"...do not let a 16-year-old child make one of the largest financial decisions of the household on their own!"
Hi again and welcome to another edition of retirement insights.It’s back to school time and what better time to think about college? More importantly, how to pay for college! It’s not easy, nor cheap. But I bet you knew that already!
A recent survey from the College Board said that the average private college tuition was $33,480 per year. Even in-state residents paid an average $9650 per year to go to a public college. Then you add in room and board, books, and the “hey mom, I need $200 bucks”…and it gets rough in a hurry!
Meanwhile, you’re trying to keep your own financial house in order, you’re saving for retirement at the same time, and oops that dishwasher just broke down. So how the heck do you pay for all of this?
Well, there are 4 things that you can do that can help ease the pain of paying for your children’s education. Let’s take a look.
First- plan ahead! And I know…”hey thanks Mike. If I did that, I wouldn’t be watching your little video.” I get that. But, for those of you who have children that are still many years away from going to college, or those who haven’t had children yet…plan ahead. The earlier, the better. When my clients have children, one of the first things we talk about is, “let’s start putting away for their education now”. And regardless of what
kind of college savings accounts you look into—when they’re very young and you’re just starting to save, I don’t care. We can talk about the differences of those accounts at another time. The important thing is to start an account for them and AUTOMATE the savings process. Have it automatically pulled from your checking account so that you don’t have to force yourself to write a check each month. Remember, inertia works two ways. If the path of least resistance is to just continue with an automatic savings plan, you’re much more likely to continue it.
Second – and this one is a biggie: When your children begin actively looking at colleges, somewhere between their sophomore and their junior year, communicate with them. More specifically communicate with them about the costs of higher education. Your
children are now young adults and this is an adult topic. Let them know that is going to be partnership between the two of you. And that while you’re happy to help, they must have some skin in the game. And to that, you must be heavily involved in the decision of the school that they choose. So often I hear clients that tell me that their child wants to go to this university or they’re gonna go to that college and it’s as if the decision has already been made! Do not let a 16-year-old child make one of the largest financial decisions of the household on their own!
Number three: Get free money! Between scholarships and grants, a student can often get a lot of their tuition covered
without spending a dime. And what’s critical here is that you look to colleges that pair well with what your child’s unique abilities are. And that goes back to my second point about helping your child choose the college that’s right for them. You need to learn what scholarships and what grants may be available to them. And this may take a good amount of research and trial and error on your end, but in the long-run the savings can be totally worth it. If you’re not sure where to start, you can even employ the help of a college selection and application planner. And or a fee, they will help clients select a school to optimize scholarships and grants, they’ll help with the application process, they’ll help with the
student essay, filling out the FAFSA forms and the like. If you don’t have the time to conduct all the research on your own, a group like this can be tremendously helpful.
Fourth: Do not take huge student loans in your name! You haven’t squirreled away enough money and your child is going to school next year…”what choice do I have?” You have a lot of choice. If you are trying to retire anytime in the near future, a six-figure loan is going to be a major roadblock to your success. It could mean staying in the work force for years longer than you would have otherwise or living at a substantially reduced standard of living for the rest of your life. I go back to what I said before. Your child must have some responsibility for themselves when it comes to paying for their college. I don’t mean that they have to cover every dime,
but I do mean that you should not forego your retirement to avoid having your child take out educational loans. They have a whole career ahead of them to get that debt down. And you don’t. Review eligibility for scholarships and grants, like that new tuition-free Degree Program in NY, maybe starting at a community college, and yes, student loans covered by the student to ensure you don’t endanger your financial future.
Do you have questions for me? Let me know! Give me a call me at (518) 612-1060, or send me an email at firstname.lastname@example.org. Do you follow me on Facebook? I think that you should! You’ll get videos like this, blog and article shares on everything retirement planning. Once again, thanks for joining me. And we’ll see you next time!