I was in middle school when I visited a college campus for the first time. Afterward, I wrote “College Fund” on a shoebox and hid it in my room to save up my own nest egg.
Enthusiastic as I was, I’m glad my parents had a more coordinated plan to help me prepare. Your child isn’t limited to contributing to college from their allowance (which comes out of your wallet anyway).
Whether or not you’ll rely on your child to help afford college costs, saving for college together can be a great opportunity to impart some financial wisdom and teach life skills. Here’s how to include them in the conversation.
There are varied pathways to affording a college education. The type of college experience your child is dreaming of will affect your financial preparations. If your child is hoping to enroll in a four-year, private college, you’ll need a different strategy than if your child plans to apply to public, in-state colleges.
Average tuition and fees in the 2020-2021 academic year were $9,400 at public 4-year institutions, and $37,600 at private nonprofit colleges. More than 83 percent of students receive financial aid, so the sticker price doesn’t tell the full story, but you can still get a sense of how far your contribution may go toward covering costs.
Start college conversations early (middle school is a great time to start). Encourage your child to think about their ideal college experience, and explain what your family can offer. Maybe you can cover 75 percent of expenses at a public college, but you’d need to rely on student loans to send your child to a private college. If your child is dreaming of a private college (e.g., to study in a specialized program), you can start conversations about cost-saving measures. For example, you might lessen the overall cost through scholarships or planning to attend a year of community college for general education requirements.
While your child can (and probably should) earn some money through babysitting or part-time jobs, a kid’s main “job” is learning and developing their talents. Doing well in school and extracurriculars can also contribute to college in several ways:
A strong GPA, athletic record or extracurricular achievements can reflect well on college applications and give your child more choices.
Your child may qualify for more merit-based scholarships.
Your child may be better positioned to find (and apply for) private scholarships based on special interests and talents.
Talk with your child about how their passions may play into their choice of college. For example, if your child is striving to reach a prestigious music school or play a Division 1 sport, they may narrow down their list of schools early (and give you a sense of what aid you might need to cover tuition). Your child can also search for scholarships based on hobbies, which award money for musical theater songwriting, hiking, photography and more.
You don’t need to pay back scholarships, so these are an ideal form of aid, but roughly $100 million in scholarships goes unclaimed each year. Often, it’s because students didn’t apply.
You don’t need a perfect GPA to win a scholarship. Scholarships focusing on athletic or musical ability, leadership skills, a moving essay, specific areas of study and more are available locally or nationally. Some scholarships are open to students as young as 14.
Nationally, students may qualify for as much as $3.75 billion in Pell Grants that they never claim because they haven’t filled out a Free Application for Federal Student Aid (FAFSA). The FAFSA should be an essential part of your family’s process as you prepare your child to choose a college.
Your child can apply for scholarship money all through high school, and especially as they begin their college search. Have them take some ownership over their own college costs by being the point person on some of the scholarship work:
Search for eligible scholarships through local and state government agencies. Fastweb is a good resource, and you can also start by looking up your state page to find scholarships for students in your area. Students who are low income, academically talented or part of marginalized groups may find special classes of state scholarship.
Search for career-based scholarships offered by companies to students interested in pursuing a specific major (e.g., nursing).
Search for “scholarship” plus keywords for an interest (e.g., writing, gaming) or identity (e.g., immigrant) that applies to you.
Make a realistic plan with your child. How many scholarships will your child apply to each year? Use a planner to track deadlines and stay organized in preparing materials, like essays.
About 30 percent of teens age 16-19 worked summer jobs in 2020, and nearly as many work during the rest of the year. Taking on a job, or even earning money through babysitting or other gig work, can help your child save a college nest egg.
For the 2022-2023 FAFSA, a dependent student can earn up to $7,040 as “protected” income, meaning it won’t factor into the expected family contribution (EFC) for financial aid. If your child makes more than this, it may be a better financial move to save these excess earnings in a parent-owned 529 account. Colleges may calculate about 20 percent of the “unprotected” funds in your child’s name against financial aid but a smaller percentage of 529 funds.
Talk about whether they will work summers or throughout the year, and what percent of their income should go toward college costs and what percent they can spend now. Set expectations for what feel reasonable for your child to cover with their side job income. Will your child pay for textbooks and entertainment, or be responsible for larger expenses, like a meal plan?
As your child reaches high school, you don’t need to dig into your financial worries with them but you can explain how external factors like a recession can make good money habits even more important. If you give your child a good financial education now, they may be more ready to use their savings responsibly when they get on campus.
Set savings goals and expectations that work for your family. You might expect your student to cover textbooks and transportation, or to work enough to pay for their own meal plan. As they’re saving in high school, this can be a great time to entrust your child with more mature responsibilities and find incentives to reward their success. A few ideas include:
Give your child “bills”: Either real expenses (e.g., paying fees for class trips or new clothes above a basic budget) or practice “bills” (e.g., “rent” payments that you keep for your child in a separate savings account for the future).
Practice budgeting: Many schools don’t teach personal finance, so your child will probably rely on you to learn the basics about credit or budgeting. Building this skill helps your child save for college and also gives them a better framework to understand how you determine what colleges you can afford.
Offer a savings match: Saving money can be a slow process. If you’re able to match your child’s savings or offer a “bonus” for reaching a milestone, that can be a powerful motivation to stay on track.
In my case, my family encouraged me to apply for scholarships and save money from summer jobs to cover textbooks (in a bank account, not a shoebox). I also took a campus job as part of my financial aid. Many families can put together their own combination of ways their teen can play an active role in preparing financially for college.
Fabric exists to help young families master their money. Our articles abide by strict editorial standards.
Fabric by Gerber Life exists to help young families master their money. Our articles abide by strict editorial standards.
Information provided is general and educational in nature and is not intended to be, and should not be construed as, financial, legal, or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. We make no warranties with regard to the information or results obtained by its use, and disclaim any liability arising out of your use of, or reliance on, the information.
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