Paying for college is a big financial undertaking. Next to buying a home, it’s one of the largest
purchases most parents will make.
The overall goal is to find a well-matched school and come out with the least amount of family
debt. Here are four things to do in the four years before college to go into the planning process
wisely.
First, take stock of your college savings and crunch some numbers. How much do you have
saved now? How much will you have saved by the time your child enters college? Can you
increase your monthly contribution? You can explore various saving scenarios by using an
online calculator. Keep in mind that you can continue saving during your child’s college years.
Second, get familiar with financial aid and net price calculators. Every college has a net price
calculator on its website. A net price calculator will give you an estimate of what your family’s
out-of-pocket cost—or net price—will be at specific schools.
Colleges differ in the amount of financial aid they offer. By running different net price
calculators, you can get an idea of how generous a college might be based on your financial
information and your child’s academic profile.
Third, research schools wisely. If cost is a factor, keep in mind you are likely to get the best
financial deal at colleges where your child’s academic profile puts him or her in the top quarter
or third of the applicant pool. Other factors might include the extracurricular activities your
child intends to pursue in college and your geographic location. It’s also smart to research the
public universities in your state because they’ll typically have the lowest sticker price.
Fourth, have a frank conversation with your child about college costs. Share how much you
expect to have saved at the start of college and how much you will be able to contribute each
year during college.
Look at a few schools that might be a fit and estimate how much borrowing would be required
at each. Then show your child exactly what the monthly payment would be after college for
these different loan amounts using a standard 10-year repayment term. Even if your teen can’t
fully grasp the future financial impact, just having the conversation is an important step in
helping you or your child avoid excessive borrowing.
With these four steps, you and your child can kick off the college planning process with
confidence.
September 3
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