6 Best Tips for Having the College Money Talk

Choosing which college you want to apply to can be a daunting task. There are approximately 5,300 colleges and universities in programs and facilities in the United States, and the total cost of attendance can vary greatly from institution to institution. How does the student choose the college to which he will join?

Is a small liberal arts college a better option than a large research university?

Will the student have a better university experience on an urban campus or a rural campus?

Should they choose an out-of-state school or a school closer to home?

These are some of the questions your child will face as he searches for colleges to apply to. In the search for the perfect college, one important thing that parents and students often overlook is the financial implications. Should a Student Look for a Low-Cost College to Reduce Student Loan Debt? Or should they attend top college and take out student loans to cover the balance?

Their choice of college and the cost of attendance can have a significant impact on their finances in the long run. To avoid any nasty surprises, it is helpful for parents to discuss college finances with their children before they start their college search.

6 tips for giving a college talk about money

1. Ultimate Goal of Going to College

It's amazing how many students go to college without really knowing what they want to do. They are not sure what major to pursue or what kind of job they will pursue after graduation. The problem is that it can be an expensive way to learn things.

Reluctant students often begin by choosing a major that they are vaguely interested in. All of this adds thousands of dollars to the total cost.

Taking the time to discuss a student's ultimate goal can save everyone a lot of money and anxiety. It's better to take a year's hiatus after high school than to rush off to college without a goal. Students who use term time to explore their options often do much better in college than those who don't.

2. What is the total cost of college?

There is more to the cost of college than just tuition fees. The total cost should take into account accommodation, food, textbooks, school supplies, and transportation. All these costs are accrued over four years. And if it takes longer to graduate or transfer schools, the cost will increase.

The good news is that very few families have to pay the total cost of college out of their savings. There can be a huge difference between the sticker price (the advertised price) and the net price (what the family actually pays). Most students receive generous financial assistance in the form of scholarships and grants that do not need to be repaid. The total cost to be paid by the family is the poster price minus the scholarships and grants received by the student.

3. Federal Financial Aid Expectation

The Department of Education uses a specific formula to calculate a student's eligibility for federal assistance. You can estimate the amount of your family's qualifications using our Federal Student Aid Estimator tool. You'll get a more accurate estimate if you enter the poster price for the schools you're interested in.

Once you calculate the estimated federal financial aid for your family, you will have a better idea of ​​how much you have to pay.

4. Is cooperation expected from the parents?

This is usually the hardest question families face when it comes to college money. Should parents contribute to their children's college education? If so, how much are they expected to pay?

There is no one answer that fits all families. This depends on many factors, the main of which is the financial situation of the family. Most financial experts advise parents to consider their retirement savings first. If they've saved enough, it's okay to consider paying for your children's college. If they do not have enough retirement savings, they should not be expected to pay. 

However, this discussion is difficult, it must take place. Students should know how much their parents can and will contribute to their university education. Without this discussion, the student may make plans based on the assumption that their parents will contribute. And if they don't, it can lead to misunderstandings, strained relationships, and frustration.

5. What is the appropriate student loan amount to borrow?

Getting student loans to cover the cost of even the most expensive college is relatively easy. While this may sound like good news, there may be a serious downside. Many students take out huge student loans to cover the cost of their "dream college". The problem arises when they graduate and do not earn enough to pay the loan installments.

When you talk about college money, you should discuss potential salaries in the field the student chooses. Find average starting salaries for bachelor's degree holders in the field. Dive into your employment prospects and growth opportunities. Ideally, the total amount of student loans should be based on how much they expect to earn after graduation. If a student's degree leads to a lower-paying job, it's best to be more conservative.

6. Are there any ways to reduce costs?

There are always ways to lower the cost of college.

One way to do this is to choose a college with reasonable fees. Another option is to complete two years at a community college and then transfer to a 4-year school. Community college costs much less than private for-profit colleges. Choosing this route is a great way to cut your college cost and save thousands of dollars.

Talking about money in college can seem difficult, but it is important to do it. It helps the student to set the record straight and clarify their short and long term goals. Most importantly, it clears the atmosphere between parents and their students and prevents misunderstandings.