Aside from retirement, sending your kids to college is probably the largest expense that you will experience. Even the politicians are saying, “College is not affordable. Student loan debt is out of control.” We think every parent worries about this. But, is it even worth saving and if so, how do you do it?
Since 1995, the average tuition of private universities has jumped 179%, out-of-state universities have gone up by 226%, and public in-state universities have spiked up 296%. That is almost 300%!
But you don’t need to panic. Families send their kids to college every year without exploding into a big blazing ball of fire, and you can too. But it will take some planning.
Here are three things you need to know in order to get your kid out of the house and into college.
#1 Know What it Costs
Understand what you are paying for. There are many options out there. You’ve got private, public, in-state, out-of-state, junior college and online. Our family went and visited three colleges this summer. We were shocked at how expensive these schools were. The crazy thing was our son’s favorite in-state option, Colorado State University, was just as expensive as his favorite, out-of-state. We would never have known that if we didn’t visit and do our research. As is true with raising teenagers, don’t assume anything. It helps to know what a college education costs, don’t go into it blindly!
#2 Research Payment Assistance
Just like it helps to do the high-level “what schools are best” research, you also benefit from researching payment assistance options. There are loans, scholarships, grants and so many other opportunities out there!
Much to our sons’ displeasure, we’ve started talking to anyone and everyone about paying for college. It is amazing to hear the different tips and tricks people have. One woman at our local grocery store took the first year off after graduating high school. She took the whole year and did her research and got all four years paid for through grants, scholarships and loans. A friend of ours researched private colleges’ based on their endowment amounts and their son goes to a top-tier school for less than his in-state option.
There are dozens of websites out there to . Encourage your student to find several and apply. You might incent their efforts by matching any scholarship amount they are awarded. (If they get a $500 scholarship and you match that, it’s $500 you would have had to pay anyway so you’re not out any money and they have more motivation to write another essay.)
You will be rewarded for your research.
#3 Figure Out Who Is Paying for What
Once your student hits middle school it is time to discuss “who’s paying for what.” You don’t live in a romantic comedy where it’s laughable when no one communicates and everyone thinks the other is doing something they aren’t. Talk to your son or daughter about the amount of college they are responsible for: a certain percentage, a set amount, room and board, books and fees, extra-curriculars, travel, etc. There are plenty of ways to ensure your student has some skin in the game and knowing now what they must pay gives that summer job a lot more purpose.
Get online and look into 529 plans, every mutual fund website or broker website has it. It’s a great way to save for college because the money grows tax-free and is not taxed when you use it. You know what grandma always said, “A penny saved is a penny earned.”
Involve your kids in setting up the 529 plan so they can contribute, watch it grow, and go into college eyes-wide-open. Take all of the steps you can to present a very clear picture of what they have to spend and how much debt they may incur.
The best advice we can give you is to talk about it as a couple first and then go to the kids after. College is emotional for both you and your spouse and discussing the massive amount of money can be stressful, but don’t avoid talking about it together. Make sure you are on the same page with your approach.