After years of saving, I will be making our first college tuition payment this year as our son heads off to college. What a strange feeling, not only that he will be gone but that something you have been working towards for so long is finally here.
The process of college “shopping” was shocking to say the least. As a financial planner, I advise on saving and have been saving for college since our son was an infant. It STILL was not enough! Admittedly, he is going to an out of state school, but in-state costs were also quite shocking.
I came across this Inflation comparison last week and was surprised to see the rate of inflation of tuition and fees. They are almost double medical care inflation. More details and information on this graph can be found Here
When I was in college (a long time ago), my tuition was $750 a semester. It was possible to make enough with a job to cover those costs. Not so much anymore, it is impossible for students to take on this cost alone. And for most parents, it is equally as difficult.
So besides saving, what is my best advice for parents?
Talk to your kids and have meaningful discussions about cost and debt and choices.
What does your child see when they get their financial aid summary? They see a loan! I am sorry, but in my world, a loan is not aid, it is a burden. Just because they see that the need is met, it is horribly misleading. Please help them understand this.
Show them the monthly cost associated with the loan that they are considering or that you are considering. That monthly number will be shocking but very real.
Research the starting salary for their intended occupation. Some occupations cannot support a high tuition bill and loan amount. Unfortunately, that is the reality, unless as parents, you are willing and able to fund the full cost. An engineer can most likely absorb a higher debt load than a future social worker. Our kids need to understand that in the real world they will be faced with many trade- offs such as this.
Remind them that their dream school may not be justified by the high cost if it means additional debt for them or their family. You are not the bad guy in this scenario.
In my planning practice, I ask my clients if they have talked to their children about what they will be able to contribute to their child’s education and most often they have not. BEFORE your child starts looking, this is a meaningful conversation to have. It is far better to set some expectations than to have their dreams broken.
Education is one of the greatest gifts we can provide our children. I challenge you to help give this gift to them without substantial debt on your part or your child’s part.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes.