“The Best Day” by George Strait played on the radio the day we brought our first born home from the hospital. Thinking back to that day, it felt like we had arrived at the college conversation all too quickly. Much like the moment when we were no longer a family of two, watching our fledgling jump from the nest raised emotions and introspection.
It began to feel ‘real’ one week before my son’s college departure date. A mix of excitement and anticipation came over me thinking about the opportunities that lie ahead, and pride for the person he’s grown into. At the same time, thoughts of not seeing him every day and knowing that we’d all be moving into a new normal created a sadness. “The Best Day” holds a different meaning now; and listening to it again the morning we dropped him at college helped shift my focus back onto his excitement for this new journey.
Before we could send our son off to college, we had to cross the bridge of finding the “perfect one,” agree as a couple how to fund this new expense, and communicate funding and expectations to our college freshman.
Where to start, and what to expect
I was fortunate enough to attend a smaller, private university as tuition was comparable for public and private universities at the time. Thinking that a similar private experience would be well suited for my son, I started the college search before he did so I could get a sense for total cost. The most important factor was finding a school with the right size and fit, and I didn’t want tuition to be an initial limitation in his mind. I want my kids to be financially grounded, but I also don’t want them to think “I can’t do that because financial circumstances limit me.”
Once we started to get a feel for the experience he was looking for, finances did narrow our search and ultimately for us, the cost was going to matter. When we compared public and private universities there were a variety of tuition sticker prices. Despite the topline number, we found most private schools had financial aid offers that would close the gap.
That said, I still thought the number would be lower. Through my work experience I have observed many families’ college search processes, but I hadn’t truly come to grips with the true cost until going through it myself. Fortunately, we had started saving early in modest amounts, so the cost isn’t overwhelming, and the savings plan will work as we imagined.
Communicating the plan
Like many parents, my wife and I initially had different ideas of the amount we’d contribute to his college funding. We knew how important it would be to give him a firm amount, and that we first needed to agree on that number. During this part of the process it helped to work with a financial planner and calculate the true cost of attending college each year. That initial budget might not be forever, but it creates a framework which will translate if he moves off-campus and costs change. My wife and I ultimately came to agreement on our contribution, above what we had saved, over an evening walk.
Our communication plan may not have evolved in the way others would approach it. Thinking back, we didn’t specifically talk about the balances of college savings, a 529 plan in our case, with him until we began talking about college financing. Ultimately, we openly discussed what the contribution from mom and dad would be out of pocket (the “cash flow” portion), what was available from his 529 plan, and the amount available through the DIRECT loan program.
Our inclination was to accept the loan money while it’s there, knowing we can choose to eliminate it later. Our son is the borrower on the loans, however most schools were also willing to give loans to us as parents. It was clear to see how students and parents can get into student debt issues so easily. The Federal Student Aid website has lots of good information, and before you can accept the loans you must go through a tutorial to better understand the loans and associated obligations. During this process, the student accepting the loans needs guidance and oversight to determine how much to accept.
What is the Plan?
Outside of the budget we have communicated to him, we discussed that he’ll be responsible for extra-curriculars, even his first year. This isn’t a surprise because he has paid for his day-to-day entertainment and gas during high school. Once his car is at college, he will pay the parking fees and increased insurance cost to help him understand the financial consequences associated with his decisions.
We see this approach as a “toe in the water” opportunity. We have four more years to educate him about costs and financial implications, so that daily living expenses aren’t such a shock when he’s out of school. Inevitably there will be experiences, like study abroad, that interest him. Using that initial budget will shape how those ‘extras’ fit into the plan, especially if there are disagreements about what opportunities should be pursued during college.
The road that led to the first day of college was filled with unexpected twists. Wherever it would have taken us, we planned for it and are thankful to have funded a 529 college savings plan. Having prepared financially allowed us to be more present to support our son and each other as we settle in to a new normal.