In a recent study conducted by Wakefield Research for Thrivent Financial, respondents agreed that opening the lines of communication is key to reducing stress and ensuring students really are prepared for the realities of college costs. 70% of students wish their families spoke with them about college costs more often.
The reasons for not having “The College Money Conversation” are many:
· Struggle to find the time between athletic events, work, and weekend activities
· Assuming schools are teaching kids about college costs
· Don’t want to add stress to your kids’ lives by talking about college costs
· You plan on taking care of it all anyway
· the biggest reason of all: not knowing HOW to have the conversation
With the upward spiral of college costs, the seemingly ever-changing landscape of college funding, and the unknown expenses your family may experience, it’s difficult to speak with certainty about how much you or your kids will be on the hook for at the end of their higher education journey. Yet, it’s critical to open the lines of communication with your kids early so they’re prepared to make wise money decisions while in college.
This framework will give you an idea of HOW to begin this conversation to give your kids a head-start. Remember, this is a stressful topic for both you and your kids. In the study mentioned previously, money was clearly a stressor for both students and parents. For 72% of students, discussions about their college costs cause more tension in their families than discussions about their grades, or SAT or ACT scores. It’s widely proven that parents who have these discussions earlier and more often in the process experience much less tension.
The Conversation With Your Kid Might Go Something Like This:
Tell Them What You're going to Tell Them.
“The reason we’re sitting down is to discuss how we’re going to fund your college experience. Paying for college is expensive and it’s going to take effort and resources from both of us. (Your situation may be your child is covering everything on their own. You should tell them this as straight-forward as possible -- the goal is NO ambiguity.) We want to talk about your responsibilities in terms of choosing the right school, applying for scholarships, and making loan payments. Then we’ll cover what you can expect from us moneywise.”
“You still have a chance to research schools and choose the right financial and educational fit. Knowing the cost differences between schools is important because they will determine how much we can cover upfront, and how much you’ll need to borrow in student loans. We have some money set aside for college (the more transparent you can be the better) and the rest of the cost will be on your shoulders through loans… meaning you’ll be making payments after graduation.
Your responsibility right now is to be aware of the existing opportunities such as: scholarships, taking classes offering college credit, and saving as much as possible. Once you’re in college, it will mean working part-time to cover some of your costs and living on a budget so you don’t spend more than you can afford.
Lastly, we do want to help you cover some of your monthly expenses, so we’ve budgeted for you to get $150 a month for things like cell phone, clothes, toiletries, and food.”
Tell Them What You've Told Them.
“Be thinking about where you’d like to go to school and the overall costs associated with each of them. This will ultimately determine how much you might owe once you graduate. We talked about the importance of scholarships, minimizing your costs, and what you can expect from us.”
There Are A Few Keys To Having This Conversation Effectively With Your High School Students:
1. Have this conversation early and often.
2. Prepare them for it. Let them know ahead of time.
3. Support their decisions as much as possible. Have a child interested in trade school, military or a gap year? You may have to put your own desires aside to be supportive.
4. Ask them what they’re thinking.
By following this framework and suggested topics, your kids stand a greater chance of finishing college with less debt and more opportunities to thrive.
Adam Carroll, Personal Finance Expert and Author via CU Learn