Telling a kid you can't afford their "dream" college

<p>Hi. Money magazine is researching an article on how to tell a kid you can't afford his or her dream college. If you have any advice or experiences you'd like to share on this subject, please post here. Parents: How do you get your kids to see the big financial picture? Students: Did your parents say or do anything that made the situation seem better? Or worse? The moderators have told me it was ok to post this. Thanks, everybody, Kim Clark</p>

<p>First, make sure that you really cannot afford the school. Financial aid and/or merit scholarships can make some privates more affordable than publics. Some guidance counselors don’t emphasize this enough, in our experience.</p>

<p>For top schools, financial aid is available to families with pretty high incomes too (like $150-180k). </p>

<p>Also, Canadian and European schools can be more affordable, and more families are looking into those.</p>

<p>If you’ve raised your children their whole lives to understand that you have to make choices on what to spend money on, whether you are rich or poor, this shouldn’t be an issue. But you can’t spend every dime you have on junk and borrow for vacations and then try to make them understand that college is unaffordable. I know parents who live in a 6000 square foot house and drive luxury cars and then tell their kids that they have to put themselves through college or take out loans.</p>

<p>I also know parents who live well within their means and have actually saved for their children’s educations and their child can go where they want, within reason. </p>

<p>Think of the message you send your children about priorities in life.</p>

<p>But no, this conversation should not start their senior year in high school.</p>

<p>If you’ve done your homework before applications go in, there shouldn’t be a problem. Your kid should know in advance what you can afford and apply accordingly. He may have to look for merit scholarships, excellent financial aid schools, commuting to a 4 year or community college to start. But he should know if a school’s total is too much, it’s off the table. </p>

<p>It’s better to let kids know beforehand, than to find in April that none of his acceptances are affordable. Every year there are kids here who find out that all their acceptances are unaffordable because parents told them not to worry about it. Then sticker shock sets in. The kid then has to scramble to find somewhere or take an unplanned gap year. IMO, that’s more stressful on a kid then saying we can pay xx before applications.</p>

<p>Both my husband and I spent many years paying back student loans - mine were high, my husband’s were usurious, i.e. his monthly student loan payment cost more than our monthly mortgage payment for many years. And so, we have been upfront with our kids since before college was on their radar screens. </p>

<p>Since our income is high and we’re on the hook for the entire tuition, we have talked repeatedly about the return on investment - is any school really worth $240k? We have told our children that there is nothing wrong with state school. We have told them if they don’t want to go to state school then they’ll need to work extra hard to get a merit scholarship to a school that offers them. And if they goof off during high school, they should consider themselves lucky if we pay tuition for them to attend a local commuter college and allow them to live with us rent free while they’re doing it. </p>

<p>Since our parents helped us not at all to pay for school (except to be poor enough to qualify us for a lot of undergrad financial aid) maybe we just don’t find this topic as difficult as some other parents.</p>

<p>Start EARLY…sophomore year in high school or earlier!</p>

<p>1) Don’t let kids get hung up on the idea that there is a one-true dream college</p>

<p>2) The dream is the future life and career…not 4 years in college</p>

<p>3) Be clear with your child the amount that you CAN pay.</p>

<p>4) Be clear that you will not co-sign loans and that as students, they can’t borrow much.</p>

<p>5) Just as there isn’t just one person that you could be happy with as a spouse, there isn’t just one college that you can be happy with.</p>

<p>6) Use the Net Price Calculators on schools’ websites EARLY…so you have an idea of what’s affordable.</p>

<p>7) Don’t go on a bunch of college visits to schools that you are CERTAIN will not be affordable.</p>

<p>8) If your child has a NCP, then everyone needs to be on board if the NCP’s income will be considered at any desirable schools. </p>

<p>9) Visit SEVERAL schools that you know FOR SURE will be affordable and find some that your child will like.</p>

