Talk to Your Teen About Financing College
by Suzanne Shafer, Parent Editor
If you have a college-bound teen you’re well aware of the cost of college – it’s high. In a 2013 story in Business Week, one graduate confessed she had given up on her student loan debt of $186,000. She is not alone. With the nation struggling under a $1 trillion student debt crisis, stories like hers are nothing uncommon. For the first time ever, the national student loan default rate exceeds the credit card delinquency rate, and so long as student loans remain one of the few types of debt that can’t be discharged in bankruptcy, chances are the situation won’t improve any time soon.
As their parent, it’s up to you to make sure they don’t fall prey to debt that they cannot repay after graduation. Following are a few tips to help broach that uncomfortable topic with your college-bound teen and talk to your teen about financing college:
The cold, hard facts
The first thing you need to discuss is finances: what you are willing to pay and what do you expect them to contribute toward college expenses even if it’s just acquiring scholarships. Discuss the ramifications of student debt and talk openly about which colleges would fit into the family’s financial picture.
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The difference between wants and needs
This discussion is just as important as discussing the cost of the college education. When a student understands the difference between the two they can make financial decisions based of this criteria. Is it something they need or simply something they want? Don’t assume they know the difference. Most teens believe everything they want is a need. I
The college choice
Be realistic. If their dream college is out of reach financially think long and hard before you apply. This may be their first time to make a choice between what they want and what is best financially. The college they choose not only needs to be a perfect fit for them socially and academically; it also needs to be a perfect fit financially.
This is the perfect time to talk to your college-bound teen about creating and sticking to a budget. You may have tuition, room and board covered but there are always added expenses. Budgeting for those added expenses means there won’t be any surprises when the bills come due.