This is the second part of our series of posts covering money discussions between family members.
Attending a college or university has consistently grown in importance in the U.S. for decades. Research study after study validates the life earnings advantage (along with other advantages) of receiving a college degree. While the benefits of a college degree are known, these benefits are offset by the ever-increasing costs of pursuing a post-high school education. The costs for college can be extremely daunting for both would-be students and their parents; still, families pay for college in a variety of ways, often making significant personal sacrifices to make higher education a reality for their children.
Paying for college may be either difficult or impossible for some families, with their children then having to either forgo or defer higher education or attempt to pay for it themselves with scholarships, loans, and working through school. Student debt from college loans is also an increasing personal issue that has grown so large that it has become a drag on many former students' earnings, which can then affect the U.S. economy. According to the Institute for College Access and Success, “Nationally, about two in three (65 percent) college seniors who graduated from public and private nonprofit colleges in 2018 had student loan debt. These borrowers owed an average of $29,200, 2 percent higher than the 2017 average.”
With funding college problematic for some, it’s critically important that parents have a discussion while their children are in high school about both their expectations and the reality of attending college.
Thinking Through the Conversation
When a parent is planning a discussion of college finances with their child, first they should have done their research to determine exactly what they will be able to provide for college, both initially and through the entirety of their kid's attendance. An important part of that research includes thoroughly investigating a variety of external sources of funding, ranging from public and private scholarships, to direct college aid and loans, to help from other relatives. If a family cannot afford college for a child, there are still options that can help fund higher education at no cost to the family or student.
After a parent has done their research to develop a clear picture of all resources for paying for college; it’s time to take the facts and think through the options of what they can provide. Following are just some of the most basic questions a parent should consider and answer while preparing to talk within the family about college affordability:
What is the level of financial support you can offer them?
- I cannot provide any financial aid.
- I can provide room and board while they attend a local commuter school and/or online classes and, possibly, work.
- I can pay for partial tuition if it’s combined with direct school aid, public or private scholarships, loans, and/or a job
- I am able to pay for full tuition, including all expenses.
Have you determined what support is available outside of your immediate family?
- Can you access state-funded public scholarships, such as the HOPE scholarship in Georgia?
- Have you looked for private scholarships from foundations, civic organizations, corporations and other sources?
- Is direct financial aid from the college or university available?
- Is any financial support available from other family members, such as grandparents, aunts or uncles?
Can you assist them with loans?
- Can you take out a loan by yourself or with another relative, such as a grandparent?
- Can you co-sign a loan with your child?
- Can you fund the loan yourself with a contract that your child will pay it back?
What kind of school can you afford?
- Purely online school (in or out-of-state, with student living at home)
- In-state commuter school (student lives at home)
- In-state, student resides at school
- Out-of-state, student resides at school
Can you provide support with school and living expenses?
- Room and/or board
- Electronics, such as a computer or a cell phone and service
- Textbooks and software
- Furniture and bedding
- Travel to and from home (a car or plane/bus fare)
The above are just some of the questions to be considered before discussing this critical topic with children. Attending—or not attending—college has an enormous effect on lives, both for students and their families. This is a discussion that needs to be based both on facts and from an attitude that everyone has different needs and wants, and that even if there are dramatically different viewpoints in the family, everyone's opinion is valid.