3 Tools to Help Discuss College Tuition with Children
Schools are out for the summer, but the thought of college tuition rarely takes a break in 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 that just started high school, this summer may be the right time to discuss the costs of college tuition and how it will be paid for.
- 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?
- Are student loans going to be needed?
Answering these questions with your high schooler will help set expectations and give them the necessary information to help them make an informed decision on college before the admissions process.
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 amount of loans required to attend.
Below are 3 tools that can help facilitate the college tuition discussion, find out the actual cost of a specific school, and potentially help lower the cost:
1. Fill out FAFSA.
The Free Application for Federal Student Aid (FAFSA) opens on October 1st, the year before your child begins college. It is important to fill it out 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. It is important to fill out the FAFSA even if you do not think you will qualify for need-based aid. Most schools require the FAFSA to be filled out to award the 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), where you now may qualify for need-based aid.
2. Check Financial Aid Breakdown.
Each school has different financial aid breakdowns. Some schools only give out need-based aid, while others give out a significant amount of merit-based aid. If you do not qualify for need-based aid and have 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, certain private universities have provided their formula for how they award financial aid so you can look up and compare your true cost to attend these universities in one place. 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 on a specific school.
As always, if you have any questions about your family’s college situation, please reach out to your Wealth Management Team for additional insight and guidance.
Steven is a Senior Advisor at BDF. Prior to joining BDF, he worked as an auditor at a public accounting firm. Steven graduated from the University of Illinois at Urbana-Champaign with his Bachelors of Science in Accountancy and Masters of Accounting Science. Steven is a Certified Public Accountant and a CERTIFIED FINANCIAL PLANNER™ professional.