Congratulations! It’s a proud moment. Your son or daughter has been accepted to college! Yes, that big life moment is happening. Right now. There’s so much to do to get ready – and a lot of it will be time well-spent with your teen. There will be dorm room shopping, meeting future roommates (and their parents) and figuring out what that first semester of classes will look like.
But, there’s another reality to face. It’s been looming for 18 or so years, and now it’s time to actually pay for college. There’s tuition and books and room and board, but there are also the meal plans and a little extra spending cash for doing something fun with new friends. If you have been able to save a few pennies towards your child’s education, that’s great and those savings will certainly come in handy. But whether you have some funds set aside or not, college isn’t cheap. And many parents will look to some form of financial support to see their freshman through the next four years.
To help jumpstart the search for financial support, here’s a guide to what’s out there:
Student loans
Many students get a student loan to help pay for tuition. With the average cost of tuition at private colleges just
shy of $35,000 a year, student loans have become an essential piece of the education financial plan. But all loans are not created equal. You can secure a federal loan through the US Department of Education while private loans are secured through banks and credit unions. Student loans also come with a fixed rate – that is a locked-in interest rate, or a variable rate – a rate that will fluctuate as the market rates change.
The best advice: Do your research and sit down with the financial aid office at your child’s school and ask every question you have. Depending on the payment plan, you and your student could be paying back this loan for a few years or a few decades, so this is one decision you want to make with all the information you can get your hands on.
Managing money
For many college freshmen, this is probably the first time they’ll be doing anything that resembles money management. It’s a good idea to sit down with your child and talk about what that day-to-day budget is really going to look like. If your teen doesn’t yet have a bank account, now is the time for that too. Many banks offer student checking accounts and easy account access via mobile apps.
Whether your student will be working, or you’ll be providing additional funds for non-tuition expenses, talk about a monthly budget. Tips for managing that money will play a big role in limiting the number of conversations you have about spending (or over-spending) down the road. Here are a few guiding questions to consider:
- Once tuition is accounted for, how much money will your son or daughter have to spend each month?
- What regular expenses will he/she have? E.g. cell phone bills, meal plans, car or travel expenses.
- What about “the fun stuff”? Once questions 1 and 2 are answered, you’ll both have a clear view on how much money will be left to spend on extras--like dinners out and spontaneous shopping trips.
Pro Tip: Student discounts are available on just about everything from clothes to movies to travel – don’t be afraid to ask before making a purchase! Small savings here and there can really add up over time.
Protecting the things that matter
You might be thinking that insurance doesn’t play into your college student’s life – but it does. Laptops and cell phones aren’t inexpensive and unfortunately, college campuses are not immune to theft. Make sure anything of value that you’re sending off with your freshman is insured – it’s likely these few items can even be included in your existing home insurance policy. A few extra dollars a month is well worth the peace of mind that comes with knowing, if that laptop gets picked up by someone with sticky fingers at the local coffee shop or library, you’ve got it covered without shelling out the dollars for a new one.
We hope these pointers help you prepare for your student’s financial future as they embark on this new journey in life. Stay tuned to this blog for additional posts on how to best manage money to help set your family up for financial success.
