Educational concerns sometimes aren’t the only factors to weigh
By Bronwyn X. Martin, Columnist, The Times
It’s the time of year when high school seniors across the country are making their final decisions about where they will attend college. Selecting the right college has always been a complex process, but in challenging economic times, the decision can be even more complicated for students and families. As higher education becomes more costly and competitive, it’s often difficult for high school students and their parents to know how to approach the situation emotionally or financially.
As parents (and holders of the pocketbook), your part in the college selection process can take many forms ─ from helping your student research and visit institutions, to seeking out scholarships. It’s also possible that your child’s college education will have a significant impact on your family’s finances, so if you’re helping foot the bill, don’t hesitate to be involved as your child decides where to attend college.
Keep the following things in mind as you help your son or daughter evaluates schools:
- Set financial guidelines before your student begins the process. The first step in the college selection process should be determining how much you can afford to fund from savings or current cash flow, how much you or your student will need to borrow, and what you’ll expect your child to personally contribute. Organize your finances and determine the amount of debt you can afford to take on if you co-sign for your student’s loans. Be sure to clarify your expectations regarding loan repayment with your child and help him or her seek out scholarship and aid opportunities if extra funding is needed. It’s also important to know when it’s right to encourage your student to explore other schools or options.
- Have an honest conversation with your child about the seriousness of student loans. Loan repayment may seem like the distant future to teens, but if your son or daughter chooses to take out a significant amount of loans, it’s crucial that they understand the long-term financial burden that may cause in the future. One of the best ways parents can help communicate to their child the significance of student loans is to sit down with them and do the math. After determining the total cost of college, calculate an estimate of what your child’s monthly student loan payment may be after graduation. Discuss what a typical graduate’s after-tax take-home pay might be and discuss what kind of choices your child might need to make in order to afford those payments. Making the dollars and cents real can bring clarity to an otherwise vague future obligation.
- Don’t immediately exclude options. Though it’s hard not to be alarmed when you see some college’s price tags, try not to immediately exclude an expensive school your son or daughter is interested in. If your child has a strong interest in a specific major or program, there may be a big payoff for attending a school with a good reputation in that area, even if you invest a large amount now. Also consider the reason for the cost. In some cases, a high price tag may be equated with the quality of education, professors, research and even job placement, which could benefit your child greatly in the future.
- Prepare for the future. In addition to looking closely at paying back student loans, plan for the financial impact that will come with sending multiple children to college as your oldest is going through the process. Don’t forget to include the cash flow needs your child might have while adjusting to campus life. Consider consulting with a professional financial advisor who can help you to determine the overall cost of higher education for your children, and to prepare you and your family financially.
As a parent you will play multiple roles when helping your child select a college, which can be taxing on your time, emotions and finances, but it’s important to remember that your child is also going through a significant transition. Talking about finances at the beginning of your child’s college search and before they head to campus should be a priority for you and your student during this exciting time.
Bronwyn L. Martin, ChFC®, MBA, CFS®, CRPC®, CMFC® is a Financial Advisor and a Chartered Financial Consultant® with Ameriprise Financial Services, Inc., an Ameriprise Platinum Financial Services® Practice, in Kennett Square, PA. She specializes in fee-based financial planning and asset management strategies and has been in practice for 13 years. To contact her, visit: www.ameripriseadvisors.com/bronwyn.x.martin/
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