While students sit in lectures, happy to be back at college, countless parents are sitting at kitchens table wondering how to pay for their child’s education.
Here’s how crazy it’s become: Families spent an average of $8,439 for tuition, fees, room and board at a public, four-year institution during the 1990 academic year, according to the College Board, a nonprofit charged with expanding access to higher education. By the 2015 academic year, those costs increased to $19,548 – a 131 percent increase.
Meanwhile, the cumulative college debt of U.S. students has reached $1.3 trillion, with 43 million Americans juggling college debt. More than 60 percent of the class of 2014 graduated with debt that averaged nearly $27,000, according to the College Board.
Have the Talk (Not a Lecture)
Many young people assume they’ll go to college after high school, and many families assume that as well. But too few engage in serious planning to discuss the cost of that education as a family.
At a time when families need to have frank discussions, many students head off to college almost by default – right after those trips to Target and the Container Store for the mini-refrigerator and closet organizers.
That’s because college conversations are based in love and not money. When parents see their babies take their first steps, say their first words and go off to elementary school, they’re plotting in their heads about the next big steps. And those steps often include going off to a great, but sometimes unaffordable, college.
Families need a better strategy. Long before a student graduates from high school, families need to organize a series of discussions intended to answer important questions:
- How much will an education cost?
- How much of that money will have to be borrowed?
- Is the student able and/or willing to shoulder some of the debt?
It’s also worthwhile to chart two paths. What does a more expensive college get you compared to a cheaper one? Are the added costs guaranteed to provide an added benefit?
Family driven financial discussions around the costs of education can help students by injecting a healthy dose of factual information into the conversation. No student should embark upon the higher education journey without understanding the real costs, real hurdles and real sacrifices.
But too often we adults can guard students from the cold, hard facts. And too often we make assumptions, like concluding that college represents a student’s only path. Asking hard questions early on and using data can help students and parents alike by injecting a dose of objectivity into a discussion that often is driven by subjective factors. What student hasn’t thought about attending a college because one of their parents attended it, or because they like the school’s football team or its history of athletic achievement?
Discussing money as a family helps everyone involved understand the scope of the financial decisions being made (and the possible debt load) and can provide kids with the tools to be smart consumers throughout their lives.
Articulation Before Matriculation
In addition to having serious discussions about money, it’s also vital for a child to articulate what they want out of an education so they get the education they need for the work they desire.
What career does the student hope to pursue? Or do they have a vocation in mind – a career that will fulfill their purpose, but not necessarily bring in big bucks? The young student may not know quite yet and that is OK. That said, does it make sense to attend a $60,000/year college to go figure it out?
So, just as an architect builds a model before designing a building to see what it will look like, families can develop a model to illustrate what career choices may look like in the future:
- With your student, choose a career that may be of interest. If unsure, pick one that might be a fit just to get the conversation started.
- Do a quick Google search to determine the median wage for that career and build a household budget around it. This exercise will provide some real world visibility as to what their future life may look like.
- If you plan to borrow money for college, put the student loan into that budget
- Do you like the result? If not, this is where creativity comes into play. How else can the student gain the necessary knowledge to ultimately gain entry and then enjoy long-term success in that career?
This exercise isn’t just about our young scholars. It’s about entire families because for some, paying for college may decimate a parents retirement fund. Forget about having your kids live in your basement. Parents may end up in their kids’ basement if they don’t make sound financial decisions.
It’s also valuable to remember that families have options. Too often, families embrace cookie-cutter paths for their children, even though there is a rich menu of alternative to help offset the high cost of college or get a solid education at no cost at all.
Here are a few alternatives to consider:
- AP Classes: By taking AP classes in high school, students can potentially receive up to a year’s worth of college credits before they set foot in a college dorm
- Employer-sponsored Education: Some companies are willing to pay for an employee’s education. If they offer this benefit, take it! And this isn’t just an alternative for someone who already has a four-year degree. If you can take classes and jobs in high school that will help you land a job at a big corporation as an executive assistant or some other entry level job, then enroll in night school to get your bachelor’s degree. You could get a degree by the time you’re 23 or 24 as well as have five or six years of solid work experience on your resume. And you’re showing potential employers that you have an enviable work ethic as well.
- Community College: This is an increasingly sensible alternative for the financially crunched. Students take classes at community college and later transfer to a state school.
College is an important time in a young person’s life. It is an equally important time in the lives of the parents who often are called upon to fund their child’s education. Soul-searching conversations about money, potential career paths and considering alternatives that can achieve a similar result without breaking the bank.
Everyone’s situation is unique and different. There is no cookie cutter answer for every family or every child. My hope is that this blog post will create some conversations around the dinner table that will lead to meaningful dialogue around the topic of education funding.
Thank you for reading.
 College Board. Trends in Higher Education. https://trends.collegeboard.org/college-pricing/figures-tables/tuition-and-fees-and-room-and-board-over-time-1
 “Why it Matters: Student Debt,” by U.S. News and World Report, September 5, 2016. http://www.usnews.com/news/politics/articles/2016-09-05/why-it-matters-student-debt