Wednesday, January 25, 2012

Tracking Costs of College

During the State of the Union address last night, the president spoke about the need to lower interest rates on student loans and urged colleges to figure out how to lower their costs, too.

These are actions beyond the control of families with children heading off to college -- and who knows how long it will take for improvements to occur. But families can take steps to ensure that the college education doesn't turn into a financial nightmare -- or what's more likely, a constant stream of requests for more walking around money from the student followed by agitated texts or calls from home saying enough already.

It all starts with the Discussion: what the family can afford; what level of debt (if any) is acceptable; understanding what it means to take a college loan and how it will affect options post-college; what can the student contribute to defray costs, etc. Teens really must be a part of the conversation -- it will help them on the course to becoming financially responsible adults. And this is true even if the family was able to save enough to cover most college costs.

Then when students learn where they've been accepted and how much financial aid, if any, they have received, having held the Discussion will make it somewhat easier to narrow decisions.

Once students are off to college, they should be responsible for adhering to a budget. Here's a good breakdown of costs of college for one family, including the day-to-day expenses for a freshman. (Note: public college, in the midwest, so figures may not look real to those of us on coasts. But that doesn't matter. It's the tracking that does.)

Learning how to keep a simple budget should be a part of prepping for life away from family.

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