College Financial Planning: How to Have Challenging Conversations with Ease
Did you know in the last 20 years the average tuition and fees for colleges have risen between 144% and 211%? The college price tag is enough to send anyone into sticker shock! Paying for college looks a lot different than it used to, and having a conversation about college financial planning is one of the most important conversations you will have. While it can feel scary, it doesn’t have to be as hard as you may think.
Let’s dive into some details to help you understand the financial piece of applying to college and some college financial planning talking points for you and your family.
College Tuition Average
Education Data Initiative is a team of researchers that collect and compile data about the U.S. education system. The link to their website is below.
You will find tuition differences for in-state vs. out-of state, as well as public vs. private institutions. The average cost of in-state tuition alone is $9,580 while out-of-state average is $27, 437. Public and private institutions have very different cost of attendance, however it is worth exploring both types of schools. You may get additional financial aid at a private college that can even the playing field between the two institution types, or make the cost of attending a private institution be less expensive than a public institution.
College Financial Planning and Selecting Potential Colleges
At first glance, the information can feel discouraging when you see how much college costs, and how the trend of that cost has increased over the last 20 years. Being able to talk about finances isn’t an easy conversation, but it plays a big role in how you select a college.
Having these college financial planning conversations early on will help prevent disappointment of being accepted to colleges and realizing that you have to decline attending because financially it is not an option. We will talk more in this episode and upcoming episodes about how money impacts where you plan to attend.
Applying for Scholarships: Is it Worth the Time Investment?
The time you invest in searching for scholarships is almost like having a part time job. In some cases, the time you put into that scholarship search would have more of a payout than a student working.
Please note that these numbers are not a guarantee of how much scholarship money someone may get, but an example of what can be possible.
The federal minimum wage is $7.25 per hour, while some states and employers pay more than that. As you know, taxes and other charges come out of a paycheck to get to the person’s take-home pay.
On the other hand, if a student invests time in applying for scholarships, some students have gotten upwards of $100 per hour from the scholarships based on the amount they received and how many hours they worked on applications.
I have seen families have several big misconceptions about the scholarship search.
- One family told me that their older student, who was currently in college, had spent some time applying for scholarships and didn’t receive them, so their current high school junior wasn’t going to even try to apply for scholarships.
- Another family thought that the only scholarships available were ones based on the student’s grades or financial need and that they made too much money for any other scholarships.
In both instances, they were leaving potential money on the table because they didn’t take time to look into other options.
Conversation Starters: College Financial Planning
Let’s talk about some steps you can take and the conversations you can have at home.
On a side note, you also should never give your personal information to any website when searching for scholarships, including your social security number. You may need to set up an account with various agencies or websites and provide your email address.
As you look at the tuition, room and board, and college financial planning, there are several areas to discuss.
- First, talk about family support.
- What is your family able to contribute to the cost of college?
- Have parents or extended family members saved money for college or created accounts for your student?
- Will students be responsible for paying for everything on their own?
- As you review the cost of colleges, potential financial aid packages, and potential scholarships, these numbers are important to know.
- Second, look at your student’s financial situation.
- What will your student’s salary be after graduating?
- What will it be 5 years after graduating?
- What type of lifestyle are they expecting to have? If they have to take out student loans, what would their expected take-home pay be after taxes, paying loans, and putting money in savings? Would they have a living wage?
- Third, I would encourage you to make a list of potential sources of money and scholarships for college and if they will renew each year.
- Will your student earn any merit-based (GPA, test scores, class rank) scholarships through the state or institutions they are applying to?
- Are there any need-based sources (like the Pell grant) you believe you will receive?
- Make a list of various scholarship opportunities available (more to come on this in a minute) and look at the timeline of when they are due. This could include local scholarships, scholarships specific to majors, application-based scholarships, essay-based scholarships, and others.
- As you look at each college, find out if you are able to stack your scholarships – will the colleges allow you to use scholarships from multiple sources without it impacting the scholarship amount you get from the college?
- Fourth, there are various resources available for you as you’re searching for scholarships. Start with one or two sites when you begin searching. You can expand into other resources if you need to.
- Your high school counseling office and local/community scholarships
- Raise.me: this is a website you can begin using early on in high school to get micro scholarships
- College Board Opportunity Scholarship offers scholarship opportunities for juniors and seniors for completing various tasks that are part of the college search and application process.
- CollegeBoard Big Future search feature College Board also has a scholarship search feature you can use.
- Niche.com has multiple scholarship search tools students can use.
- Fastweb Fastweb is a website students can sign up for to be notified of various scholarship opportunities. Some are essay based and others have an application.
Helpful Resources and Connect with Me
With individual families I coach, we go into further detail on the process of discussing finances and helping students find the right fit. It is possible to earn money for college, and it is possible to have those conversations even when they aren’t easy.
If you haven’t listened to our episode on having positive conversations, please go back and listen to have insight on the best ways to structure your time as you have these conversations.
- Episode 2 How to Find the Right College for Your Student Part 1
- Episode 3 College Application Success: Having Positive Conversations
- Episode 4 You Don’t Have to Attend an Elite College to Be Successful
Let me know how your positive conversations are going! Download my guide on How to Start or Expand Your College search at www.confusedtoready.com/howtostart
As always I am here to serve you and your student,
Courtney
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