According to an article by Forbes, the average total cost of a four-year degree is now over $100,000, more than double, even when accounting for inflation, than it was 30 years ago. Perhaps even more shocking, the total college price tag grew nearly eight times as fast as wages over the same period. Working your way through college is nearly impossible and it’s no secret that student loans make up the largest slice of non-housing debt in the U.S.
So how do you plan for and advise your child as they weigh their post high school graduation options?
The first question for you to answer should be: what are your values when it comes to college? Did you enjoy a four year, private college and thus providing that opportunity to your child is really important to you? Or, do you think a college degree will be a commodity in the future and it doesn’t matter where or how (or even if) they obtain one? Do you think it’s important the child take some ownership over the decision by being responsible for some or all of the cost?
It is also important to help your child think through any ideals they have in regard to their college experience. Is there a preference for a larger or smaller school? How important is the location? Or whether it’s a four-year college experience vs. an online program?
Next, it would be helpful to understand how they plan to apply their education in the future. Does your child plan to continue on to graduate school or enter the workforce? What are their career ambitions? There’s nothing unusual about an eighteen-year-old having no idea what they want to do in the future, but discussing these questions might help them start to balance ideals with financial value.
Once you’ve had family conversations about what your child hopes to get out of their college experience and how they plan to support themselves post college, it’s time to sprinkle in some practicality by talking about your child’s options for funding their education. One of the biggest hurdles can be your child’s perspective when it comes to the true cost of college. They likely don’t have experience paying bills, so how do you help them understand the difference between a $25,000 and a $65,000 per year college or university? Both are large dollar amounts, making it difficult to properly differentiate, especially if someone else is paying.
The answers to the questions above need to be put in the context of your financial plan. Can you afford to help your child with the cost of college? Paying for your child’s education at the expense of funding your retirement may have implications that are difficult to foresee, such as relying on your child to help cover your future living expenses. You need to consider the long term effects of funding your child’s education will have on both of your lives. From there, you can help your child think through their options and help them balance their dreams with practical financial solutions.
If you aren’t able to help with the cost of college or your child isn’t set on a four year experience, starting at a community college is a great way to reduce the overall cost of higher education. Some states, such as Oregon, will provide two years of community college education for free if the student enrolls right out of high school. This is a great option for many students who aren’t sure what they want out of college and beyond.
If starting at a community college isn’t right for your child, you will want to spend time researching need and merit-based financial aid. Need-based aid is determined by an assessment of your ability to pay performed by the government and the colleges to which you apply. It’s a good idea to submit a FAFSA form as soon as the window opens, as some awards are given on a first-come, first-served basis. Colleges and private institutions will also award merit-based aid to students based on their accomplishments.
If your child is still exploring their path for the future, another option is to delay college for a year or two. This allows them to get a job and learn to support themselves, thus gaining a more adult, real-life appreciation for the value of the money they earn. Additionally, they may develop a better idea of how they want to use their education in the future.
Every young adult’s situation is different, but for most, the high cost of education is a very real hurdle. The rising cost of education has inevitably changed college decisions for some students. Starting the conversations early, being open to starting at a community college, investing time in researching need and merit-based scholarships, and delaying college entry are all options that may help your child make a well-informed decision and reduce unnecessary debt.
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