<p>It’s more a discussion on what you and the student CAN afford, then saying you can’t afford the kid’s dream college. College costs are funded through past, present and future income of the parents and child. So you look at the savings that are there for parents and child, look at how much money you and the student can put towards college in the next 4 years from jobs, gifts, scrimping, selling some goods,scholarship money and how much parent and child can borrow. By running EFC estimators and NPCs for the colleges on the list, some idea can be gotten as to how much the colleges are going to expect the family to pay. They are averages, but one can get a feel for the costs.</p>

<p>The dream college may well be the one with good scholarship opportunities, good financial aid, state honors programs, state flagships. And it’s not just affording the college, but getting into it, getting the scholarships, getting into the programs, getting the finacial aid that is of issue. Not just a blanket, we can’t afford your dream college. Making that one piece the entire focus is really using tunnel vision on all of this…</p>

<ol>
<li><p>Start early. By the beginning of Junior year, at the latest, your child needs to know what you can spend on college, and that colleges with bills over that amount can’t be considered. Sure, apply to many places so you can see what fin. aid looks like, but be prepared to walk away.</p></li>
<li><p>Don’t let the concept of a single “dream” college develop. After all, dreams aren’t real. Encourage your children to find several colleges they’ll be happy to attend.</p></li>
</ol>

<p>The key is to not have some “dream” school at all – or perhaps we need to redefine “dream school” to mean “one that will not burden me with a lifetime of debilitating debt at 22 and/or cause the financial ruin of my siblings and parents”. The best gift we gave our students was a debt free degree, earned through everyone’s hard work, sacrifice, and realistic choice of financially reachable school. We are ordinary working-class parents. </p>

<p>Parents and students should worry less about getting in, and worry more about getting out and getting started. A debt-free education gives the grad a huge breadth of choices after graduation, and that’s what we emphasized. Having been raised by fiscal conservatives, there was no “convincing” or “breaking the news” to be done. Money is a tool, not a prize.</p>

<p>(One of our students wanted to apply to a prestigious school in his field. We understood he wanted to know where he stood , talent-wise, and said of course you can apply if you want to. You know we can’t ever pay for that. He knew. He applied. He got in. We partied to celebrate the validation of his talent. And he accepted a place at a fine public we could all afford, with happiness)</p>

<p>I know how much I can pay out of pocket for school; I think it’s acceptable to take on a small amount of debt over the 4 years, since you do have such a long time to pay it off, but if she can do it without debt, that would be better. She has heard a lot from her sister abut not taking out loans. My older daughter has a small amount of debt herself but her husband has a LOT of debt and isn’t even done with school yet (he’s in a doctoral program at BU). </p>

<p>We will apply to the dream school, which is academically a reach for her, but if the financial aid isn’t there, she already knows she won’t be going there.</p>

<p>I have been in school myself for the past couple of years and I qualify for Pell Grants, so I’m assuming that will be the same for her, at least as long as there are Pell Grants! Her father lives in another state and has been happily unemployed and mooching off of his girlfriend (who is only a couple of years older than our older daughter) for 5 years, so there will be no help from that corner.</p>

<p>Teach them from an early age that the nightmare of burdensome debt can ruin any “dream”.</p>

<p>Start early. Talk to your children about finances and budget when they are young.</p>

<p>When they are old enough to start the college search, include costs along with other aspects of the colleges. In other words, if the parent/child sees on a preliminary basis (run those NPCs!) that the college is unaffordable, it isn’t a “dream school”.</p>

<p>My child gave me a list of schools. I threw a few more schools onto the list. Then I ran the NPCs. The ones where our out-of-pocket costs were over the threshold (my child knows it too) were put in red. These schools are reach schools just like the ones where my child’s stats are in the 25th percentile. It’s unlikely she will be able to attend these colleges.</p>

