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Thursday, June 13, 2024

5 Mistakes Parents Make Discussing College Financing


Students aren’t the only ones facing a long list of things to do and some fraught emotions when they’re planning for college. It’s not a walk in the park for their parents either.

While your role in college planning and financing is very different from your student’s it’s an important one — and you want to do right by your kid. But there are some common missteps that parents make, especially when it comes to talking about how students should finance their education.

Consider these five areas where other parents have gone astray so you can avoid doing the same.

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Mistake #1: Not sharing enough information about your finances and ability to help

When your kid was little, you likely didn’t discuss the family budget beyond occasionally saying a specific toy or trip was too expensive.

But what worked at age 7 doesn’t work at 17. Your kid deserves to know a bit about the family finances, in particular, how much — if any — help you can give them in paying for college.

Now, that doesn’t mean you have to give them the nitty-gritty on each credit card balance and that your annual bonus got slashed during Covid. It’s possible to share too much, and you deserve some privacy as well.

But you do your kid no favors if you have limited ability to help them pay for college but they’re so oblivious about the family budget that they assume you can and will pay their full ride. Let them know early on if you plan to help and if so, in what ways and how much.

Doing so gives them a more realistic picture of what kind of schools they can afford and what financing alternatives (loans, work-study, etc.) they need to consider.

Mistake #2: Not helping them set a budget

Even kids who are good at managing their money will need help coming up with a budget for college. Most likely, they’re living at home now, and responsible for only certain limited expenses, like gas for their car or buying their own clothes.

Budgeting for college — including food, books, rent if they aren’t on campus, and the cost of travel if they go to school some distance away — is a very different ball game. They often also overestimate how much they can work while still maintaining their grades.

Help them come up with a realistic budget now, and you can avoid a lot of heartbreak (for them and you) later.

Mistake #3: Assuming your kid can’t qualify for aid or scholarships

We hear it all the time: Families think they make too much money to qualify for any financial aid, so they don’t pursue it.

The truth is, virtually every family can qualify for some form of financial aid. (The few that don’t generally have enough money that they aren’t worried about this issue in the first place.) It’s always worth applying to see what you can get, so make sure your student fills out the FAFSA.

Even if you don’t qualify for federal financial aid, quite a bit of state- and college-based aid requires you to fill out the FAFSA. Don’t leave money on the table because you think the answer might be no. It could be yes!

The other half of this mistake is thinking that if your kid isn’t a permanent resident of the honor roll that they can’t get scholarships. Nothing could be further from the truth.

There are scholarships with all sorts of varied criteria, including scholarships for those belonging to a certain ethnicity or religion, who are tall, are pursuing a certain career path, or simply filled out a form. (We’ve got our own that you and your kid can both apply for.)

Encourage your child to spend a little time every week looking for and applying for suitable scholarships. An extra $250 here and $500 there can add up to a decent chunk of money to put toward their education. We’ve made the search a little easier. Visit our scholarship hub where you can search by different criteria to find scholarships that apply to your kid.  

Mistake #4: Thinking college admissions and financing haven’t changed

Sharing your knowledge and experience with your kids is a huge benefit. But chances are that if you went to college, it was decades ago. A lot has changed. Your insight still has value, but if your kid says some of your advice is unrealistic or out-of-date, it’s worth looking into it — they just might be right.

Mistake #5: Not being flexible

Established workers are changing how they work in the current “Great Resignation,” and many students are rethinking their educational and career plans as well. You may have had your heart set on your student following in your footsteps attending the same college you graduated from and maybe even taking a specific career path. But that plan might not feel right to your kid anymore or it may be financially unfeasible. And let’s face it: They’ll be the person dealing with student loans for years or decades after they leave school.

There’s more than one way to get an education and prepare for working life. If your kid is thinking about an alternative path such as trying a trade school, community college, or taking a gap year, don’t automatically dismiss it. Hear them out (Why do they want to do this? What’s their plan for how it will work?) and do some research on your own. You may be surprised at some of the benefits.

Your instinct as a parent is to help your child prepare for college as much as you possibly can. But now, when they’re on the cusp of adulthood, your role is changing to one of a trusted advisor.

Understanding that you don’t, and can’t, have all the answers for your child is a big part of your job now. What you can do is make sure you provide them with the best information so they can make their own calls. We have a lot of great info on financial aid,  loans, figuring out how much college will actually cost, and reducing those costs as much as possible, to help you along the way. 



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