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While it’s hard for many parents to imagine their children growing up and leaving the nest, there will come a day when they walk across that high school graduation stage and move forward into their adult lives.
All families and kids are different, so it can be hard to know where to start when it comes to having a conversation about college options. The earlier families have this conversation, the better.
Let’s take a closer look at when to talk to your child about college and how to walk them through what their options are for post-graduation.
When to start talking about college with your child
While it may seem like parents can wait to talk about college until their kids are in high school, there’s no harm in starting earlier than that. Parents can start having conversations with their kids about what their future education and career options are as soon as elementary school. This way, they can plan as a family together.
It can be fun to take kids to a college campus for an event like a football game or a play so they can better visualize what a college is. You can have conversations when they’re young about the doors a college education can open and how they can prepare to get into a good school. You can also talk about the financial implications of attending college and how attending is a serious financial commitment.
As they get older, you can talk to them about what their options are for paying for college and how much it can cost. If you can afford to save money for their education, share with them the sacrifices that entails and the discipline it requires.
You can also discuss what contributions they may need to take and ways they can help out, such as applying for scholarships and saving money from jobs.
Consider setting up a 529 plan
One way parents can help save for their child’s future college education is to open a 529 savings plan.
A 529 savings plan makes it possible to save for education costs on behalf of a beneficiary (most often this is a child or a grandchild, but the beneficiary doesn’t have to be a family member). The plan owner (in this case, the parent) decides how much money to contribute to the plan and how to invest it.
They also get to determine when to withdraw money from the plan, even once the beneficiary turns 18. If the beneficiary decides not to go to college, you can transfer the plan to another beneficiary.
529 savings plans work similar to mutual funds, and you can choose what investments to make based on your risk tolerance. Many people choose to start with riskier investments when their child is young and then switch over to less risky investments as they get closer to college age.
Parents can choose from two types of 529 savings plans:
- Education savings plan or college savings plan: This plan type makes it possible to save for related education expenses and tuition at a qualified university or college. This money can be used to pay for a bachelor’s degree and more advanced degrees, but it can also be used to pay for K-12 school tuition (up to $10,000 per year).
- Prepaid tuition plan: A prepaid tuition plan is a less flexible savings option as it makes it possible to prepay tuition at a specific university or college at the current price (not the price when your child is old enough to attend). While this seems risky, since you can’t predict what college your child will get into, you can still use the money you saved for tuition at another college. But you will still have to pay the current tuition price at that school.
The main benefits of 529 savings plans are that they make it possible to earn money on the money you save for your child’s college education, and that money grows tax-free (after-tax contributions) if you use the money for qualified educational expenses. Some states even offer state income tax deductions or tax credits to the contributor of a 529 plan.
High school discussions
By the time your child is in high school, they should have an awareness of what college is and be ready to kick talks into high-gear about the many different options they have.
Now that they are old enough to understand how money works, you may want to outline a handful of different education options for them and what they cost. For example, you could outline what it would cost to attend an in-state public college versus a private one. You can also explain how living in a dorm and living expenses add to the cost of their education.
Finally, it’s important that they understand how student loan interest works if they need to take on loans to pay for their education. From that explanation, if they do choose a more expensive education, they’ll know how much more it will cost once they add student loan interest to the equation.
You can also walk them through the pros and cons of attending community college versus attending a four-year university. While attending a community college is a great way to save money and can make it possible to live at home, they can miss out on some of the “traditional” college experience. If they do want to head straight to a four-year college, they need to understand what that cost involves.
You can walk them through the differences between public and private schools and how in-state versus out-of-state tuition works. Once they narrow down their focus, you can work together to learn more about which colleges are the right fit for them based on each school’s unique academic offerings.
Of course, attending a university isn’t their only path forward. You can also help them research trade schools, and if they really aren’t ready to make a decision about their future, you can work together to figure out how a gap year would work. Explain what you would expect from them during that time (such as interning or having a part-time job).
If you’re considering getting a private student loan for your child, Credible makes it easy to compare lenders.
The companies in the table below are Credible’s approved partner lenders. Whether you’re the borrower or cosigner, Credible makes it easy to compare rates from multiple private student loan providers without affecting your credit score.
|Lender||Fixed Rates From (APR)||Variable Rates From (APR)|
|4.50%9 - 15.49%9||6.37%9 - 16.70%9|
Lowest APRs reflect autopay, loyalty, and interest-only repayment discounts where available. Prequalified rates are not an offer of credit. | 10Ascent Disclosures | 1Citizens Bank Disclosures | 2,3College Ave Disclosures | 11Custom Choice Disclosures | 7EDvestinU Disclosures | 8INvestEd Disclosures | 9Sallie Mae Disclosures
Start thinking about financial aid
Even if you have saved enough money for your child to attend college without taking on loans, it never hurts to apply for financial aid. These are some types of financial aid your family can start to think about.
- FAFSA: Your child has to fill out the Free Application for Federal Student Aid (FAFSA) each year by the application deadline if they want to qualify for financial assistance like federal student loans and grants. Completing the FAFSA is the easiest way to see what financial aid you qualify for.
- Scholarships and grants: When students fill out the FAFSA, they can find out what scholarships and grants they qualify for through the government and their school. They can also apply for outside grants and scholarships to get free money for school.
- Private student loans: Once a student and their parents exhaust federal student loan options (which are more affordable than private loans), they can start to look into applying for private student loans to help fill the gap.
These days, students have plenty of great education options after they graduate high school. The sooner a family starts discussing their options, the better prepared they’ll be emotionally and financially for what comes next.