Many parents are not prepared for their child to go to college. No, I don’t just mean the emotional attachment to your kid, I’m also talking about the “homework” parents should be doing to help ensure that they pay as little for college as possible.
In my financial planning practice, I see parents and their college age children struggle with the amount of “information overload” that they need to sort through. And, what often happens when they are presented with all of these decisions is… you guessed it, nothing! (Otherwise known as what I call the “we’ll look at it later” syndrome.)
I find that when it comes to college… all to often, parents and students wait too long to do the things that might possibly save them thousands, or even tens of thousands of dollars on the cost of attendance. Although I can’t guarantee how much you might save, there are (at least) seven big mistakes that I often see families make when planning for their their student’s college education.
If you want to help your child get the best academic, social and financial experience out of college… it is almost a “must” that you do some coordinated planning to help them make the right decisions. So, when it comes to projecting the cost that your family might have to pay, consider these “mistakes to avoid”:
1) “Let’s just focus on getting through the next year”
Looking at only the first year of college could be dangerous to you finances and detrimental to your child’s education! When you sit down to look at the cost of college and how much money your family might be on the hook for, consider the cost of getting the entire degree (eg. four years or more for most students).
2) “Let’s worry about each kid… one at a time”
If you have more than one child, it would be a big mistake to commit all of your resources to the one getting ready to enter college. Don’t ignore the discussion of how you plan on paying for the future degrees of your younger children.
3) “The cost of college is this year’s price times four”
According to the National Center for Education Statistics, the average cost of public college tuition expenses has gone up by about 2.7% per year and the rate of increase at private colleges has averaged 3.9%. If your student is entering their freshman year of college, factor in that the first year cost will potentially be much lower than the fourth year. And while you are at it, realize that the national average for amount of time that an incoming freshman will spend in college to get their four year degree is…. almost SIX YEARS!
4) “The cost of going to this college is only $X, whatever the degree”
Although the Cost of Attendance at a college may reflect the overall price you’ll pay to get many of the undergraduate degrees there, realize that some degrees at that same instituion may cost more… in both time and tuition, books and fees. For example, degrees in pharmacy and engineering may require coordinated summer internships where colleges charge extra tuition, summer semester classes, additional supplies and other costs that were not listed in the “general” cost of attending that college. Be sure to ask about the cost of specific degrees at the colleges that your student is interested in attending.
5) “Every college Not understanding the how different colleges go about meeting families financial aid needs”
This one is often very surprising to parents. You can have two colleges with the same tuition “sticker price.” Yet they give two very different financial aid packages, on average, to their students. Some colleges are generous with their endowments and offer more scholarship and merit aid; while some schools expect students to rely more on loans. In fact, I have seen many cases where choosing the right private college has resulted in families paying a similar or even lower “net price” for school than if their child had attended a public college.
6) “I’ll fill out the FAFSA after my taxes are done in April”
I recently attended a freshman college orientation where the financial aid officer recommended that families wait to fill out the FAFSA (Free Application for Federal Student Aid) until the parents’ federal taxes were filed for that year. Do not listen to that bad advice! Instead, you want to fill out the FAFSA as early as possible, which is normally after January 1st of each year. You can always go back after you file your taxes and update the FAFSA, and even link your federal tax return to the FAFSA electronically (which also offers you additional benefits). Since many colleges will not give out scholarship or merit aid until after they review your FAFSA… and this aid is often given out first come, first serve… fill out the FAFSA as early as possible.
7) “I’m only going to apply to [name of college], because [reason]”
Most students should apply to at least a few colleges, and maybe as many as ten. This is often a strategic decision for several reasons, including: chances of acceptance, differences in financial aid packages, family resources, differences in degrees, college social life, etc. I often recommend that students apply to three types of colleges: their “dream college(s)”, “great second choice(s)” and finally one or two “fallbacks or safety schools.” Choosing the right college is one big key to graduating on time and budget.
There are several more mistakes that see families make when it comes to planning for college. Some involve Early Decision vs Early Acceptance, some involve not taking many of the “smaller cost savings” into consideration which often result in much “bigger savings” when added together. The important thing is to become focused on making smart, informed decisions from the time your child is in the last few years of high school and throughout their college years. (I’d say even earlier, but I realize that for most people this is asking too much!)
The key is to help them get a good degree with great career potential, at a cost that doesn’t burden their financial future or your retirement.