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.
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.
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.
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.