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The College Conversation Every Parent Must Have With Their Kids — Your Complete Guide

The Tough College Conversation Every Parent Must Have With Their Kids - TaxAct width=

One of the reasons parents put off critical conversations, in this case the tough college conversation, is because they feel the conversations may jeopardize the relationship.

That’s why the “how” of the chat is essential.

When I discuss hard things with my millennials, I start by choosing a time when we are all relaxed and there’s no tension in the air (yes, with teenagers, finding that magical moment may be a miracle).

A good option is to take them out for their favorite meal or a Frappuccino.

Second, it’s important to start with something along the lines of “You know that I love you and I want your future to be as bright as possible. I want you to succeed.”

This sets up the conversation in a positive light.

You could also secure that affirming atmosphere by adding something like, “Going to college these days is a huge challenge and I admire your desire to get your education. I’m so proud of you because you live in a different world than I did 20+ years ago, and paying for college is much harder.”

This lets them know that you are proud of them and adds a measure of humility on your end as well.

Implement the ABC’s of getting your student to talk.

As you have chats about college, remember the ABCs of success in getting your student to talk.

Accuracy

You need to get your facts together because you’ll lose credibility if you pull numbers out of the air. For example, if you are saying, “Going to College X will cost one gazillion dollars.”

Instead, go to a college cost calculator to make sure your numbers are accurate.

Brevity

One of the skills I had to learn as an author who does radio and television interviews is how to speak in sound bites.

With 1,200 interviews under my belt, I can go into sound bite mode and keep the dialog going with my teens.

My husband, a fighter pilot who has never had to abbreviate his flight briefs, was recently told by his boss that he pontificates too much.

So we developed a hand signal that I give him so he knows when he is sounding like, “Blah, blah, blah” in a chat.

Since we’ve both agreed to the hand signal ahead of time, he’s not offended (it’s the charades symbol for ”little word” just in case you think there’s a wayward finger involved). It works like a champ!

Clarity

Let your children know, in their terms, what even $40,000 in student loan debt looks like in their future.

If they are paying $500 a month in loans (or $800 or $1,000), then that is equivalent to having to live at home in order to make ends meet.

Or, it could look like being forced to have 3 to 4 roommates to pay the bills based on an average post-graduation wage of $38,000/year.

It also means the difference between driving a nice car or taking public transportation.

It may even mean that once they are married and have kids, they may not have the option to allow a parent to stay home with the infant because both partners need to work to pay student loans.

Stick to Your Guns – But Don’t Shoot Yourself in the Foot!

The College Conversation Every Parent Must Have With Their Kids — Your Complete Guide - TaxAct Blog

Before you have the critical chat with your high school senior or current college student, you need to have that same conversation with yourself and/or with your spouse.

You need to ask yourself the following questions and come up with the answer that will set the boundaries for your own financial future, as well as your child’s.

Remember, if you leverage your future retirement for their college expenses, then you aren’t doing them a service in the long run because the financial burden you have might become theirs.

One of the best things you can do for your child is to be financially independent of needing their monetary help in your own retirement. Tweet this

Here are 8 questions you need to settle first:

  • How much will their education cost at each school they are considering? Estimate with a college cost calculator.
  • How much income can they expect to earn from a job using their major or in their chosen profession? Go to Salary.com to calculate.
  • How much money will they need after scholarships and grants to complete their college education? Go to FastWeb to find 1.5 million scholarships.
  • What do they expect to make each summer between college semesters and/or during the year from a part-time job? (It’s best to underestimate what they can make).
  • How much money is saved by going to a community college (and living at home) for the first two years?
  • How much from your 529 and other savings plans can you contribute to college expenses?
  • What is the projected amount in student loans they will need and at current student loan interest rates> And, how much will they have to pay per month and for how long? See my free tools to calculate debt repayment.
  • How much student loan debt can you take out in your name without jeopardizing your retirement?

After you’ve answered these questions and come to an understanding of what you can contribute, then have that critical discussion with your student as to what is really possible in terms of their college choices and what is not feasible.

Here are some friendly reminders to help you stick to your guns during that tough college conversation with your kids:

HELOCs

Never get a Home Equity Line of Credit to pay for college. Tweet this

You need to keep the equity in your home for your own retirement nest egg. Do not deteriorate your own future to pay for your child’s future.

It goes along the lines of the flight attendant when she gives instructions for the oxygen mask: “If you are traveling with children, secure your own mask first, then assist your child.”

If you go unconscious financially because of a HELOC, then you cannot help your child in the future.

401(k)s

Never ever borrow from a 401(k) in order to pay for college for the same reasons as the HELOC. Tweet this

Co-Signatures

Do not co-sign loans unless you can pay back the ENTIRE loan in full since you will assume the same risk as your child.

One of our kids decided to try to go to a college that we did not support because it was too expensive.

Our child tried to get us to co-sign a $20,000 loan for one semester’s worth of expenses and we refused.

The result was a strained relationship, but in the long run we stuck to our guns and had the painful task of watching this child learn life’s lessons the hard way.

Collateral

Never put up your home as collateral for a student loan. Tweet this

I have had the unfortunate experience of seeing well-meaning parents lose their homes because their child defaulted on private student loans where the parents put up this kind of collateral.

In fact, don’t put up ANY kind of collateral for any kind of student loan.

A New Mantra

Not enough parents are having these critical conversations with their students and sooner is better than later when it comes time to have the tough talk.

We developed a mantra with our children and it was:

I will go to the school where I can get the best education possible for the least amount of student loan debt.

Remember that your child cannot get into significant student loan debt without help from you (or another cosignator).

So it’s not as if they have any leverage when they respond with “I’m 18, I can do whatever I want and I’m going to Berkeley.”

Um, actually they can’t go there unless they got a full ride scholarship, inherited a $200,000 trust fund or had a rich uncle decide to cover their expenses.

They can’t get that much in student loan debts without your signature.

They may need a paradigm shift that helps them see the reality of their situation and that’s where the new mantra comes in.

For us, this mantra resulted in 7 college degrees with no student loan debt from schools like Stanford (2013), USNA (2011), USAFA (2015), USMA (2017), University of Texas (2009), and Moody Institute (2012).

It also meant our students earned college scholarships, worked part-time during the year, worked during the summer, got internships, found research assistant jobs, got dual enrollment credit, got credit for their AP exams and got hours for CLEP testing.

If we can do it, you can do it as well and it all began with a series of critical chats.

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About Ellie Kay

Ellie Kay is a regular expert on national television with ABC NEWS NOW’s Money Matters and Good Money shows. She is also a national radio commentator, a frequent media guest on Fox News, and CNBC, a popular international speaker, and the best-selling author of fourteen books including her newest release, The Sixty Minute Money Workout (Waterbrook, 2010). For money savings links visit Ellie's blog.

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