There are many different times to have a college conversation with your student. And as you can probably guess there are many different topics to discuss in these college conversations. We want to help you facilitate the college conversations. So we will start with one of the most difficult college conversations.
College Conversations: “Show me the money!”
This is one of the most important college conversations. Although, we think financial training for each student should start as soon as the students start handling money, there is definitely a need to talk about money in preparation for the college years. Here are a few talking points for your college conversations about money.
How much money comes from the family
Every parent must sit down with their student and talk about how much money the family will contribute toward college. This number is different for every family. This includes money that the parents have saved for their student’s college, money set aside as gifts from birth or through the child’s life, funds that the parents may be able to pay during the college years, even money from extended family members. This information is invaluable, because it forms the foundation of financial planning for the college years.
How much money comes from the student
Once the conversation about family contribution has been started, the next step is to talk about how the student will be involved in college funding. Student’s involvement includes many facets. For instance, if a student excels in academics or athletics, they may be able to secure scholarships which will handle some of the financial load. The student can also save as they work during the summer months leading up to their freshman year of college. Some additional questions to help this conversation: Is the student willing to apply for outside scholarships and grants? Will the student have a job while attending college? Will the student have a job during the summer months during the college years?
How will you handle college debt
Unfortunately for many, the college financial conversation now must include a conversation about debt. In our last post we focused on the rising debt among college graduates. The average debt for a 2016 college graduate is now $37,000.00. Is the student willing to incur this debt? For most students, this debt load will not be carried alone. Are the parents willing and able to incur this amount of debt?
It may be helpful to use a debt repayment calculator such as the one provided by finaid.org. Type in the amount the student plans to borrow and the expected interest rate and let the calculator do its work. It will show you what the payments will be, how much interest will be incurred and how long it will take to pay the debt off.
This information becomes invaluable as you have your college conversation about money. It may even become the most important piece of information regarding our final talking point.
Choosing a school with finances in mind
Choosing a college is one of the most important financial decisions a student will make. That is why it is important to have a college conversation about money. Finances may or may not be the most important issue when choosing a college, but it can play a role in the decision making process. A private college will be more expensive than a public college. Living on campus or commuting is another decision that may be discussed in one’s financial college conversations.
Using the talking points mentioned above you can choose a college with confidence. Although conversation about money can be difficult, these conversations are essential to your financial planning for the college years.