September of senior year has a way of making college feel suddenly real.
The campus visits are underway. The college list is taking shape. And soon applications and essays will be on the docket. While your child is focused on the type of schools where they can see themselves next year, you may be quietly wondering how you can see yourself covering the cost.
While you don’t need to have it all figured out right now, the Fall of senior year is a good time to take a fresh look at your family’s financial picture — before tours continue, applications go out, and emotional stakes ratchet up.
Here are a few steps to help bring you a bit closer to clarity:
1. Start By Evaluating What You Have
Take inventory of the resources you’ve already set aside for college or other forms of career training. Start with your 529 account(s). Look at current balances and how they are invested, and consider whether your current strategy makes sense given the path you feel your child is leaning toward and how quickly it is approaching.
Then, look beyond the 529. Is there money in other accounts that you’ve mentally earmarked for college? Are there custodial accounts that may be part of the plan?
2. Determine Who Else May Have Saved for the Same Purpose
To the extent possible, attempt to assess whether grandparents or other family members may have saved as well for your child. A grandparent may have established a 529 or another account for your child without you knowing or having a complete picture of what is available. While you don’t want to build your plan around money you can’t necessarily count on, it can be very helpful to know what resources may exist and, where feasible, to coordinate what those additional funds will cover and how and when they will be disbursed.
3. Don’t Forget Other Goals
This is also an appropriate time to consider how paying for college fits alongside other financial priorities like emergency savings, retirement, and other major financial goals, including saving for other children. While paying for college is an admirable objective, it shouldn’t be your sole focus — particularly if it causes you to overlook outstanding debt, saving for retirement, or maintaining a rainy-day fund for times when it may be needed.
4. Know What You’re Comfortable Contributing
There’s an important difference between what you could pay and what you’re comfortable paying. Whether or not you technically have the resources to cover a significant college bill, you may have placed a cap on the amount you will spend. For instance, you’d be comfortable covering the cost of four years of tuition at an in-state public school. Or perhaps you’ve decided you will pay up to a third or half of the cost of a school your child chooses.
Whatever boundaries you set, recognize there is no one right answer. What matters is that you, your partner, and your child have a general sense of what you’re willing and able to contribute before you’re faced with an acceptance letter and financial aid offer from an unaffordable school your child has fallen in love with.
5. Look Beyond Tuition
When comparing colleges, don’t focus only on the tuition number. Think about the full cost of attendance: housing, food, fees, books, transportation to and from school for breaks and visits (especially if airfare is involved), and other personal expenses. And remember that today’s cost is only a starting point. Over four years, those expenses can increase.
It’s also important to distinguish between a school’s published price and what your family may actually pay after grants and scholarships. And make sure you are clear on the exact value of all forms of aid for all years of the degree your child will be seeking and what the criteria are to maintain them.
6. Get Ready for the FAFSA
Don’t assume your family won’t qualify for financial aid and don’t skip the FAFSA. Create the necessary StudentAid.gov accounts as soon as you are able, gather the financial information you’ll need, and plan to complete the FAFSA as early as practical once it becomes available – often in early October.
7. Decide How You Feel About Borrowing
If borrowing might be part of your college plan, think about that now — rather than facing the topic years down the line when you and/or your child are faced with how to make the first of many payments. Parents and students should consider whether they’re comfortable borrowing and to what level, what the approximate monthly payments will be and for how many years, and who will ultimately be responsible for repaying the debt.
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