Discussing College Funding with Children


More than 35 percent of parents either haven’t saved anything for their child’s college education, or they don’t plan to. That’s according to a study by Sallie Mae.

Another study found that they haven’t been discussing that with their college-bound children. The Fidelity College Savings Indicator study found 40 percent of parents haven’t discussed college funding with their high school students. Encourage your clients to talk to their children about the following aspects of college funding.

Early Planning

Planning should start in middle school. Scholarship aid is competitive, and students need to do well both academically and with extracurriculars to land those dollars. Ensure students are involved in extracurriculars and have proper preparation for standardized tests.

College Funding Expectations

The Fidelity study found that parents expect their children to save around $10,000 for their own education by the time they graduate from high school. But they haven’t told their children that expectation. If your clients expect their kids to financially contribute to their college education, then encourage them to talk about that.

“Expecting children to assume more responsibility for college costs makes sense—but the right time for the college talk is long before the first tuition bill is due,” said Melissa Ridolfi, vice president of retirement and college products at Fidelity, in a BusinessWire press release.

Also, estimating how much the full cost of college will be in order to best fund it is helpful. A U.S. News & World Report story suggests this is critical to figuring out how much to borrow in loans and find in scholarships. The figure should include not just tuition, but room and board, car expenses, gas, parking, books and other miscellaneous items.

College-Credit Courses

Many high schools offer AP courses or allow students to enroll in college courses while in high school. This will cut college costs by allowing students to get a few credits under their belt  before they go to college. This might mean that in some cases, they enter college as a sophomore.

Borrowing Responsibly

Forbes reported in June 2018 that 44.7 million people currently have outstanding student loan debt totaling $1.53 trillion. That translates to an average of $37,172. Encourage clients to help their children be cautious of what types of student loans they take out and the amount of the loan. These figures should be based on how much their student is likely make upon graduation.

Ana TL Headshot_Cropped

Ana Trujillo Limón is senior editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org. Follow her on Twitter at @AnaT_Edits.

2 thoughts on “Discussing College Funding with Children

  1. My personal experience echoes Ana’s recommendations. We first talked with our children while they were in Middle School. My wife and I had designed a funding plan that included a percentage of expenses that would be the responsibility of our children. Academic scholarships counted toward their responsibility. We encouraged them to save during high school years and work during summers. They could obtain a student loan if they chose not to work. They both graduated from college without any loans. We never had a conflict over money.

  2. I find this increasingly important as college costs increase the student debt becomes more problematic. Parents should share the plan with their kids and expect the kids to be part of the plan. I generally recommend even those that can afford to pay for a “full ride” require the kids to have a stake in the game. It is also extremely important to set expectations. Kids should know how much parents are planning to spend so that they don’t aspire to attend the expensive private or out of state public because of its appeal. Most college students are adults legally by the time they start college and need to be encouraged to think like adults. If they are smart enough to attend a college they are smart enough to handle the financial structuring of the time. My best clients do this with great success. It is sad to hear of so many cases where the debt load is overwhelming.

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