Do you think the student should pay for their own college expenses? Or is it the parents’ responsibilities? This is a tough question!
Sasha Grabenstetter and I discuss this in the latest Family Financial Feuds podcast, Who Should Pay for College?. Take a listen and see if you agree or disagree with us.
We talk about aspects of this question including:
- Does skin in the game matter?
- Does the major the student chooses influences who pays?
- How much in student loans is okay?
Plus we offer strategies to keep costs low overall!
On a related note, if you have a student packing for college, now’s a good time to have a conversation about money. Talking about money can be really hard. However, misunderstandings about financial expectations can lead to conflicts – it’s better to talk be clear before students start college. Here are some conversation starters:
- Who is expected to pay for which expenses? Different families have different expectations about college expenses – what’s your family’s plan? Will the parent keep paying for items they paid for before, for example: clothing, toiletries, auto insurance? Or is now the young adults responsibility? And, what about new expenses like textbooks?
- What strategies can be used by the student to keep living expenses low? For example, for Fall 2019, University of Illinois at Urbana-Champaign estimated costs for an undergraduate show living costs (housing, food, etc.) to be very close to the cost of tuition. Students can manage their living costs to save money.
- Talk about how you feel about borrowing money. Is it something to avoid or do you see it as a financial tool? And, in what situations? You may also want to discuss interest rates and how the Annual Percentage Rate tells us how expensive a loan is. For example, a student loan may have an interest rate of 6%, a credit card – 18%, and a payday loan, up to 99%. A vehicle title loan may be even higher, for example, 265%. If your student feels like they need to borrow more money during the year, what would you like them to do?