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Talking to Your Teen About Paying for College

June 23, 2021

June 23, 2021

In the 60’s, a four-year degree at a public college cost just a couple hundred dollars. After adjusting for inflation, that’s around $2,000 today. So, why is the average bachelor’s degree now anywhere between $8,000 to over $100,000? The rising cost of college in America has been a hot source of debate for years in both political and academic sectors. But the real burden falls on the shoulders of students and families. Parents who are still wrestling with their own student debt are wondering how they’ll pay for their child’s education or at least prepare them for a stable future. If your teenager is starting to explore their options, here’s how to start discussing the cost of college and how to plan ahead.

Affordability vs. Prestige

What is the real value of a college degree post-graduation? Is a bachelor’s from Harvard more valuable than one from your state college, even if someone graduates with the exact same credentials? Ambitious high school students with big dreams for their future may naturally drift toward a path that includes attending an Ivy League school, but the cost is often too much for parents to bear.

Merit-based scholarships are not offered as frequently at universities like Harvard and Cornell. The exclusivity evidenced by abysmally low acceptance rates turns the prospect of earning a degree at such a school more than just an academic goal. It’s a status symbol that many students may begin to see as their only way of achieving their dreams.

Realistically, no one cares if you went to Harvard in the real world. At least, not in common fields like English literature or education. Earning a master’s from an Ivy League school can come with greater career opportunity simply because the alumni tend to be so well-connected. But for freshmen, it’s highly likely that they can receive the same degree for far less money by studying at a public school.

In-State Rates are Always Lowest

Talk to your teen about how they would like to earn their degree. Are they comfortable staying at home, or do they want to move out and try living in the dorms? Do they absolutely need to pay double the amount of money to study across the country? A lot of teenagers fall under the assumption that they have to get as far away from home as possible to really branch out at 18. They can actually live independently while staying in-state and taking advantage of the resident tuition rates.

Middle-class families struggle to contribute to their teenagers’ educations, especially when two years at a university can cost both parents’ annual salaries. It’s a good idea to bring up the subject of tuition and financing when your teen is a sophomore. This is when they start talking seriously about college in school, and it gives them time to explore different options. They’ll also be able to put money from a part-time or summer job into savings.

Are Student Loans Mandatory?

No one wants to spend half of their adult life in debt, but that reality affects millions of Americans across the country. Unless your teenager is actively applying for scholarships and manages to land a full-ride, chances are they’ll need to borrow some money to pay for their degree. You can help them and you avoid the financial burden of tuition by taking out a student loan from a private lender. Federal options are still available, but private loans offer greater opportunity for your child to borrow more, accrue less interest and take advantage of refinancing or consolidation in the future.

The only surefire way to guarantee your child won’t have any student loans is to have enough money saved that you can cover the cost of their degree. But this is highly unlikely for most families. Avoid feeling guilty that you can’t pay more, and offer to help in small but meaningful ways, like paying for some of their new furniture or back-to-school clothes.

College Is a Chance to Learn Real-World Money Skills

Parents can prepare their teenagers for a lifetime of financial responsibility now. Introducing them to tuition, loan terminology and concepts like interest is a way to encourage responsibility in your child with tangible examples. Financial independence does not have to mean debt-free. It means being able to manage your finances well, maximize your income’s value and profit as much as possible from what you earn, expenses and obligations aside.

Once you’ve gotten through the first conversations, start an action plan that helps your teen feel empowered about their ability to build the future they want. This includes covering things like gas and transpiration, food, housing, supplies and other living expenses. They can also explore work-study opportunities, paid internships and summer jobs to help offset the cost of student loans. Living at home while in school is another great way to save big on college education. By opting out of dorms, students can cut their tuition costs by as much as 50 percent.

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