<p>Slightly OT, but I would like to say kudos to our HS guidance counselors. They are more concerned with helping kids find affordable fits that showing a list of fancy colleges that kids can go to. They meet with each parent in private and discuss, is money an issue (this is in Sophomore year), in addition to other concerns.</p>

<p>Try to get them excited about their second choice college.</p>

<p>When the aid offers came out, it was clear that my son’s first choice college was unaffordable (of the 8 colleges where he was accepted, it was the only one that was out of reach financially). </p>

<p>Fortunately, he was soon accepted by his second choice college, and I scheduled an overnight trip there ASAP. He had never been to that college before. After I picked him up at the dorm the next morning, he said “Put down a deposit.” </p>

<p>He is extremely happy there (and the net price is very reasonable).</p>

<p>He was also happy that he did not have to work during the school year, because his chosen college was affordable.</p>

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<p>Or their affordable safety. Better, get them to build the application list starting at an affordable safety that they like, rather than scrambling to find one after many schools’ application deadlines are past.</p>

<p>For us, we’ve been open about our finances from the beginning. We’ve talked about what is affordable for us and what is not from toys to internet service. They’ve been expected to use their own money for certain things. I know my eldest sees prices in hours of work now. They’ve always known that they’d be involved in paying for their education. When it came time for our eldest to search for colleges, every potential college was run through the net price calculator first. If in our range, then it warranted a deeper look and then the falling in love. If outside our range, it was pushed aside early before attachments were made. In the end, our eldest only applied to schools in our price range. Her top choices are all 100 percent need schools. Her lower choices are schools for which her stats give her a lot of merit aid or in-state publics which are in our range without aid. Will it be heart-breaking if she’s accepted into a top choice and they don’t come back with a financial package comparable to the net price calculators? Yes. However, D has seen the struggles of older friends taking out huge loans to go to “dream” schools… some of which who were forced to transfer out when the banks started saying “no” to further loans or who’ve had to take years off to work to make the money for an additional year. That doesn’t sound like much of a dream.</p>

<p>Advice? Start the process early. Don’t shield your kid from your financial situation. They don’t need to know every detail but they need to see parents making choices due to finances and having an understanding of why. It’s OK to say aloud “I really love that blouse but we’re saving for a family trip to Yosemite and I think that will be more fun. Don’t you?”</p>

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<p>That is a great approach. Unfortunately, the GC at my D’s school told her not to worry about finances when formulating her college list. What!!??!! He had absolutely no idea what our financial situation was, so I’m not sure why he would say such a thing. We had already had the financial discussion with D, so she ignored the GC, but I fear that he put other families in a bind with that advice. </p>

<p>I would never tell my child I couldn’t afford her dream school. I would tell her what I COULD afford well in advance so that she wouldn’t waste time dreaming about a school that was unaffordable. We were in the very fortunate position of being able to afford any school our D might want to go to, but we still emphasized cost and value and encouraged a cost/benefit analysis of the various schools she was looking at. At the end she was deciding between two schools, both of which she liked a lot. One would have cost over $100,000 more than the other. She never said as much, but I know that was factored into her decision, even though we would have paid for either school. I think it’s important, no matter what the financial situation, to involve the student in the finances simply because it’s a good teaching moment.</p>

<p>Have the student focus on the bigger dream–namely, what they’d like to do with their life. College can be a wonderful four year experience, but in the end it’s just four years. If a student wants to be able to go to med school, or go into a field where they’re not going to be earning much money, or wants to travel extensively/buy a house/etc, having a lot of debt for those four years is going to be a dream killer.</p>

<p>I’ll echo those who say to start early on telling one’s children what’s affordable. I was lucky enough to stumble into College Confidential when my older child was just finishing 8th grade. That’s when I first ran a FAFSA forecaster, and had that moment of disbelief where one thinks “surely, that’s what they expect us to pay for all four years!”</p>

<p>^^^Very Funny! Wait…not funny at all!</p>

<p>*College * is the dream, not being hung up on a brand name or logo.</p>