This post is sponsored and part of a paid campaign with Citizens Bank, N.A. With the exception of direct quotes, the below advice and opinions are mine.
Making the best decision depends on a thorough understanding of their family’s financial situation, the college financial aid process and their potential earnings upon graduation. But talking about money is uncomfortable for many families, and too often parents put off having such frank conversations with their kids until they’re already seniors deciding which college to attend.
Experts say that’s a mistake that could actually make the conversations more difficult, particularly if a child ends up setting her heart on a school that the family simply can’t afford, or taking on loans without understanding the long-term implications. “Knowing all of those financial factors at the outset, when you start searching for a college makes your search infinitely smarter,” says Casey Near, executive director of counseling at Collegewise.
But talking about money and college is never a one-and-done conversation. Here are a few conversation starters to try, throughout your child’s high school journey.
Freshman year: “This is how much we’ll likely be able to contribute to your college expenses. Let’s talk about how to cover the rest.”
Whether you’re planning to foot the entire bill, or haven’t even been able to put any college savings aside (or, more likely, fall somewhere in between), setting clear expectations now about what you’ll contribute prevents confusion later.
“Having the conversation early takes the pressure and the guilt off of everybody,” says Eugene Beresin, a psychologist and executive director of the Clay Center for Young and Healthy Minds. “It helps the kids feel more responsible and part of the decision-making process.”
You and your child can compare that number to your family’s estimated family contribution (use this calculator to find yours), or the amount that colleges and the federal government expect you to pay each year. You’ll need to cover any gap between those numbers with financial aid and loans. Having this information early allows students to decide whether they want to get a job, and start setting aside some of their own money for college.
Sophomore year: Did you see this news story about how student loans are impacting graduates?
If your child is planning to use student loans to help cover the cost of college, you’ll want to make sure that they understand how graduating with debt could impact their future lifestyle. While a hypothetical budget can help, seeing the impact on real people might reinforce the message. So, point out how the young woman or man down the street is living at home because of student loan payments. And if you don’t have family or friends who’ve recently graduated, you might pull a few recent news stories about student loans, which will likely often be seen in the media.
“Sometimes we don’t talk about student loans with our kids because we don’t want to overwhelm them,” says child psychologist Tanya Gesek. “But maybe we should overwhelm them a little bit. Student debt is a serious responsibility, and they should understand that it’s a serious responsibility.”
Three-quarters of Americans with student loan debt (74%) wish they had done more to minimize the burden of their student loans, according to research released by Citizens Bank. “Although the education financing process may seem overwhelming and stressful for students beginning their college journey, not fully understanding the impact of the college they choose and resulting student loan debt for life after graduation is far worse,” says Christine Roberts, head of student lending at Citizens Bank. “It’s clear that many people wish they had more information and knowledge on the subject before making their financial decisions.
Junior year: That college list looks great. Have you considered these schools, too?
Financial aid packages can vary dramatically from school to school, so your best bet for getting the best offer is to apply to a variety of schools, even those that might seem outside of your price range. While state schools have lower sticker prices, some private schools might be able to offer you a financial aid package that makes the school more affordable.
Encourage your student to include a few schools on their list without brand name caché. Your child’s application may stand out more at a less competitive school, making them likely to offer you a bigger discount on tuition to lure you in.
Senior year: “I’m so proud of you for getting into these colleges! Let’s compare the financial aid packages together.”
While it may be tempting to focus on the acceptance letters that start rolling in senior year, it’s important to keep your eye on the financial aid offers that are attached to them. That’s where each school spells out the mix of federal loans, grants, scholarships, and work-study programs they’re extending to you.
You’ll want to use those letters to determine how much each school will actually cost your family, after free aid (grants and scholarships), and whether you’ll need to borrow additional money outside of the federal loans (which are capped at $5,500 for your freshman year). Then you’ll need to consider the value proposition of each offer relative to the school itself, and the long-term impact of potential loans.
“The value of a student’s education comes down to what they make of their experience at the school they attend, not what the name of the college will do for them after they graduate,” says Debbie Schwartz, founder of the family education website Road2College. “It’s possible to get a similar quality education at a more affordable school.”