The College Talk that You Need to Keep Having Every Year

The following post is by MPFJ staff writer, Melissa Batai.  Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

I met with some of my friends a few nights ago.  One woman I’ll call Rose has a daughter who will be a senior in high school this year.  Rose is frustrated because her daughter has her heart set on attending one of three different colleges twelve or more hours away.

The distance away isn’t Rose’s concern.  She’s concerned that each of these colleges costs $40,000 to $50,000 a year, and her daughter will not consider any other options.  Rose and her husband refuse to go tens of thousands of dollars in debt for their child’s college education, and they don’t want their daughter to leave school saddled with debt, either.

Unfortunately, this scenario will be played out across the country as upcoming seniors set their sights on their dream colleges, which often cost a fortune.

However, your child doesn’t have to be one of these kids with unrealistic expectations, especially if you talk with him regularly from middle school on about what you can pay for college.

Here are some strategies you can use to help keep your child’s expectations in line with your financial reality:

Let them pay for their own expenses

Many high school seniors who have unrealistic expectations about attending a pricey college haven’t had to handle their own budget.  Their parents may supply them with a car and insurance when they’re teens.  When it’s time to go out with friends on Saturday, they just ask mom or dad for money.  This dependent relationship isn’t helping the parents or teens.

Instead, put your kids in charge of their own budget as early as possible.  When kids are in 7^th grade, increase their allowance (perhaps based on the chores they do) and let them assume some of their own expenses.  Let them buy their own clothes and pay for their entertainment.  Don’t forget to also teach them to save.

Your child will quickly learn that she’s not earning enough money to meet all of her wants.  When she’s shopping for back to school clothes, maybe she’ll pass on the $90 jeans and instead by two pairs of the $30 jeans.  (True penny pinchers may even check out the thrift store.)

The earlier a child understands the concept of money and how far it can or cannot stretch, the more he will understand why a college that costs $50,000 a year is not feasible.

Match their own college savings

One easy way to motivate your children to save for college is to match their college savings contribution.  My husband and I want to help our children with college, but we don’t want to just hand them money that we alone have set aside for their college education because we don’t believe they’ll value the money or the education as much.  Instead, we want our kids to be invested in saving and paying for college.

Our son just turned 12, and for the last six months he’s been saving for college.  Of course, he’s also used his money for other things, but so far he’s saved $100, and we matched that amount.  We have it invested, and he gets excited seeing the money grow (even though at such a small amount it’s not earning much interest yet).  This strategy not only helps him invest in his own education, but it also teaches him about matching, which will be so important when he’s in his twenties and newly employed.  I’m quite sure, based on this experience, that he’ll take advantage of the company match on retirement savings.

Let them borrow money from you and pay it back with interest

At least once or twice, when your child’s wants are greater than her available money, let her borrow money from you with interest.  Put her on a payment plan, though make the repayment terms a bit aggressive.  Maybe she has to use 50% of her allowance per week to use to pay back her loan to you.  Also include interest.

While this tactic sounds mean, it teaches your child how constrictive student loan payments can be on a budget, especially when it’s a large student loan with steep monthly payments and the borrower is earning a relatively low salary when starting out.

Hopefully, after a time or two of borrowing money, your child will learn that it isn’t worthwhile.  If she doesn’t learn the lesson, however, feel free to turn her down for loans.  She also need to learn to stick to her budget so that she doesn’t constantly borrow money as an adult and stay in a never ending debt cycle.

Clearly outline what you can contribute to their college education

No parent likes to tell their child no, but for your own sake, you may need to.  Decide in advance with your spouse how much you plan to pay for college per child and then have a chat with your child, as early as possible, perhaps even as early as 8^th grade and then repeat the conversation every year.

This talk will help your child understand how much is available when shopping colleges, and it may also motivate her to look more aggressively for scholarships or to pick more reasonably priced schools.

Remind them grad school might be time for the school of their dreams

If your child will need to attend grad school for his chosen career path, encourage him to choose a more reasonably priced college for undergrad.  Then, he might choose the college of his dreams that is best in his field for grad school.  There are more opportunities to help fund grad school such as assistantships than there are for an undergraduate degree.

Let them apply to the unrealistic college

Finally, if all else fails and your child is adamant about the unrealistic college choices, as my friend’s daughter is, let her apply to the schools.  Once accepted, she can then fill out the financial aid package.  This may be the time that your child finally accepts financial reality.  Or, it may be the time that you’re surprised by the generous financial aid package.

I went to a community college for the first two years of college.  When it was time to transfer, I looked at our local four year college and a more prestigious four year college several hours away.  I was shocked when I got the financial aid packages.  It was cheaper for me to attend the prestigious college after financial aid, even though that college cost about 50% more.  Turns out the college had generous alumni, so that school was able to offer more financial aid.

When it comes to raising your children, college is likely the biggest expense you’ll face.  However, if you regularly chat with your child about how much you can afford to pay for college AND if you teach your child financial responsibility from an early age, hopefully you can avoid a fight over which colleges your child should plan on attending.

Most importantly, stand your ground.  A child who doesn’t get to go to his dream college will likely understand years down the road and thank you, especially when say “no” to your child and expensive college parental loans means saying yes to your own retirement funding.

How about you all? How did you handle college choices and expenses with your child?  Or, if your child is not yet that old, how do you plan to handle this situation?

Share your experiences by commenting below!

****Photo courtesy https://pixabay.com/en/graduation-grads-cap-diploma-907565/