College Finance Discussions: Finding Answers That Work
Apr 8th, 2011 | By John | Category: Economics, Financial | Print This Article
Each spring, millions of families wait by the mailbox for that all-important college acceptance letter. This simple piece of paper holds the verdict on weeks of application work, and could very well be the key to the kind of future students will have. Yet with the economy continuing to struggle and student loan debt a dead weight on far too many graduates, getting into college is a minor battle compared with the challenge of paying for college.
College financing challenges pull children into their parent’s financial concerns, and for many it’s the first time they’ve had to be involved in such discussion. The complexity of figuring out finances together can be a strain for families, but there’s no need for things to degenerate into arguments, hurt feelings, or bad decisions. By preparing for a thoughtful discussion, it is possible to find answers that work.
Re-focus On The Goal
College degree programs are designed to prepare students for the career of their choice. Refocusing on this before starting a discussion will help both sides remember why a particular college is being chosen. It shouldn’t be about having fun, following in parental footsteps, or being with friends: the focus is on how the college program prepares graduates for success. This refocusing helps keep the discussion oriented around the future benefits, and avoids letting students and families end up paying for a college that doesn’t fit their end goals.
Get The Facts
After refocusing, it’s time to get the facts. What are the true costs for tuition, room and board, books, and lifestyle expenses while at college? When are payments due, and what are the options for making payments? Use these numbers to help break things down into monthly budgets that reflect tough realities instead of college fantasies.
With the facts in hand, it is easier to talk realistically about paying the bills. Parents should never promise to foot the whole bill, states financial advisor Bob Goldman in the Wall Street Journal. The reasons are twofold: rising costs can make even the most well-meant promises impossible to fulfill, and involving students in paying for college ensures they’re invested in their educational outcomes.
Armed with real numbers, talk things through in terms of who can comfortably pay for what. Debate which schools offer more value for the dollar in terms of career goals and get employment levels for recent grads as a guide if needed. Identify what’s really affordable, and where extra income or borrowing would be needed to pay for classes.
As the total bill for college is discussed, it is important to talk about jobs. Many students do work during school, while others view school itself as the job, and this shapes financial discussions.
If a job is needed, work with your child to figure out where it will come from, and what Plan B is if it can’t be found. Investigate work-study programs, and figure out average wages in the area for part-time work at restaurants, retail stores, and so on. Be realistic about what’s possible, what’s comfortable, and where things might negatively impact grades or future careers.
If going to college is the job, lay out what could get students “fired” from their school. After all, if they’re really doing their “job” and studying, poor academic performance, partying problems, and skipping school shouldn’t be accepted. Having this conversation long before classes start insures no surprises. This allows students to be aware of the consequences of poor choices in college.
Last but not least, have an open conversation about debt. Student loan debt is approaching $25,000 for the average student at graduation, and this debt burden limits the kinds of choices students can make after they finish college. Looking at possible career choices and salaries coupled with college costs, families need to determine what debt levels (if any) are going to be wise throughout school, and start looking at how those debts can be repaid after graduation.
There are always options, and finances don’t have to be a barrier. The key is to get creative. Students who want a degree from an expensive school might start at a local school to cheaply fulfill general requirements and then transfer in to finish with a name-brand diploma. Taking a year off either before college or during school to work can reduce debt burdens and keep college affordable.
By having college finance discussions early, parents and students have the chance to get things worked out in a way that is realistic and practical. In this way, crushed dreams and high debts can be avoided in favor of keeping college a positive, educational experience.
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