3 Tools to Help Discuss College Tuition with Children
College is an exciting time for many young adults, but it can also be expensive. To help manage the costs, financial aid and related resources are available.
Schools are out for the summer, but the thought of college tuition always seems to be on the minds of parents with high school kids. This summer, you may want to add another family activity to your list: discussing college tuition. If you have a child who just started high school, this summer may be the right time to initiate a discussion on the costs of college tuition and how to pay for it.
- Is there money in 529 plans that can help?
- Will Mom and Dad be paying for it all?
- Will kids be expected to pay their way through college?
- Will student loans be needed?
Answering these questions with your high schooler will help set expectations and provide the necessary information to help them make an informed decision on college before the admissions process begins.
According to a recent Forbes article, 45 million student loan borrowers currently owe a collective $1.7 trillion on their federal student loans. Before you spend time visiting college campuses, your high schooler (and you) should be aware of the true out-of-pocket costs and the number of loans required to attend college.
Below are three handy tools that can help facilitate the college tuition discussion, determine the actual cost of a specific school and potentially help lower the cost:
1. Fill out the FAFSA
The Free Application for Federal Student Aid (FAFSA) opens on October 1, the year before your child begins college. It’s important to fill out the application as early as possible because need-based aid is first come, first served. If you wait to fill it out, your child may have less need-based aid available. Be sure to fill out the FAFSA even if you don’t think you’ll qualify for need-based aid. Most schools require the FAFSA to be completed to award merit-based aid, which your child could still qualify for. Also, your family situation could change during the year (i.e., divorce, loss of job, death), which may qualify you for need-based aid.
2. Check financial aid breakdowns
Each school has different financial aid breakdowns. Some schools only provide need-based aid, while others give out a significant amount of merit-based aid. If you don’t qualify for need-based aid but the student has good grades, applying to schools with merit-based aid could help reduce your overall cost of tuition.
3. Check out free resources
There are several free resources online to help you compare the actual cost of college, figure out your expected family contribution and get information on financial aid packages. For example, at MyinTuition.org, certain private universities have provided their formula for how they award financial aid, so you can look up and compare—all in one convenient place—your true cost to attend these universities. You can also use the Net Price Calculator on a specific university’s website or visit websites like collegedata.com and collegeboard.org for more information regarding a specific school.
As always, if you have any questions about your family’s college situation and the financial resources you may need, please reach out to your Wealth Advisor for additional insight and guidance.
1 https://www.forbes.com/sites/zackfriedman/2022/05/16/student-loan-debt-statistics-in-2022-a-record-17-trillion/?sh=b912ee94d5a6
ABOUT THE AUTHOR
Steven Hollon
Steven is a Wealth Advisor in our Itasca, IL, office. He works closely with clients to help them identify a holistic understanding of their financial and future goals. He earned both his Bachelor of Science in Accountancy and Master of Accounting Science from the University of Illinois. Steven is a Certified Public Accountant (CPA) and a CERTIFIED FINANCIAL PLANNER™ professional.
