College is perhaps the most important time to have a conversation with your child about money. They’re about to go out into the world on their own, harnessing way more responsibility (especially financial responsibility) than they’ve ever had before.
You want to set up your college student for success. One way of showing your support is by discussing topics such as expectations, student loans, scholarships, part-time work, and other ways to save money.
Read More: How to Talk to Kids About Finances
Set Expectations on Funding
The more expectations you set in the very beginning, the less likely you are to get into an argument about who is paying for what later down the road. Clearly define how and where you are contributing (if any) as their parent and what your college student will be responsible for handling for themselves.
For instance, are you paying their tuition, and it’s up to them to handle housing, groceries, gas, etc.? Or maybe it’s the opposite. Are you, as a parent, going to take out a Parent Plus loan, with the expectation that you will be paid back?
When I was attending college, my parents helped me pay for on-campus housing and food — but I was solely responsible if I wanted to go off-campus to eat or do something fun. Don’t play a guessing game. Make sure you are on the same page. The less ambiguity that surrounds college expenses, the better.
Figure Out Financial Aid
Student loans are kind of a “catch 22.” Do you want them for your college student? Of course not. However, these loans enable a lot of people to be able to afford education and thus seek a job that will help them pay their loans off, rather than enter the world without a degree.
There are a few important topics to discuss when it comes to student loans.
- Federal Loans: Make sure your child knows how important the FAFSA is. In my opinion, federal loans are much better than private loans because of the little-to-no interest paid.
- Public vs. Private Schools: It may be helpful to display the financial difference between a private versus a public institution. If your child has one dream school, encourage them to search for others that offer comparable programs and environments so they have more to choose from if it comes down to affordability. Consider allowing them to pick a top three, rather than a top one, especially if their top one is an expensive choice.
Lean into Scholarships
I would stress the value of scholarships. Yes, they take some time and commitment depending on the application, but college students should never dismiss the importance of scholarships and what a blessing they can be under tight financial circumstances.
Reaching out to local and global scholarship resources is always a big help. This can look like going to your county library or hopping on sites like ScholarshipOwl and seeing what’s available.
Look into Part-Time Work
It would be great to discuss the idea of your college student working part-time, even if it’s only a few hours a week. Oftentimes, if you work for the school itself, you can funnel the money you make directly back into your loans or college fees.
However, I would advise that your college student look for work only if:
- They feel as if they can handle it mentally/emotionally with all the new experiences that come with being a college student. Maybe have them wait until the second semester before job hunting.
- They are not tied to a scholarship that is dependent on keeping a certain GPA. Grades can suffer due to the strain of juggling both a part-time job and full-time studies.
Other Conversations to Have
There are plenty of other conversations you can have that are centered around how to save money and minimize student loans. Depending on your college student’s situation, here are other ideas for helping them financially:
- Refrain from using the college bookstore to purchase brand new textbooks. Instead, browse vendors like Chegg or use Amazon rentals.
- Talk about the possibility of living at home for the first year or so and attending a local university to complete core classes before reaching upper level and degree-specific requirements.
- Come up with a budget or plan with Personal Capital’s free financial tools for monitoring spending on activities like eating out.
At the end of the day, reiterate to your college student that finances, student loans and money don’t have to be intimidating. Having them sign up with Personal Capital could be a great way for your child to start becoming familiar with concepts like growing your net worth and creating a savings plan.
Don’t miss the opportunity to have a healthy conversation about money with your college student. Whether you’re nervous the first time around or are used to this sort of thing, it’s a great way to connect to your kid on how to have the most successful and financially-conscious college experience possible.
Personal Capital compensates Tori Dunlap (“Author”) for providing the content contained in this blog post. Additionally, in a separate referral arrangement between Author and Personal Capital Corporation (“PCC”), Author is paid $70 and $150 for each person who uses Author’s webpage (www.HerFirst100k.com) to register with Personal Capital and links at least $100,000 in investable assets to Personal Capital’s Free Financial Dashboard. As a result of these arrangements, Author may financially benefit from referring potential clients to Personal Capital and/or be incentivized to present blog content that is favorable to PCC. No fees or other amounts will be charged to investors by Author or Personal Capital as a result of the Referral Arrangement. Investors that are referred to PCC and subsequently subscribe for investment advisory services provided by PCC’s affiliated adviser, Personal Capital Advisors Corporation (“PCAC”) will not pay increased management fees or other similar compensation to Author, PCC or PCAC as a result of this arrangement. Additional information about PCAC is contained in Form ADV Part 2A available here.
The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.