For many people, their college tuition will be one of the largest expenses in their entire life. In fact, the average annual tuition for a private college has now crept up over $30,000. That means that a four-year degree could cost over $100,000 before other expenses like food and housing.
As a result, about 27% of the cost of college tuition is paid for with student loans. This is combined with money earned from scholarships, working, and gifts from family. With college costs increasing every year, more students will need to borrow more money which simply means more debt before they have even begun working in their career of choice.
To soften the shock of college tuition cost, parents often set aside money for their children. In this article, we will offer some tips to help you talk with your children about college planning in a way that they can understand.
Start the Discussions at a Young Age
Young children may not be able to fathom what tens of thousands of dollars of debt looks like for a young adult so discussions must be age appropriate. Instead of focusing on the doom and gloom of debt and high college tuition fees, discuss what your child wants to do when they grow up.
Of course, their answers may change as they get older, but it allows you to relate the importance of college and the importance of saving for college.
You may even wish to get them involved by saving a portion of their allowance from doing chores. This puts some skin in the game, so to speak, and helps them understand the hard work that goes into saving.
Be Honest About the Cost of College and the Effects of Debt
As your child enters their teenage years, you can begin to change the discussion about college savings to be more in-depth. If your teen is working a part-time job, then they will have a much better understanding of the value of a dollar.
This is your opportunity to be open and honest about the costs associated with college.
Create mock college budgets that include the costs of tuition, housing, and other expenses. Show the differences between state colleges and private colleges. Map out the difference between living at home and living in a new city or on campus. You may also wish to show how these expenses must be paid for and how debt can follow someone long after they have completed their degree.
Most importantly, don’t leave this college planning discussion until the day your child is considering applying for college. This should be an ongoing conversation in your family throughout the years leading up to high school graduation.
Involve Your Child in the Budgeting and Saving
It’s important for your children to see where the money for college is coming from. By involving them in the budget, they can get an understanding of the hard work it takes for college savings. More importantly, they can see their college budget clearly and recognize that, if they wish to avoid debt, they may have to help with saving for college.
This can also show the importance of earning scholarships and drive your child to succeed in academics and sport. However, without involving kids in the budgeting and saving, college planning will simply remain a mystery to them.
Advice for College Planning and Family Meetings
Family meetings about money can be a delicate subject for some. At Mooney Lyons, we are experienced in helping families plan better family meetings and create effective college planning budgets.
If you would like to speak to us about your family’s needs, please contact us today.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.