By Judy McNary
Are you the parent of a high school student with higher education aspirations? Congratulations! But, before you promise the moon, take time to study up on the subject.
College tuition is expensive, so it pays to be a smart consumer and to set realistic expectations with your student.
In my work as a financial planner and as a parent of three recent college graduates, I have heard so many tales of disappointment and broken promises that I jumped at the chance to contribute on this topic. As with most issues involving money, good conversations help lead to great outcomes.
Fit, Finance, and Finish
Alison Griffin is Vice President of Policy Research for USA Funds, a nonprofit organization that has been providing products and services to help colleges and universities promote student success for over 50 years. When discussing the college planning conversation parents and students need to have, she says, “I like to refer to it as fit, finance, and finish.” This three-pronged approach is a great way to frame the conversation.
FIT is about understanding what type of school makes sense for your student.
Part of this will be driven by her career aspirations. For example, scientific fields of study require high-quality labs and research facilities. Beyond that, you and your student need to understand the tradeoffs of attending different types of schools. Public vs. private, large vs. small, and residential vs. commuter are a few factors to consider.
Your student’s high school guidance counselor has extensive resources available. Take advantage of these! Encourage your student to attend local college fairs and college visits hosted by your high school. What she returns with might surprise you. My daughter attended a college fair with a good friend and they discovered they were opposites. Her friend wanted urban, with an exclamation point! Attending school in New York City was her dream but any large metropolitan area sounded exciting. My daughter, on the other hand, had no interest in an urban school. For her, the great outdoors was the draw.
The website www.savingforcollege.com is a great planning-for-college resource. It shows the best 529 college savings plans (if you’re not familiar with 529 plans, all the more reason to head to the site now!), calculates future costs of attending specific colleges, and shows what you need to save to reach your goals. It also has a wonderful dictionary to bring you up to speed on the financial terminology that will be part of your world the next few years.
FINANCE is the issue where I can provide suggestions and guidance.
One of the most upsetting times for me as a financial advisor is when parents encourage their son or daughter to apply wherever they want, no matter the cost, because they believe the financial aid package will be sufficient to cover what they can’t afford. Quite often, the aid package is nowhere near what they hoped for and they are left with a dilemma. Their student may have her heart set on this now-too-costly school, emotions take over, and no one is happy.
Talk with your student.
Let her know exactly how much you are willing and able to pay. Be clear and firm. College is a privilege, not a right. If your student is interested in schools that cost more than what you’re going to contribute, she needs to make up the difference. This can be through working, scholarships and financial aid, or student loans. Several parents I’ve worked with created spreadsheets that illustrated the difference in cost between the schools their sons and daughters were evaluating. Life is about tradeoffs, and showing your 16- or 17-year-old how to evaluate different options for college helps build a skill she will use well beyond the college years.
What can you afford?
College is expensive so, just like anything else, be a smart shopper. Determine the cost of attendance at different schools. An in-state public university will generally cost less than attending out of state but there are programs, such as the Western Undergraduate Exchange (WUE), that can make them equivalent. Some states, such as Georgia and Colorado, subsidize in-state higher education for students who graduate from high school in the state — ask your high school guidance counselor what programs your state sponsors.
Private colleges average $50,000 or more per year so, if your student is considering a private school, research the financial aid packages that typically are offered by that institution and set your expectations accordingly. Along with your student, explore the difference between net vs. sticker price. Online tools such as Tuition Tracker and the College Board’s Net Price Calculator can help you anticipate what you might actually pay at different schools. Affordability may not mean ruling out your student’s dream college. Remember that a strong student with high test scores will be attractive to a lot of schools who will offer a “tuition discount” (i.e., merit aid).
How likely is your student to graduate?
FINISH, the third prong of Alison Griffin’s college planning strategy, refers to the likelihood of your student finishing her degree at the institution she chooses. Is it likely she’ll complete what she starts? If not, according to Alison, “the fit means nothing and the finances were wasted.” The Chronicle of Higher Education’s College Completion website is a good place to locate completion data on schools nationwide (public, private, community, and for-profit). Many college ranking lists take freshman retention rates into consideration.
Over the years I have met people who wished they studied “X” instead of “Y” or went to college “A” instead of “B”, but I have never met anyone who regrets going.
Whether you plan to pay the full cost, pay part, or contribute by helping your student find a solution she can afford to finance, college is an investment that is well worth making.