Saving for College

Written by Kate Horrell | August 6, 2019

The college application season is getting into full swing, and high school seniors and their parents are starting to think seriously about college expenses and how they are going to pay for them. It’s a busy, confusing, and emotional process, but it is important that you take the time to sit down and figure out how much you can really afford, and where the money is going to come from. And then talk, a lot.

Start talking about it early.  Okay, maybe it isn't great pre-school reading, but don't wait until April of your child's senior year to start talking about how they'll pay for school. Calculate your Expected Family Contribution (you can get an estimate here) and talk about whether your family can actually manage that amount - most people can't. Share whether there is money set aside for college, in college accounts or otherwise. Talk about what things you'll pay for, and what things you expect them to pay for themselves.  (For example, I fund dining hall meals but not Starbucks.) Explore your thoughts on student loans, whether you think it is OK for your kids to take them, and whether you're willing to take them on behalf of your kids. (Pro tip: don't.) Emphasize the concept of "financial fit" as an important consideration in the college selection process.

Learn about in-state and out-of-state tuition rules for military kids. It can be confusing to know where military kids will get in-state tuition. The best answer is to check with the individual schools, but generally, military kids can get in-state tuition in the state where their parent is stationed (that’s federal law) and their parents’ state(s) of legal residence (though a few states are weird about this.). Some schools are more generous with their in-state rules for military kids even if they don’t have obvious ties to the state.

Be realistic about both merit-based and need-based aid.  Many families are shocked when they see how much they're "supposed" to be able to afford for college. And those full-ride scholarships? They're less common than you probably think they are, and the competition is incredibly fierce. For example, the 2016-2017 University of Virginia's Jefferson Scholars program selected just 36 students out of 2,005 highly-competitive nominees.

Don't count on your counselor. Unless you go to a small, private school, your guidance counselor is a demi-god, or your school has a uniquely good program, your high school counseling office isn't truly equipped to give the right kind of help to every single child. Both parents and students need to learn about the college admissions and financial aid process. Read books, check out blogs, and join Facebook groups. (My favorite: Paying for College 101.)

Consider alternatives. Despite what you see in the movies, the "straight to a 4 year university" isn't the only way to do higher education. There are 100 ways to get a degree, and just as many ways to pay for it. Common choices include starting at a community college or going part-time, more creative options include getting a job at the university (like my friend!), pursuing a more technical education like an apprenticeship, or taking enough CLEP exams to earn your first year of college credits for free. On the flip side, many of the most generous merit aid programs are reserved for those who start as a freshman. If you have a competitive student, your best bang for the buck may be to grab that freshman-based merit aid. Transfer scholarships typically offer less aid, and the savings of two years at the community college may be outweighed by the higher costs of the last two years of a bachelors degree.

Emphasize that there's no single perfect school. The idea that there's one "best" school for any person is absolutely unhelpful to the process of finding the right school for your situation. As mentioned before, "financial fit" is at least as important as all the other factors that go into picking a college.

Do the math - a lot of it. Make a spreadsheet of the costs of each school, and each source of financial assistance, including federal, state, and institutional merit and need-based aid.

Spend some time with a student loan calculator and plot out the loan repayment costs for various loans. Compare those loan repayment costs with average starting salaries for various jobs, including the possibility that your student will leave college before finishing that degree. (Approximately 40% of incoming freshmen won’t complete a bachelors degree within the first six years.) Consider preparing a couple of “what if” budget scenarios to see if that loan payment is reasonable.

Think long and hard before taking out parent student loans, and don’t ever believe that the student will take over responsibility for the loan at some point in the future. If that happens, that is fantastic, but don’t make it plan A. The person signing for the loan needs to be prepared to pay for it in full. Some parent loans require that repayment start immediately, so be sure you can fit that payment into your budget. And be realistic - if you haven’t been saving that much each month for college in the past, how will you make that payment each month?

A college education can be essential for many careers, but it is just as important that you pay for it in a way that works for your situation, both now and in the future. A great job with a great salary isn’t worth much if a huge portion of it is going to pay student loans each month. Do your child, and yourself, a favor by making the hard choices at the front end of the process. Everything that comes after college will be so much easier if you do.