Mary Smith, a high school junior, isn’t speaking to her parents this week. Her parents are not speaking to each other either. The reason: College Admissions Stress! For most parents, there are few things that rival the anxiety associated with wondering how they are going to pay for their children’s education without completely going broke. The stress these parents feel is being taken out on their daughter, and Mary cannot make a proper decision on college until her parents give her an idea as to which colleges are financially acceptable to them. And around and around they go.
Two common causes of college planning stress are 1) little to no comprehension of what a college education will cost and 2) procrastinating on when to start saving. Ask any mom or dad of a high school senior and they will most certainly tell you that the time went “so fast!”
Here are some steps that can be taken to greatly reduce this stressful time:
- Get an accurate evaluation of your personal financial situation and clearly spell out your financial goals, not just for college. Before building a paying-for-college plan, it is imperative to know all the resources you expect to have at your disposal.
- Calculate the actual projected costs of college for all of your children. Most families need this reality check because they greatly underestimate the current cost, the rate of inflation, as well as the number of years that it will actually take their kids to receive a degree.
- Draft a paying-for-college plan. Financial market volatility and escalating college costs have translated into the need for a much more formalized plan to accomplish the important objective of successfully sending kids to college. After all, it is most likely that college will be one of the most costly outlays in a family’s lifetime.
- Understand that there are many pieces to a successful college plan and educate yourself about your options. College selection, financial aid, merit-based aid, modest student loans, athletic aid and parental contributions are all possible components of your paying-for-college plan. Getting a plan in writing is key, then it can be tweaked and modified as needed.
- Start saving! Doing the math, in order to have college costs covered when the time comes, you should be saving $200 per month for a newborn, $350 per month for a first grader, $450 per month for a fifth grader, and it goes up from there. If you wait for high school, you’re probably looking at $1,000 per month.
Waiting until the last minute to plan for college can be painful. Paying for college does not have to be so stressful. Planning NOW is the remedy.
College and retirement: you can do both!