Planning for college entails planning for the costs of college, and doing so is often a family affair. You might rely, or want to rely, on your parents to pay for some of your education, to teach you how to make wise financial decisions, or to help you with the FAFSA. Talking to your family about paying for college, however, is often easier said than done. These conversations can be intimidating, humbling, or awkward, but they’re also necessary.
If you’re wondering how to start talking to your family about paying for college, look no further. The following tips can help you broach the subject of money with your parents. After all, once you start those conversations, you can estimate your college costs and make a realistic plan about how you will pay for your education.
The early bird gets more time to plan for the costs of higher education! The sooner you start talking to your family about paying for college, the sooner you can start saving, estimating your financial need, creating a budget, looking for schools within your budget, etc. And because that’s a long to-do list, whether you’re a high school freshman or rising senior, get the conversation started as soon as possible.
Give your parents time to prepare for the conversation.
Especially if your family is new to the world of higher education, give your parents time to prepare, talk to each other in private, review their accounts, and read up on financial aid online before you demand concrete answers from them. Don’t spring a difficult conversation on your parents in the car or at the dinner table after a long day. Instead, you might say, “Lately, my teachers have been talking a lot about what I can do to prepare for the future. Would you mind sitting down with me sometime this week to talk about paying for college?” Another great segue into the conversation is to email your parents interesting links about paying for higher education (try this one). Then, once they’ve had time to check their inboxes, you might tell them that paying for college has been on your mind and ask them what they thought about the article(s) you shared. Other ideas for starting the conversation include attending college planning sessions with your parents (your high school or community center might offer them for free) or making an appointment with your high school guidance counselor for advice tailored to your situation.
Remind your family why these conversations are necessary, especially if they are hesitant to discuss finances with you.
Many parents hesitate to discuss their financial situation with their children, and they have valid reasons. They may not want their children to worry, or they don’t think their finances are any of their children’s business. While that is usually the case, students applying for financial aid are directly affected by their family’s financial situations. That’s because a parent’s financial situation is a determining factor in a student’s financial need (unless the student is over 23 or otherwise considered independent). In other words, the amount of need-based aid a student qualifies for depends, in part, on his or her parents’ circumstances.
Here’s the lowdown: When colleges are deciding how much need-based financial aid to offer a student, they look at that student’s “estimated family contribution,” or the minimum amount of money that the student’s family could afford (and is expected) to come up with to send the student to school for one year. The EFC is expressed as a dollar amount, and it’s determined by either a federal (FAFSA) or institutional (CSS Profile) formula which uses information about the student’s family’s finances. That’s right. Not just the student’s finances, but the family’s finances. (Generally, students from low-income families will be expected to pay less out of pocket per year than students from families with more resources.)
Families need to understand that their circumstances will directly affect how much their child is expected to pay to attend school for one year, so it might be up to you to explain this to your parents. Remind them that, whether or not they decide to contribute money to your education, their financial situation will still affect your EFC, which will, in turn, affect the type of school you choose, which college you select, your budget, etc. You will probably find that your parents are more willing to share sensitive information with you if you can maturely explain why it’s crucial for you to know.
Calculate your EFC together.
Let’s get back to that estimated family contribution. If you’ve already forgotten (and I hope you haven’t, because this is important), your EFC is the minimum you and your family can expect to pay out of pocket for one year of your education. Knowing your EFC, or an estimate of your future EFC, will help you and your family plan for the costs of your education.
When you apply for financial aid with the FAFSA and/or CSS Profile, the form you use contains its own formula to automatically calculate your EFC for you. (Because the FAFSA and CSS Profile use their own formulas, there might be some variation between your two EFC results.) If you’re not applying to college/financial aid this year, however, you can still estimate your EFC with the College Board’s EFC Calculator. It lets you use both the institutional (CSS Profile) and federal (FAFSA) formulas so that you are prepared for your EFC, no matter which formula your prospective college considers.
Both formulas consider your household’s financial situation, so if you are a dependent student, you will need to ask your parents for help. They will need to refer to a recent copy of their tax returns when filling out the EFC Calculator. You will also need to provide some information of your own, especially if you file your own taxes. Ideally, you can sit down and do this together rather than allowing your parents to fill out their portion in private. Not only does the transparency allow you to start planning for a certain dollar figure (or EFC) together, but it also serves as a segue into deeper discussions and gives you the chance to ask questions about other financial decisions that will affect you.
Ask direct questions and request direct answers.
When we talk about money with other people, we so often use phrases like “a lot of money” or “some funding.” As difficult as it may be, ask your family to give you a clear estimate as to their contribution to your education. Your parents should understand that you are not trying to be impertinent or nosy, and if they don’t, remind them that it is impossible to plan for your expenses if you’re not sure how to answer the following questions:
- Has your family saved for your education? If so, how much? Is that amount in a savings or investment account? Do you have direct access to it?
- Remember that it is unwise to empty or liquidate those accounts to spend on just one year of education. Most students graduate with their associate’s degrees or certificates in two years and their bachelor’s degrees in four years, but it might take you longer or shorter. Budget those savings according to the number of years you plan to spend in school.
- Is your family planning to budget out a portion of its yearly income to put toward your education? If so, how much? Can you depend on your family to put that amount toward your tuition every year until you graduate?
- Do your parents expect you to pay them back after graduation? If so, how soon?
- How much money are you expected to contribute each year? Have you been putting your earnings from after-school jobs into a savings account? Will you be expected to hold a job during the semesters and/or summers and put your earnings toward tuition and living expenses? Have you already earned any scholarships for college?
Do not assume or expect that your parents will make a financial contribution to your education.
The federal government believes that it is primarily a family’s responsibility to pay for as many of the costs associated with a child’s higher education as it can afford when the family makes some reasonable sacrifices. That’s why the FAFSA and CSS Profile consider the entire household’s financial situation when deciding how much the student could afford to pay for college. However, despite these formulas, no family is obligated to contribute to the costs of a child’s education. This means that, even if your parents fill bathtubs with gold bars and even if the government says, “Hey, we think you could afford to pay for your child’s entire tuition bill at the most expensive college this year,” they are under no obligation to do so.
Your parents have the right to decide how they spend their money, and yours may choose not to contribute much or anything to your educational costs. You must acknowledge that that’s fine, that your parents could very well say, “We’re not giving you any money,” when you bring up the subject. Only when you can recognize that receiving any financial help from your family would be a privilege should you press the conversation. After all, you are not entitled to your parents’ financial support. (And remember, even if your parents can’t or won’t offer you any money for your education, they can still offer you advice and connect you with resources!)
Absorb all of the advice you can, even if you didn’t ask for it.
If talking to your family about paying for college is your goal, you might be tempted to roll your eyes when your dad goes off on a tangent about the importance of a Roth IRA. While it’s okay to remind your parents that you want to take things one step at a time, keep the conversation alive throughout your college years and beyond, if necessary. You can learn from your parents’ successes and mistakes, so they might be good resources as you collect information on any of the following topics:
- Creating a monthly budget
- Opening a credit card
- Taking out loans
- Paying off debt
- Having an emergency savings account
- Different careers and their average salaries
- Monthly expenses to expect, like health and car insurance, utilities, etc.
- Ways to save for retirement
- Property assets
Maybe your parents have promised to pay for your entire education out of pocket. Maybe they will take out Direct PLUS loans or delay retirement to see you through graduation. Maybe their contributions are less direct. Are they going to cosign for your apartment? Help you open a credit card? Teach you how to balance a checkbook? Whether or not your parents foot the bill for your education, if they support you as you do, say thank you.