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College Choice: Family and Financial Considerations

Last month we discussed how college students and their families are facing tough choices. And in a article entitled “For Financially Responsible Kids, Do NOT Do These 3 Things,” the author suggests that parents not leave this decision about which school to attend solely in the hands of their teenaged children:
“Most parents feel obliged to send their children to the best — and often the most expensive — school they can get into. We are leaving large financial decisions that will impact the whole family up to our 17-year-old children.”

The article points out that we do not usually let children make the sole decision about other major purchases like a house or a car. You could argue that a child’s education should be their decision because it affects that child’s life and future career prospects. This is true; however, it does help to consider how college education costs can affect an entire family. No matter the size or number of children in a family, the costs of a college education will alter the family budget and spending power. And since some parents consider dipping into their retirement savings to pay for a child’s college education (something the author advises against), it can change the family prospects for years to come.

Rather than letting a child get excited about their dream college and taking out loans to make that dream come true, parents can talk to their children in the years leading up to college about the costs and what they as parents can contribute. In years past, students borrowed heavily for college because they were told that college debt was “good debt” and an investment in the future.  Many of these students were in for a surprise when they learned what their monthly loan payments would be once they had graduated. Rather than dealing with this kind of aftershock, you can discuss the costs with your child and make economics a part of the considerations as you child is selecting which college to attend.