College Considerations
Some of our friends are leaving this week to drop their kids off at college for the first time. I can’t imagine! Such excitement, anxiousness, pride, and sadness all wrapped up there!
I have no idea what that drive is like. As a parent I imagine it would be filled with so many questions. Did I teach him enough? Is she really ready? And not to mention all the “what ifs” I’ll be fighting off.
Transitioning kids from our homes out into the world has to be one of the most emotionally taxing processes. There are so many decisions to be made, and I know enough about life to know highly emotional times aren’t the best times to make decisions.
This is one of the reasons I suggest clients begin preparing financially for their kids’ launch long before it’s time. Sure, lots of things could change between now and then. But you want to at least identify what your financial role is in their future. Doing some planning now in the direction of the role you want to have ensures an easier transition when the time comes.
So here are some questions to ask yourself to help you identify what your role will be.
Questions About Kids’ Education
How do I feel about my child attending college? Is it mandatory? Is it OK to do something different? What about attending a trade school instead? Or maybe starting a business right after high school?
Do I want to pay for my child’s higher education? Do I want them to pay for it so they “own” it? Is is realistic for me to pay for it?
How do my own experiences influence my thought process?
What are the cost differences between state schools and out-of-state? Private vs. public schools?
Talking with your spouse or co-parent and your child about these topics early on will help navigate the waters when it’s time to make bigger decisions about what those next steps look like. I often find that spouses had different college experiences, and that leads them to have different viewpoints on what they want for their own kids. Just like any financial goals, identifying them early and talking about them together makes them easier to work toward.
Resources
What does college cost? CollegeBoard is a great website that can help you research different schools. Search for the school name and gets lots of information on the size of the school, the majors offered, and how much it costs.
I live in Austin, Texas, so let’s look at the University of Texas as an example. The CollegeBoard website for UT tells me there are around 40,000 undergraduate students, and they also offer master’s and doctorate programs. The most popular degrees are engineering, followed closely by business, journalism, and social sciences. The full cost to attend UT in the Fall 2019/Spring 2020 school year is $27,722. About $11,000 of that is tuition and fees, with the rest covering room and board, books, and personal expenses.
Before you get sticker shock, read the disclaimer stated right after the price: “The prices listed above are probably not what you and your family will pay. Most college students receive financial aid, which reduces the amount the family actually pays.” So how are you supposed to figure out what a higher education will actually cost your family? Use the CollegeBoard’s Net Price Calculator.
What is the best way to save for college? My favorite resource for this is SavingForCollege.com. They have lots of great articles like “6 ways to save for college” and “What can I pay for with a 529?” One link I use all the time on this website is Compare 529 Plans. Any time a new client comes to me with a 529, I use this website to compare their plan with my favorite plans (Utah and Nevada both have great plans). I show them the side-by-side comparison of fees and investment options.
Another great section of this website is “Grandparents and 529 plans.” I hear from a lot of parents who don’t want their kids to get loads of toys from friends and family at their birthday party. A great gift idea for grandparents is to gift money into a college savings account like a 529. It’s tough to get a 4-year-old excited about financial contributions to college, so maybe accompany it with at least one toy!
Bottom Line
Planning for college is a big task with lots of decisions to make! And it’s emotional. Honestly I don’t have room in this post to tell you about all of the different savings options out there. Or how to determine which college is the best fit for your child. Or whether or not you should pay for 100% of your child’s college education.
I would love to help you with this decision, though! If it’s part of your financial life, I help with it! My goal is to have a conversation with you, understand what you want, and then educate you on what your best options are. I sift through all of the information and just present what is most suitable in your situation.
For those of you moving kids into college this week, good luck to them! (And you!)
