Are you planning on letting your child study wherever they feel like, regardless of cost? Is your plan to take out a bunch of loans and hand them to your child at graduation? Do you think they are going to thank you for that when they graduate? Do you understand that legally, Parent Plus loans are in your name and your child doesn’t have to make any payments?

Overview

One of the hardest conversations you can have with a high school student is the one where you tell them they can’t go to their dream school because it is not affordable. 

Perhaps they went on the school tour and fell in love with the campus. Maybe their friends are going to that school. Maybe they have a boyfriend / girlfriend going to the school. Perhaps your student was dazzled when they received an acceptance letter stating that they were going to get thousands and thousands of dollars in merit aid. Whatever the reason, you are now coming along and telling them your family can’t afford some of those schools.

Having “the talk” with your child

Every parent should sit down with their child and talk to them about the cost of college. However, many are too embarrassed to speak up before or during the college selection process. Often they are embarrassed because they feel like they should have planned better and don’t want to be the one to tell their child they can’t attend their dream college. 

Rather than discuss what is and isn’t affordable, they just let their child apply to whichever schools they feel like. Worst still, many parents assume they can take out loans to cover the cost of college and then transfer those loans to the student at graduation. In many cases, the students aren’t aware of this. The result is that many students get to graduation and are then told about the debt and the expectation that they will have to repay it. That is not a graduation gift that anybody would want to receive. 

Don’t be that parent. Sit down with your child and discuss the following:

• How much money you have saved for college? – start with this number even if the answer is $0. When you think about money saved for college, only include money that is readily available, such as money in bank accounts or 529 plans. Don’t include money in retirement accounts and don’t include money that can only be obtained by borrowing. For example, don’t count money from a possible home equity loan. If you have to take out a loan to get money, then it does not count as savings.
• Parent contributions during school – this is money you will earn from working and that you can afford to apply to college each year. If you are currently contributing to a retirement plan, make sure you don’t count those contributions. You should plan on continuing those contributions. Don’t stop your retirement plans to pay for college.
• Student contributions – Many families find this to be a tough part of the conversation. However, there is no reason a student can’t work while they are in college to help cover the cost of attending. It is far better to work and graduate debt free than it is to borrow, borrow, borrow and spend the next 10 to 20 years paying off student loans.
• Scholarships – scholarships can only be useful if you have a student that actually takes the time to apply for them. Far too many students are unwilling to put in the time to search for scholarships. They limit their searching to the bigger, well known scholarships, or else they only apply to the scholarships which don’t require any effort (no essay required). If your child wants to have scholarship money to pay for college, they are going to have to put in the time and effort to submit as many applications as possible.

Keep in mind, however, that even if they are putting in the effort to submit applications, they are not guaranteed to have success. So only count scholarships once they are awarded. Do not base your calculations on scholarships that you haven’t won yet.

• How to be more attractive – no, not with a nice haircut and teeth whitening. I mean making your child a candidate that colleges want to attract to their campus. This doesn’t mean they have to be valedictorian and captain of every sports team. What it means is that they have some attributes that colleges will find desirable and which will cause them to offer higher merit awards. Leadership experience and active community involvement are two of the main things colleges look for in applicants. They also want to see students taking part in a variety of activities and are not just focussing on academics or sports. The more attractive the applicant is, the more money they college might agree to award and the less it will cost to attend.
• Does your state offer free community college? – if your state offers 2 years of community college for free, then you automatically have a way to cut the tuition bill in half. Most 4 year degrees involve taking core classes during the first 2 years. Students can either spend $15,000 per year on tuition taking those core classes at a 4 year college, or they can spend $0 per year taking similar classes at a community college. Overcoming the reluctance to attend community college will save thousands of dollars. Just make sure all the community college classes will transfer to the 4 year college. 

Keep your eyes on the prize

Once you have had the discussion about what money will be available for college, it is time to look at what colleges are realistically within your family’s means. Which colleges could you pay for without borrowing money? 

As offer letters come in, you need to see if the cost of attending will be more or less than the money you have available. If a dream college is not within the budget, then you are going to have to look at alternatives. Remember, getting a degree is more important than where the degree came from.

Should they only apply to cheap colleges?

So does this mean you should only let your student apply to the colleges with the lowest prices? No. But it does mean that you need to discuss finances with them before they begin the college selection process. You are the adult and it is up to you to have a frank discussion with them about the cost of college and what you can afford as a family. This might mean telling them you haven’t saved anything for college, that you will only be able to contribute a limited amount of money while they are at college, or that maybe you won’t be able to contribute anything. Once you have determined what your family can afford, then you can start to look at which colleges will fit within that budget.

Let them talk to adults with student debt

If you went to college and borrowed money, tell them about the impact it has had on your life. Did having to repay your debt stop you from doing something you really wanted to do, such as work abroad? Did it force you to take a job that would let you pay off your debt versus a job you were really passionate about which paid less? Discuss these things openly with your child. Let them know how your life was affected by having debt. Let them know how you want to spare them from making the same mistake. 

Also let them talk to other people that have been affected by student debt. It is likely some of their teachers are still paying off student loans, so that might be a place to start. 

Conclusion

Not having the money to pay for a dream college does not make you a bad parent. Taking out tens of thousands of dollars in loans and then trying to hand them to your child at graduation is another story.

As a parent, it is your job to set realistic expectations around the amount of money your family can afford to contribute to college. It is up to you to show your child how borrowing money is not the only path.

Your thoughts

Do you have a large student loan balance? Did your parents take out loans without your knowledge and then expect you to make payments? Are you a parent that is still making payments for loans taken out for your child’s education?

Let us know in the comments below so others can learn from your experiences.