Parents often remark that they don’t want money to define their child’s choices for college, and then proceed to ask me questions about financial aid and scholarships. The sense of an impending expense in the thousands of dollars can make any normal human being nervous. Teens can often react with guilt and fear, that they are potentially asking for the family to make great financial sacrifices on their behalf. Parents’ reactions can range: from talking with me in hushed tones or pulling me aside after the teen has left the room to ask questions about college costs to consistent reminders to the teen that s/he must apply for scholarships and stating that the family cannot afford the expenses of college. Despite the various reactions, families are being asked to think through what they currently spend, what amount they want to invest for college, the value of the intended college degree in relation to their investment, as well as how to balance other long term investments, like retirement savings, with college expenses. The money part of going to college is not an easily answered question, nor answered with finality in one conversation. How the family manages the expense of higher education usually evolves over time, and with a series of conversations.
Gathering information to begin planning for the expense of college happens in two places: one, in the family’s personal financial statements and two,with tools from the colleges themselves. Having one’s personal finances as transparent to all family members and as healthy as possible, can be firm ground for the family to begin considering the additional expenses of college. Most families don’t have a savings of $125,000 to $250,000 to pay for college in cash. Some combination of scholarships, current income, savings and possibly debt (i.e. student or parent loans) will be needed to pay for college, which is where the tools available on each college’s financial aid website can help. Families can view estimated costs of attendance for tuition, housing, personal expenses, books etc to begin setting a budget. I will caution that these numbers are the most conservative estimate of what the family may pay out of pocket for college–meaning these published costs are most likely the highest estimated expenses. (Of course, if the college is across the country, then travel expenses may increase for your student or if the student isn’t conscientious of how much s/he is spending at Starbucks, the expenses may be higher. However, the listing of various college costs will give families a framework to start planning.) Another tool that families can use is what’s known as, the “Net Cost Calculator”, also called the “Net Price Calculator”. These calculators ask families to input financial data, like current income, asset values, as well as academic data for the student. (Academic data, like GPA, SAT and ACT scores, will only be requested if the college provides merit aid.) The “calculators” forecast an estimated financial aid award letter–the amount of scholarship, grant, work-study (i.e. a job), loans and out-of-pocket costs–the family will likely be awarded. Families can “comparison shop” between colleges to understand the costs. Also, any forecasts can be used to counter any thoughts about not qualifying for financial aid or fears about paying more than can be reasonably afforded. In either case, families can gain greater information to help them make decisions about college–both in selecting colleges for application, as well as making final decisions about where to enroll.
No family wants to limit their child’s possibilities. The reality of increasing college costs is creating pressure for families to make difficult decisions–both parents and students–which can lead to greater confidence in the end of the college s/he chooses, as well as in the money invested in the student’s future. Plus, if students understand the costs of their endeavors, perhaps they’ll cherish the experience all that much more. We’ve all had the experience of having to work toward something and really earn the end result. Isn’t that infinitely more rewarding, than possibly taking for granted some outcome that came effortlessly?
