When discussing how to pay for college, one topic never fails to run the gamut on opinions and differing philosophies:
Whose responsibility should it be to pay?
Our college financial planning experts will share a wide range of options to consider and offer personal experience regarding what worked for them.
Meet the Experts
State Bank of Cross Plains has enlisted two internal experts to share insight and guidance as your family makes plans to save for and pay for college:
Jayne Deutmeyer is a Certified Trust and Financial Planner and a mother who has helped two of her own children navigate education and career decisions beyond high school.
Brent Landrum is a Personal Banker who recently graduated after returning to school as a non-traditional student paying his own way as an adult.
They have both personal and professional experience that can help make this process easier.
All or Nothing…and Everything in Between
By Jayne Deutmeyer, Certified Trust & Financial Advisor (and mother)
When I have this conversation with clients, people usually fall solidly into one of two extremes. They either:
- Intend to pay for all of their child(ren)’s higher education themselves, OR
- Expect the child(ren) to pay for college on their own.
In truth, there are lots of other options that fall somewhere in between that most people never consider, such as:
- Split the cost. This split could be 50/50 or any other percentage or division just to give the student some “skin in the game.”
- Split the cost, up to a set dollar amount. An example of this might be a 50/50 split up to $10,000. An agreement like this might be helpful if your student is choosing between schools with drastic differences in tuition.
- Reimburse after graduation. If work ethic or commitment to college are concerns, some people encourage following through to graduation by promising reimbursement – or reimbursement up to a certain amount – only upon graduation. That way, the parent avoids “wasting” money on years of education that don’t lead to a diploma.
For my own children, I took the stance that I want to support them fully now so they can become fully independent more quickly. In my experience, children rarely have the financial resources to manage college expenses on their own…even WITH financial aid. Gone are the days when a full-time summer job will cover most or all of the following year’s tuition! In addition, financial aid offers are based on the parents’ income until your child is 24 years old unless there are special circumstances (such as your child is married). That means a 21-year-old who lives independently will still only qualify for financial aid based on his or her parents’ financial situation.
That said, most people I work with choose some form of shared responsibility for paying for college. Regardless of your own philosophy, one thing I’ve become sure of over the years is that it takes a whole family to get a child through college. Consider these tips for getting started on saving for college:
- Think about your own philosophy for paying for college in order to set expectations. It’s helpful to give your child some idea of where you stand starting around age 14 to give them time to think about their own savings plan.
- Start as soon as possible.
- Save something – anything – to just get started. You can always increase the amount you set aside down the road.
However you manage the cost of higher education, it remains a solid investment in your child(ren)’s future. This article in USA Today reports that college graduates earn an average of $20,000 more per year than someone who completes their education in high school.
The Right Answer Might Depend on Personality and Maturity
By Brent Landrum, SBCP Personal Banker and recent college graduate
There is no right or wrong answer when it comes to who should pay for college. The decision must be made by all parties involved and everyone should be comfortable with what is arranged. In my experience, I had a little bit of everything when it came to paying for my education.
Starting out as a young 18-year old freshman, my parents knew I wasn’t mature enough to understand all the components of financial aid and made the best decision for me. Their goal was me succeeding in my academic career by having me focus on what school to attend and what to major in. I was not involved in the financial decisions, and I didn’t fully understand that whole realm. My parents had me take any financial aid I qualified for, and they covered the difference along with living expenses. There were many pros and cons to this mentality, but for me it allowed me to take the first couple years for granted and not focus as I should.
Ultimately, after a couple years with little academic success, my parents and I agreed to split the cost of my education so I could begin to take ownership of my future. This approach helped me understand more about paying for college, but life had other plans for me, and I ended up taking time off. It was during this phase in my life that I was forced to take ownership of my finances and work toward being fiscally smart.
Fast forward a few years, and the situation was much different. After my extended break from school, it was time to return and earn my degree. As a non-traditional student with more life experience than before, I took the initiative to understand my financial aid options and consult with my parents so that I could pay my own way. More options were available to me at an older age. There were hurdles along the way, but in my opinion, those struggles meant growth.
Through my experiences, I learned it’s always important to consider all expenses involved and who can or should pay for what. My parents were active in the conversations throughout and helped guide me along the way. They saw the benefit in paying for college themselves as well as me paying for it and helped me understand the process.
My advice when making these decisions for you and your future student is to consider these three things:
- Have an open and honest conversation with the student about financial aid. Explain what it is and what it means.
- Include the student in the financial conversations.
- All parties involved should hear thoughts and concerns about the financial aspect, both during and after college.
Watch for more information on planning for college expenses each month in this newsletter. If you would like help in planning appropriately for college tuition, contact JDeutmeyer@sbcp.bank or call 608-798-5233.