Paying for College: How Parents and Students Can Tackle College Financing

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Early on in high school—let’s say freshman year—I recall asking my parents over dinner how much money had been saved for my two sisters and I to attend college.


In response I got two belly laughs, and a recommendation to “keep up those grades for scholarships”. For a 15-year old, it was a strong wake-up call that college would be a shared burden—and maybe even my entire responsibility.  


With the student loan debt crisis looming large over young graduates, it appears that college financing is still a huge challenge for many American families. So, to ward off an unhealthy college debt burden at graduation, it’s all about being proactive now—starting with those all-important initial parent-student discussions about expectations, resources, and responsibilities.


In short, tackling the “How are we going to pay for college?” question requires getting informed, understanding each family member’s unique role, and making a plan.

College Conversation Starter: How Can We Determine Where Our Financial Contributions are Coming From?

“Put pen to paper,” says Minnesota-based Derek F. Hagen, CFP® and founder of Fireside Financial. “Figure out how much it will cost, determine the resources you have available, and list out how you will pay. Start with any college savings, factor in monthly cash flow that can be used for college, determine if there will be grandparent help, take advantage of the American Opportunity Tax Credit (worth $10,000 over four years if you qualify), and take advantage of Federal Direct loans--which have limits each year and are ‘use-it-or-lose-it.’”


“I bring [clients] through a college pre-approval process,” says CFP® Jeff Brainard, CEO and founder of Columbine Wealth Management in Colorado. “It’s not about saving or investing, it’s about here’s where I am as a parent, these are all the resources I have. We’re going to get an idea of what we’re going to qualify for from a financial aid perspective. From there, we’re going to create a menu of schools that are acceptable, to both the students and parents.”


Once parents have a better sense of what they can contribute, they can tell their kids their expectations about how financial responsibilities will be divvied up. Each family will be different; each arrangement unique.

College Conversation Starter: Which Schools Can My Family Afford?

Managing expectations versus reality can be the trickiest part of hashing out where to apply to college, with academics, competition, and finances all playing a strong role in the decision-making process. Keep an open mind and be willing to research, negotiate with, and consider a wide variety of schools.


Planning for college needs to get a lot deeper, with a lot more explanation and hand holding,” says Brainard. “It’s much more than running numbers through financial planning software and saying this is what it’s going to cost you. There are a lot of options out there.”


Let’s say your student has her heart set on a particular school--but you do some digging and learn it doesn’t offer merit-based scholarships. Can you find a comparable experience at a different college that may have a more robust aid package (or maybe even a full ride)? Look at rankings for departments, available aid, and estimated salaries for graduates in specific majors. “You don’t want to borrow more than that first-year salary,” Brainard says.


“It all starts with their budget,” says Hagen. “Know how much you have, factor in ‘good’ student loans—that is, Federal Direct loans—factor in the American Opportunity Tax Credit and any cash flow you and your child are able to contribute toward college. Then, go shopping for schools that are within that budget. Make sure to shop based on net price to you, not sticker price.”


Do you have a brilliant student, or a student with a remarkable athletic or artistic talent? Try filtering your aid package research through those specific parameters. Chances are, you’ll find an institution seeking out your student’s distinctive abilities, one that may be willing to pay some or all of the bill to get them on campus.

College Conversation Starter: We Don’t Have Much Saved for College. What Financial Aid Opportunities are Available to Us Right Now?

If you have little—or nothing—saved for college, you’re not alone. “The truth is very few people have enough money to pay for their kids to go to school,” says Brainard. “I’ve never had a client that has everything covered.”


Luckily, there are resources to help budget and plan for institutions that match your family’s finances and your student’s goals--and a lot of financial aid packages to help.


“Learn the financial aid formula--the cost of college minus the expected family contribution equals the aid you are eligible for,” says Hagen. “This is different for each institution because each institution has a different cost. Use resources like and to find out the financial aid policy at your selected schools. Some will meet 100 percent of your need.”


Don’t be timid: Ask about discounts, look into scholarships, and use comparison tools (like Edmit) to take advantage of every penny that’s available to you. Speaking of comparison shopping, we can’t recommend this strategy enough: By comparing the net price of colleges, side by side, you’ll be empowered with the knowledge of exactly which school is your ideal financial fit.


“There are always ways we can figure out a best fit for your child,” says Brainard. “Once parents realize that very few people [pay full price], and learn that they’re going to go through a process, it changes the conversation to ‘we’re going to figure out what we can do.’”


Find out which college is your best financial fit by comparing college financial aid offers with Edmit!



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