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“I Got In. Now, How Do We Pay for College?”

Submitted by Jill Yoshikawa, Ed M, Partner of Creative Marbles Consultancy on March 20th, 2013

“How do I pay for college?” is an often heard question from Senior parents at this time of the year.   As college acceptances and financial aid award letters arrive, the reality of an imminent, multi-thousands of dollars per year over multiple years expense may be blossoming in the consciousness of families, especially when a commitment to enroll needs to be made by May 1st for Seniors.   (Not to say that the idea hadn’t occurred to parents before now, as we posted earlier about middle class families, but, as is typical, there’s imagining what might happen–which can leave room to procrastinate–and then, there’s it’s happening right now.)  The following post can be a cautionary tale for younger families, as well as advice for Senior families.

What parents may actually be wondering with their questions is: “How do I make room in my already stretched thin, family budget to pay for tens of thousands of dollars of college expenses, without having to give something more up myself-now and in the future, as well as still being able to pay for college for younger child(ren)?”  What is a logical question, can become complicated, however.  The perception of being selfish, or not putting a child’s needs before a parent’s, can be enough for parents to take back the question as soon as its verbalized–adding complications to an already complex conversation. Plus, no parent wants to limit their offspring’s choices for college, nor do students want their choices limited.  So, the question that often starts the conversation about paying for college is “How do I find scholarships?” or frustration that the Senior is not applying for as many scholarships as available.  But, scholarships are only one part of a strategy to pay for college.  Also, in our experience, scholarships may subsidize out-of-pocket expenses for college, yet rarely covers ALL costs of college.   A more effective approach to affording college expenses is viewing college costs as a multi-year expense.  Then, families can review their household budgets and net worth, to plan each year what each family member–both parents and students–will contribute toward college costs.  (What may also be occurring is a shift in expectations that parents may not pay for ALL college expenses, which can warrant additional conversations.) Then, each person can decide how to best fulfill their portion of the college expense obligations, either through reducing spending and reallocating the cash, using savings, spending current income (i.e. getting a job and/or earning scholarships), taking debt (i.e. student loans) or some combination of all four.

The difficulty for Senior-aged families is the series of conversations outlined above may be taking place in an expedited timeframe, within the next 6 weeks before the May 1st deadline to choose a specific college for enrollment.  Thus, can give rise to the aforementioned panic and less than ideal circumstances for complex conversations. For younger families, the opportunity is to talk through the complexities of the increasing expense of college and possibly reduce the additional stress of finding room in the family budget to pay for increasing college costs and not unnecessarily limit choices for college.  While every family expects to pay something for college, no one family wants to feel burdened by the expense; planning and continuous conversation can help reduce the “burden”.

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