Paying for College – News and Views

A recent Wall Street Journal featured Should Parents Pay for Their Child's Education profiling both the yes ( Don't have your children start life with crippling debt) and no (Let's make sure kids the most from their education) points of view. You can read the full article here. 

Then there is the case of the New Jersey private high school student suing her parents for her college tuition (you don't want to read about that). 

Rather than leaving these issues unspoken, parents should find the time to have a frank discussion with their student about his/her options for college and the associated financial consequences.

1.The family's financial landscape-The first thing parents should share with their child about college tuition costs is how much they are willing to pay. If applicable, disclose the amount of money that has been saved expressly for this purpose and whether or not additional funds would be available from current family income. Calculate the difference between the amount the family is able to pay and the cost of the schools the child is considering. Explain that this balance will have to be made up by scholarships, grants, a job, and/or student loans.

  2. Majoring in Psychology vs. Engineering—It Matters-  A good fit between an individual’s talents and interests and their field of study is the primary goal when deciding what disciplines to pursue in college. The amount of money a college graduate can expect to earn may be estimated based upon their course of study and marketable skills.  The amount of debt they graduate with will depend upon the institution they choose, their spending habits and how they finance their education. A realistic view of future earning power and assumption of debt should be considered part of the college decision-making process.

  3. Understanding Student Loans-When discussing the financing of their education, it is crucial that parents and students are well informed about the different types of student loans available to them. It is important that the student borrower know the difference between federal and private loans and understand that some are more favorable in terms of function, grace period for payback and interest rates.  All of these options are detailed in the white paper available at the end of this post.

 4. Keeping it real about life after college- Student loan debt can affect more than just the graduate, it can impact the whole family. The boomerang generation has been formed by the overwhelming number of young adults living in their parent’s homes after graduation. Credit a poor job market for recent college grads or the fact that between loan payments, car insurance and cell phones, there is no money left over to rent their own apartment.

5. Setting an example- Being informed of the options for college and their associated costs is a perfect preview into the adult world of financial responsibility for a teenager.  Taking the time to talk this over as a family drives home the message about the importance of making informed decisions. 

Download our Whitepaper: Having the Talk about College Finances:

http://www.shepherdfinancialpartners.com/having-the-talkdiscussing-college-finances-with-your-studen...