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While it seems nonsensical to think about letting an 18-year-old borrow thousands of dollars, many 18-year-olds do just that when they take out student loans to pay for college. As parents, our job is not done when our children are 18; we have to continue guiding our children as they are making large financial decisions that will impact the rest of their lives – or may even cause them to leave college entirely as financial pressure is the primary reason kids drop out of college.

Of course, this conversation should not start at age 18. Just as we know that the earlier we start saving for our children to go to college, the better, we should also be talking with them in high school about the cost of higher education and how to pay for it.

Here are 4 steps to take before you start college shopping with your teen:

  1. Set a college budget for tuition. As you analyze how much college you can afford, consider the personal resources you have available, like college savings plans or custodial savings accounts. If you have been paying for private high school, you can redirect that expense to paying for college. Or perhaps your mortgage will be paid off and you can use the money you were paying on it to go toward college expenses. Your children may also have grandparents who are able and willing to help pay for some of the tuition. Keep in mind that grandparents can pay tuition directly to an educational institution in addition to making maximum annual exclusion gifts.
  2. Set the expectation that your student will graduate in 4 years. The “average” for public college is 4 ½ years to graduate. Because more than 50% of college freshman change majors, it’s also important to talk about career selection before college begins. In addition to getting resources from your child’s high school guidance counselor, you may want to consider a program like Career Direct, which looks at 4 aspects of career selection: personality, interests, skills, and values.
  3. Set a maximum student loan limit if debt will be part of the plan to pay for college. As part of setting that maximum debt limit, create a post-college budget with your student. Estimate a starting salary then back out required payments, like student loans, health insurance premiums, and retirement plan contributions – because those should be required! Then factor in living expenses for apartment rent, car maintenance and fuel, utilities, groceries, and fun money. It may be an eye-opening exercise.
  4. Shop online before visiting in person. Just as you do your research online before you test drive and fall in love with a 2 door convertible that will not fit your growing family, you should research schools before starting a college tour. Here are some resources to help you comparison shop online for higher education:
  • College Scorecard allows you to sort and filter to compare schools based on cost, average loan amount, ability to repay, and future earnings.
  • The education section of Payscale.com shows return on investment for colleges and lists graduation rates and years to graduate.
  • Money magazine evaluates colleges based on graduation rate and consumer transparency. You can then rank colleges based on major, size, test scores, and location.
  • College Abacus estimates your net cost of attendance after factoring in estimated financial aid.

We know that “the days are long, but the years are short,” so it won’t be long until the college decision is made. Excuse me while I go and grab a scrapbook or two and reminisce…


Bridgeworth, LLC is not associated with Career Direct, College Scorecard, Payscale.com, Money magazine and College Abacus.

The information and material presented in this commentary are for general information only and do not specifically address individual investment objectives, financial situations or the particular needs of any specific person who may receive this commentary. Investing in any security or investment strategies discussed herein may not be suitable for you, and you may want to consult a financial advisor. Nothing in this material constitutes individual investment, legal or tax advice. Investments involve risk and an investor may incur either profits or losses. Past performance should not be taken as an indication or guarantee of future performance.

Bridgeworth is now a part of Savant Wealth Management as of 11/30/2023. Savant Wealth Management (“Savant”) is an SEC registered investment adviser headquartered in Rockford, Illinois.