You’ve been avoiding it, maybe even dreading it, but now it’s finally time to have The Talk with your teenaged son or daughter. No, not that Talk. The College Costs Talk.
For many parents, talking to their child about how to pay for college can be a difficult, emotionally charged conversation — but shielding them from financial realities does them a real disservice now and down the road. Here’s how to do it right.
Don’t wait until senior year to talk about college tuition costs.
The best time to start this conversation is the summer after ninth grade, says Ron Lieber, author of The Opposite of Spoiled. Talk to your child about the cost of college: in state and out of state, public and private. Explain how loans work, and tell them how much you’ve saved. “Be honest about money constraints. If kids are already thinking about expensive colleges, they’ll understand that they can work to try to help make that happen. You want to tell them when they still have four summers to earn money,” Lieber tells Real Simple1. It’s also a good time to remind your child — without applying too much pressure — that keeping their grades up can help them get merit-based financial aid and scholarships.
Don’t feel guilty if you can’t pay 100 percent of college costs.
You may feel ashamed that you haven’t put away enough of your money for your child to go to their dream school. You may be tempted to sacrifice your own financial security to enable paying for college. Don’t. Instead, treat your child as a partner in this big financial undertaking. Say, “We expect to be able to contribute X per year to your college costs. Tuition at the school you want costs Y. That leaves Z for you to make up through scholarships, financial aid and loans.”
Do discuss the return on investment of a college degree.
For decades, the prevailing wisdom was that parents and children should go ahead and pay for college by any means necessary, because a degree would always pay for itself. That’s no longer true for every graduate or every degree. College graduates do earn more money — their average hourly wage is about $32.60, double the wage for someone without a degree.2 However, the heavy burden of student loan debt can drag down a young person’s finances for decades. Recent college graduates leave school with $34,000 in student loan debt, on average.3
Talk to your child about their desired major and career, and look at the average return on investment for that degree. A librarian, for instance, may need 17 years to pay off all loan debt, while a public-relations specialist can do it in five. Make sure your child knows you’re not trying to steer them into a specific career; you just want them to fully understand the costs and benefits.
Do explain how financial aid and student loans work.
The typical high-schooler doesn’t have a clear understanding of how to pay for college. Lay out the options in simple terms. Explain financial aid terminology. Look at a student loan calculator together to find out how long it’ll take to pay off $25,000, $50,000 or even $75,000 in loans. Make sure your child knows that student loans are serious business, and that not even bankruptcy will allow them to discharge the debt.
Don’t rule out alternatives to the traditional four-year college experience.
Your child’s college daydream may be a lovely little liberal-arts school with gray-stone buildings, or an urban campus that never sleeps. That daydream probably doesn’t include the local community college, or living at home and commuting to class. But one of those options may be the best choice to help reduce college tuition costs, and may even be the gateway to their idealized college experience. In Virginia, for example, students who graduate from community college with a minimum grade point average may obtain guaranteed admission to more than 30 Virginia colleges and universities.4
Do remember you’re teaching your child an important lesson about money.
In the wise words of financial writer Michelle Singletary, “Don’t give him a blank check and say something like, ‘Honey, go where you like and we will figure out how to pay for it.’ Don’t teach him to live like he has it when he — or you — don’t.” This tough talk about college costs is a great opportunity to teach your child how to live within his or her means. You don’t always get what you want, and that’s OK.
Do protect your college investment with tuition insurance.
If your child withdraws from college after classes begin, you could lose the tuition money you worked so hard to save. Most universities will only issue partial refunds — or no refund at all — when a student leaves school mid-semester. Allianz Tuition Insurance provides reimbursement for tuition, fees, housing and other college costs if a covered student has to withdraw from school mid-semester for a covered reason, such as a serious covered injury, illness or mental health condition. Learn more about our tuition insurance plans.