Oct 29, 2021

Why We'll Pay for Our Kids' College Education + Tips for Paying for College Without Loans

My oldest child is now a junior in high school, so many of my friends also have juniors and seniors. Not surprisingly, a common topic of conversation is college. What does it take to get in, but especially, how are we going to pay for college?

Most of my friends seem to feel the same way I do: we'll pay as much as we can afford for college, but we don't want to take out loans, and we'd prefer that our children not take out loans either.

Some friends have saved some money in a 529 account, and don't intend to contribute any more toward their kids' college expenses. A few of my friends take a more hardline approach and have told their children that they won't pay for college at all. 

From talking to my friends and researching the subject, there are a lot of reasons why parents don't contribute, or contribute more, to their kids' college education. Among the most common reasons are: 
  • Not being able to afford it (and not wanting to take out loans themselves)
  • Feeling that graduation from high school is the demarcation for adulthood (therefore, college expenses are the student's responsibility)
  • Believing that kids need to have "skin in the game" - i.e., if they don't bear the financial responsibility of college, they won't take it seriously and will waste their time there
I think how a person grew up has to do a lot to do with how they view paying for college. Talking with other parents, it seems like those who had to pay their own way through college or couldn't afford to go (or didn't view it as an option for themselves) are more likely to think their children should at least contribute to their college expenses. Although there are parents who paid their own way who are happy to be able to pay for their children's education, because they remember how hard it was for themselves.

In my own family, my husband and I were both fortunate enough to have parents who paid in full for both of our college educations, and that's a big part of why we want to do the same for our own children. We know what a gift it is to be able to go to college and not have to worry about where the next tuition payment is coming from, and to graduate without any debt. We also know what carrying student debt feels like, because I took out loans to pay for law school.

We also remember how immature we were when we graduated from high school, and how college was an integral part of our maturation. Because of our own experiences, we really want our kids to have the opportunity to go away and live in a dorm their freshman year. 

Paying for college is obviously difficult, so we've been planning for many years now. We even refinanced our mortgage recently to bolster our cash flow. Nevertheless, we haven't saved up enough to pay for any college our kids might want to go to. So finances have been a part of the college conversation in our house from the beginning.

That's really important, because the last thing any parent wants is to never talk about money but then break their child's heart in April of senior year and say, "I know you worked really hard to get into College X but you can't go because we can't afford it." The better way to do things is to talk about cost before the student even starts putting together the list of schools where they'll apply. And then incorporate cost into the application process, so that the student isn't applying only to schools that are academic and social fits, but also a financial fit.

There's no way to know for sure if a school is a financial fit before you receive the financial aid package, but there are ways to roughly predict if a school will be affordable. Here are my best tips:
  • Start by assessing your finances. You can't know if a school is affordable if you don't know how much you can pay.
  • Determine your family's EFC, or Expected Family Contribution (soon to become the Student Aid Index in 2024). Read this discussion about EFC first so you don't go into shock when you do this.
  • Understand the different types of financial aid - schools may offer need-based financial aid and/or merit-based financial aid. There's more information in this post about paying for college.
  • Run a college's Net Price Calculator (NPC). Every college is required to have one on their website, so a search for the school name and "NPC" or "net price calculator" should take you to that page. Unfortunately, not all NPCs are built the same. In general, the more information the NPC asks for, the more reliable the result. Note that most NPCs don't seem to include merit scholarship information, so you'll have to dig deeper for those.
  • Create an account at TuitionFit. This is a new site and should become more reliable as more people use it. The site collects information from financial aid offers, so you can enter a student's stats and get information on the offers received by students with similar stats. The last time I checked, there was a free version and a premium paid version, but that was about a year ago when it first came out.
There are also paid services like Road2College's College Insights, which purport to show you which schools offer the best financial aid packages. I've followed the site's founder, Debbie Schwartz, for years, but I can't endorse the service since I've never actually used it (although I'm considering it for next year when my son is in application mode).

Of course, there's no way to know for sure how much a college will cost until a student is admitted and has received the financial aid package. I know families who have gotten shockingly generous aid that they didn't expect, and families who were deeply disappointed at the lack of aid offered. Again, the best thing you can do for your child is make sure they know that cost is a factor that has to be considered in deciding where they will ultimately attend.


Terry said...

Did you wind up using the Road2College service? Or another? If so, what did you think. Was it a good value? Our son just finished his Junior Year in HS so we’re about to get into “application mode.” Thanks in advance.

Chief Family Officer said...

Hi Terry, no, to be honest, I totally forgot about it this past fall. But we hired a private counselor, who helped my son figure out where he wanted to apply and what those schools were likely to cost. Now that I've been through the process once as a parent, and being on the verge of getting certified as a college counselor, I would say: If you're not working with a counselor who can advise you on where to apply, and you are just building your college list without many parameters (e.g., a list of colleges that are known for a specific major or colleges in a specific location), then the College Insights program might be especially useful.

However, if you already have a list of colleges, I would just run the NPCs and research those specific schools to see if you can figure out how much aid your student is likely to get. For example, my son was staying on the west coast, so I ran NPCs on all the colleges he was thinking of applying (and others I thought he should consider applying to). That helped me see which schools were likely to be affordable, and I was able to have honest conversations with him about which schools were likely to be financial fits if he got in.

Another example would be a student who wants to be a marine bio major. She could figure out which schools have the type of program she wants, and then run the NPC for those schools to figure out which will be the most affordable.

Hope that helps!