this opportunity to have an educational conversation about 529s, compound interest, and investing.
You can also talk about scholarships. We’ve had discussions with my son about working hard in school to beef up his grades so he can qualify for scholarships. Extracurricular activities, like joining the service club and doing music or sports, can also help a little bit.
Emphasize that the more your child prepares now, the less he’ll have to borrow — and the freer he will be — in the future.
Have you talked to your child about the cost of college? Any tips?