When and how should you have the money talk about college?
Try these tips from our team to get it right
It’s time we had a little talk. Few of us look forward to hearing those words. But when it comes to paying for college, that little talk can help your family avoid surprises, minimize conflict, and make informed decisions.
“The sooner you understand the details of paying for college, the more control you have,” said Carla Peacock, North Country Pathways and Funding Specialist at Granite Edvance. “Knowledge is power.”
Here are some tips for having the college money talk:
Push through the discomfort
Talking about money isn’t easy for everyone, but the payoff in this case is worth it.
“I would suggest that this is an occasion to allow yourself to be uncomfortable,” said Carla, who has a daughter in college and a son in his senior year of high school.
Anticipate areas that may be especially thorny due to differences of opinion and face them head on. These might include tackling who is going to pay for college costs and how much, what amount of debt is acceptable, and what you’ll do if that dream college ends up being too expensive. There are no right or wrong answers to questions like these; families need to determine together what works for them.
Carla and her husband, for example, decided to avoid potential heartache around college decisions this way: “We said to our daughter, ‘Do not apply to a school that you don’t want to attend because you’re going to go with the one that gives you the best financial aid package.’ That might not work for everyone, but it worked for us.”
Talk early and often
Rich Neilsen, Lending Products and Partnerships Manager for Granite Edvance, is already teaching his daughters, ages 11 and 8, about how interest works, and he regularly reminds them that putting money aside for college is part of their family budget. He wants to make sure they’re financially literate long before they have to start making important financial decisions.
Talking about money early can also give your family more time to set goals and address differences of opinion. But don’t worry if you haven’t had “the talk” yet. Anytime is a good time to start.
As college becomes a reality for your family, it’s time to have more deliberate and specific conversations around money (see suggested questions below). It’s also important to revisit topics periodically, especially if metrics such as salary or savings account balances change.
Carla, who started talking seriously with her children about money when they hit high school, said their conversations evolved in step with their planning. First, they identified possible career pathways and the training associated with those pathways. Next, they built their college lists. Finally, they examined the financial realities for the colleges on their lists. A college financing calculator and institutional net price calculators can help with this. They also discussed return on investment:
“What will you come out of school being able to do? What is the starting salary for that job? What does that look like compared with what you’re paying for school and how much debt you’ll have?” Carla said.
Find trusted resources
In her role, Carla speaks with many students and families who have been misinformed or ill-informed about college costs. “I run into a lot of students who see those dollar amounts for college like Monopoly money. Like it isn’t real,” she said. “I also encounter far too many parents who are pointing their kids to decisions based on information from years ago, or from a friend or neighbor.”
Some common misconceptions:
- We won’t get aid, so we’re not going to fill out the FAFSA. (Reality: the FAFSA is also your gateway to other types of aid, including scholarships).
- College is too expensive for our family. (Reality: Most families don’t pay the college’s “sticker price,” and there are many ways to lower your costs.)
- We didn’t start saving when our kids were little, so it’s too late. (Reality: Whenever you start, that’s more than you had the day before!)
To combat misinformation and equip yourself for success, it’s crucial that you find trusted resources, said Carla, who remembers reading Granite Edvance’s Admissions Insider and Financial Aid Insider cover-to-cover when her daughter was a junior in high school, before she started working here.
Along with resources such as our Insiders, Granite Edvance offers webinars, in-school presentations, and 1-on-1 appointments on all aspects of planning and paying for college. Families should also consider consulting professional financial planners when making decisions around paying for college.
“Fear breeds misinformation. Knowledge breeds possibility,” Carla said. “Without trustworthy information, you’ll find yourself reacting. When you have the right information, you can respond rather than react.”
Know what to talk about
Ready to have the money talk? Here are some questions to guide your conversation.
- Does your family have any money set aside for college? If so, how much? If not, do you have a savings plan?
- Who will be responsible for paying college bills? If the student and parent are working together, what amount or percentage of college bills will each pay?
- Along with money that’s been set aside for college, how much can the student and parents put toward college bills during the college years?
- What other costs should be included in your college budget? (travel, textbooks, spending money, technology, etc.)
- What will your family do if the student’s top-pick college(s) do not fit the family budget? (choose a more affordable college, start at community college, take a gap year, search for scholarships, take out loans, etc.)
- If the student needs to take out loans, are the parents willing to cosign? Are they able to cosign, based on their credit? Will they help with repayment?
- What is the expected return on investment in the student’s chosen career or major? How long will it take to pay off loans with the student’s expected salary?
- If graduate school is part of the student’s plan, will the parents help pay?
Need help covering a funding gap in your budget? Learn more about our private student loan options and reach out to our team here!
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