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How to talk to your kids about paying for college

A four-year college degree costs between $40,000 to $142,000. Here's how to have the conversation about who will foot the bill.
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According to Chegg’s 2018 State of the Student report, a majority of students — 62% — all have the same main life stressor in common: their finances. Rawpixel / Getty Images/iStockphoto

Just how much is that diploma going to cost you, again? Brace yourself — for the 2018-19 school year, private schools tuition came in around $35,000 per year, and public schools charged between $10,000 and $21,000 depending on in-state or out-of-state classifications. That means that for four years of college, families will spend somewhere between $40,000 and $142,000 — not including room, board, books or basically anything else.

If you haven’t saved anywhere near that much, you aren’t alone. By the time their kids matriculate, most parents will have set aside just 28 percent of what they wanted to save, according to Fidelity Investments’ 2018 College Savings Indicator. But interestingly — and perhaps refreshingly — they don’t seem too worried about it. Instead of compromising their retirement savings or going to other great lengths to afford tuition, parents are now asking their children to take on a greater share of responsibility, and expect their kids to have set aside an average of $15,385 by high school graduation, up from $12,431 in 2016. Today, just 49 percent of parents feel tuition is solely their responsibility, down from 56 percent in 2016, according to the Fidelity study. In fact, many moms and dads seem pretty darn chilled out about paying for college, despite costs being higher than ever. According T. Rowe Price’s tenth annual Parents, Kids & Money Survey, just 27 percent of parents report losing sleep over college savings costs this year, compared with 41 percent in 2017. So, what’s changed?

A New Strategy

Today’s parents are less willing to take on their children’s college debt, according to the T. Rowe Price survey. A minority of parents — just 14 percent — said they were willing to take on more than $75,000 in debt for their kids' college. In comparison, 26 percent of parents were willing in 2017. Interestingly, as the number of parents willing to take on student debt went down, the number of parents utilizing 529 college savings accounts went way up — today, 44 percent of parents are saving for college in a 529 account, compared to just 27 percent in 2017, making 529 plans the most popular college savings vehicle on the market.

More parents are realizing that while there are countless options out there for paying for college, there is no such thing as a loan that will support you through your retirement.

“More parents are realizing that while there are countless options out there for paying for college, there is no such thing as a loan that will support you through your retirement,” says Jocelyn Wright, consultant at The American College of Financial Services. “And for many families, that’s what this debate comes down to: Is your child’s education the priority over your nest egg? It shouldn’t be.”

Shifting Stress

Unfortunately, parents may be the only ones enjoying a stress-free mindset around student debt — students seem to have absorbed their folks’ financial worries. According to Chegg’s 2018 State of the Student report, a majority of students — 62 percent — all have the same main life stressor in common: their finances. Additionally, the report found that the greatest source of social pressure for college students is to spend more money than they can afford and nearly one-in-five struggle to afford housing.

“Unfortunately, students who stress about finances become adults who stress about finances,” Wright says. “So many students don’t ever get financial education. They go to school not understanding their options around financial aid, taking out loans, what their debt will be, or how the repayments may impact them when they graduate and start working. All these unknowns can be a great source of stress, which is why education is so important.”

Getting On The Same Page

Conversations about college costs need to start early — In 2017, students had enough income and savings to cover 11 percent of their college costs, or around $2,600, according to Sallie Mae. Additionally, nearly half of all students received some kind of scholarship in 2017. But both of those efforts require a head start, on either earning money or on finding and filling out scholarship applications. “Parents are the ones who need to initiate those conversations,” Wright says. “Paying for college is a team effort, and everyone has to be on the same page.”

A few ways to get there include:

  • Set clear expectations about how much you’ll contribute toward college and how much you expect your child to pay. Sit down with your kids and break down the costs of college together, including tuition, housing and books, says Rebecca Safier of Student Loan Hero. “When it comes to choosing a college, encourage your child to consider cost of attendance along with other factors, such as location, size, and academic programs.” The U.S. Department of Education offers a usefulnet price calculator that families can use to estimate the net cost at different colleges.
  • Discuss the pros and cons of borrowing student loans, and help your child understand what paying back a loan would involve, Safier says. Use astudent loan calculator so your child can see and understand exactly how much their monthly payments would be on any debt they borrowed.
  • Encourage your child to work part-time if possible. A job can be an excellent resume builder as well as a stream of income. If the sticker price of a full semester is intimidating, help your child identify a specific portion that they’re expected to cover — a meal plan, books, or housing may be a good place to start.
  • Discuss some of the financial pressures your child may encounter in college. This includes the pressure to overspend on social events, Safier says.“Managing money isn’t just a matter of numbers; it can be a very emotional and psychological issue, too. Opening up space for your child to share their concerns and feelings around money could help them understand their money mindset and prepare for the challenges they could face in the years to come.”
  • Encourage a cheaper start in a community college. Suggest that your child start college with a semester or two of community college under their belts, Wright suggests. “Get creative. That four-year model may need to be turned on its side.”
  • Recommend that your child take a financial planning course. You don’t have to major in it, but do take a course in it so you can be armed with the tools you need so you don’t have to be stressed about money, Wright says.


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Kathryn Tuggle contributed to this report.