Unfortunately, many families never have a conversation about budgets or even reasonable spending expectations before students leave for college. Parents need to be aware of the realistic costs of books, clubs, activities and midnight pizza runs. Students should not assume there is a limitless debit card at their disposal.
Rather than sweep this huge financial investment under the rug, parents owe it to their children to discuss their financial commitment. Parents should make their academic and financial expectations clear.
Do you expect that your children will have some “skin in the game” and be responsible for some measure of the expenses? Are they taking out loans? Are they responsible for their personal expenses? Do you plan to provide them with a monthly allowance? Writing checks without having these conversations does not give a young person a recipe for financial success in college or in their future.
Part of what makes this conversation even more challenging is that money is almost a virtual concept for many students. They use gift cards, credit cards, debit cards and apps such as Venmo and PayPal. Money, the green stuff, may not be a meaningful part of their lives.
Here are some tips for getting that financial conversation going:
Be straight about the costs of tuition and room and board.
Most students can’t comprehend the idea of laying out $50,000 or more per year. Help them understand the investment by comparing it to something more tangible, such as the cost of two cars.
Be specific about what you’re willing to pay for.
Be even more specific about what you’re unwilling to subsidize.
Discuss the hidden costs at college.
Some fees are not included in the list of required fees. For example, class-specific fees may include charges for materials (e.g. art, chemistry, biology, physics, etc.), studio or practice room time, and laboratory fees. The same is true for per-use fees such as the athletic facility, pool, or weight rooms. Unfortunately, even when a college has a “comprehensive” fee, the fee isn't usually all-inclusive. According to Edvisors, most students will spend $250 to $500 per month on these hidden costs.
Consider putting your expectations in writing.
For example, if your student will be responsible for paying back any loans, ask them to sign a contract. Some parents tie in academic expectations as well, such as, “You must have a 3.0 GPA to continue". Make sure your student is cautious before setting up multiple credit and debit card accounts. Be clear with them about what you’ll pay for and what is their responsibility.
Schedule a financial check-up with them about a month in.
Review the specific items and where they’ve been spending your/their money. Let them know they’ve done a good job and loosen the leash a little if deserved, and agree to check-in again at Thanksgiving.
Editor’s Note: This post was originally published by The College Advisor, prepared for our clients and their families.