Many parents with children in high school are finding that a frank conversation about the “facts of life” should also include a discussion of how to pay for college–and for good reason.
According to a recent survey conducted by Sallie Mae and Ipsos, 22 percent of students and parents strongly agree that they had a plan to pay for all years of college before enrolling. At the same time, families overwhelmingly agree that a college degree is more important than ever.
With higher education a priority among families, it’s crucial for families to have honest and open conversations about their higher education goals and the financial steps to achieve them.
Here are some tips on how to jump-start the conversation with your child:
- Build a plan to save for college together. Emphasize saving for college early and let kids know their contribution is important. Younger children can set aside money from a weekly allowance, while older kids can deposit money earned from baby-sitting or part-time jobs into their college savings account. Not only will it add up over time, but it will serve as a reminder of the child’s goal to attend college. Sallie Mae offers the Education Investment Planner to help you build a financial plan for college, available free at SallieMae.com/invest.
- Teach kids the “1-2-3” rule for paying for college. First, leverage free money, such as scholarships and grants. Second, explore federal student loan programs, which are widely available regardless of income or assets. Third, if there’s still a gap, consider responsible private student loans to help cover the costs.
- Not all loans are created equal–make sure your children are smart borrowers. Look at loan options that encourage them to make interest payments while in school, such as the Sallie Mae Smart Option Student Loan. Opting for this type of loan can shorten repayment after school and help them save money in the long run.
- It’s never too early. “Financial planning for college is crucial; parents should realize it’s never too early or too late to start,” said Farnoosh Torabi, personal finance expert and author of Psych Yourself Rich. “Including your child in the conversation will ensure the family develops a strong commitment and plan for college.”
To learn more, visit http://www.SallieMae.com.