Parents – Have I had a discussion with my spouse as to who is paying for college?
Some parents want to pay for everything for college because that is what their parents did for them, or they want their student to be able to focus solely on their studies.
Other parents would like their students to have some skin in the game with some loans.
Yet other parents want their students to have some loans, and then would be willing to pay them off for the student should they get through college in 4 years. There is no right or wrong answer here. What is most important is that you and your spouse are in agreement and have made the time to discuss where the funding is to come from, with all your children AND your retirement in mind.
Do I have a number in mind as to what College might cost?
We might not know exactly what college will cost until we have the final offer from the school the student wants to attend. Then comes the negotiation process. We can however do some pretty accurate calculations in order to take into account the variables that might have an impact on the bottom line. (The possibility of negotiation comes after proper planning in the beginning)
Typically, I ask parents what they think college might cost and even though that might be a tough question to answer definitively. Perhaps we should think on some of the following:
What we would be willing to pay, what our EFC will be (and plan to lower it if we can), possible scholarships, alternate schools, acceptance probability. Then do the math and comparisons among those schools. Sometimes students get accepted to expensive colleges with some pretty good Endowment money which brings the cost to an acceptable level for the family.
Have we had a discussion as to how much we are willing to pay for College?
This is important for us to have discussed as a couple, and for the student to know in advance when making college choices. If we don’t set expectations BEFORE they get accepted to their dream school, then we might have to tell them that we cannot afford it. No parent or student wants that.
As parents, we should consider which school is the best fit, and what price is the best for our kids and us. Remember that if we run out of money in Retirement because we spent it on their college, then our kids will have to support us financially in our old age. Is that what we want?
This is a wonderful time to teach our kids how to go through a decision-making process.
What we teach them through this process could very well influence how they make financial decisions in the future. It’s a wonderful opportunity for us to walk them through a responsible decision-making process
Where is the money coming from?
Once we have had the above discussions amongst ourselves as a family, then it might be a good idea to figure out where that money will come from and would that be the most efficient money to use. We don’t want to be guessing what the real cost of college might be because we have not taken into account the cost of inflation or where we get the money. Remember that we borrow for College no matter what, even if we pay cash for college. We either borrow from someone else or we borrow from our retirement.
Let’s Talk
What is the biggest mistake that most people make? They ASSUME that they cannot be helped. We have no idea whether we can help a family or not until we have a personal discussion with them to see what their unique circumstances are and then develop a personalized plan that it unique for their circumstances.
Please feel free to contact me if you would like to discuss how we can help you with your family’s plan either in person, over the phone or on Zoom
About Dave
Dave Coen is a Retirement Income Certified Professional (RICP®) and Financial Advisor with SageView Advisory, and CEO of College Planning America. Along with his retirement financial industry experience, he is a College Planning Specialist. He works closely with individuals and families to provide comprehensive financial planning that addresses all elements of their financial picture. Learn more by connecting with Dave on LinkedIn.
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