Setting a College Budget
The cost of a college degree can be taxing to all but the most affluent incomes. It is important to make wise decisions when selecting the next level of education that is appropriate for your graduating high-school senior. Here are some helpful tips:
Step 1: Set a budget.
Based on your financial situation, come up with a number you are willing to participate for college or other continuing education options. If you feel it is appropriate, share with your child the process by which you arrived at the number. This can be an important ‘teachable moment’ as you prepare them to make important financial decisions for themselves.
Know that the financial aid process at most schools empowers those institutions with detailed personal information they use to derive your EFC (estimated family contribution). Based on your situation, that number may be ‘suspect’ as it might not take into account all the factors that inform your decision. Bottom line, if too much is being placed on you and/or your child, consider other options.
Step 2: Set expectations.
Have a heart to heart with your child about their expectations for the college experience. Why do they want to go to college? What do they want to get out of it? ‘A good education’ is only a partial answer! “Because everybody is doing it” is no answer at all!
How will this education help them succeed in life? What are job prospects in their areas of interest? Guide your student/child in the importance of making practical assessments. Conversations about the job prospects of a liberal arts major shouldn’t be off the table, especially if your child will be participating in the cost of his/her education. Graduating with a history degree and 50-100k in student loans is a tough way to start life. Put a budget together with them: ‘To live after college, you will need to earn ‘X’….’ This reality check can help them grow into the realities of adult life before they start spending your life savings and large segments of their future income.
Step 3: Run the numbers.
If things aren’t adding up, it is ok…MANY families are experiencing big challenges in this area. Some ways to save include state universities, ‘day hopping’, or perhaps doing 2 years at a community college before transferring to a university.
Technically oriented VO-Tech schools can be a good value, especially if your child likes computers. They can help land an entry-level technical job with a company that has tuition reimbursement!