Most college conversations between parents and teens don’t begin until junior or senior year – when teens are fully immersed in the college search process. Sometimes, the subject of college cost is not even broached until after acceptance letters and financial aid packages have been received. But that is far too late. Parents and teens need to start having college cost conversations earlier – much earlier than the beginning of the college search process. By talking with your teen about how much you can pay, you can set better expectations of the type of education you’ll be able to afford as well as communicate that you’ll need them to help pay too. When should we start talking about college costs?Your Teen asked New York Times columnist and author of The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart about Money, Ron Lieber, when parents should start talking with their child about college, and he states as early as middle school. In fact, it’s not too far-fetched to have them start to save for college at that point as well, even if it’s just $1 or $2 a week, according to Your Teen. In high school, preferably freshmen or sophomore year, talk together about savings goals for college. If you’ve been saving for your child’s education, talk to them about what the total will look like when they’re ready to enroll. Encourage them to take on summer or weekend jobs during the school year, and ask them to save a certain percentage from each paycheck toward college.Talking about college costs and saving early on not only sets expectations that you all will work together to save, but it’s also a commitment to one another. How should we talk about college costs? College cost conversations should not be limited to one face-to-face meeting. Parents and teens should talk about college savings, spending and potential debt frequently. Again, these conversations reiterate expectations and commitments that have been discussed together.Start thinking about which colleges your teen may want to attend, and consider a range of cost of attendance. Sit down together with a college cost calculator and insert the amount you’ve saved or will save together, which will help you figure out how much student loan debt you or your teen may have to realistically take to pay for college. This will help you all identify what type of colleges your family can afford. You may be able to factor in potential scholarship or grant money, but be careful not to overestimate the amount your teen may receive. It’s almost better not to consider scholarships or grant money into the equation so that your savings and college cost plans aren’t dependent on them. At the same time, your teen should treat applying for scholarships and grants like a part-time job in order to limit the amount of student loan debt or alleviate other college costs. How should we save as a family? A 529 account is the ideal savings vessel for your child’s education. Parents can set up automatic deposits to this account on a monthly basis – even if it’s just $10 per paycheck. A dollar saved is a dollar less your family will have to borrow to pay for college. Keep in mind that student assets are assessed on the FAFSA and can actually hurt more than they help. Student accounts are assessed at a higher rate than parent accounts and increase the entire Expected Family Contribution (EFC). That’s why it’s best to save everything in the parents’ name. Your child should deposit the money into their 529 account or create a savings account in your name to which they have access to make deposits. If your family feels it’s best to save in your child’s name, they can save up to $6,400 in their own name before it has a major impact on EFC. Paying for school and saving up for it can cause a lot of stress and anxiety for students and parents alike. Start talking with your teen sooner rather than later about college costs. Formulating a plan, setting expectations and committing to saving together can help to alleviate the burden.
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