When totaling up your own available resources, be cautious about tapping retirement funds or borrowing too much. Your child has a working lifetime ahead to benefit from the education and pay back any loans. The time until you retire will be much shorter. Set expectations of what your child will contribute Most teenagers can’t “work their way through college” or pay for an education entirely on their own. Working too many hours can result in lower grades and increase the odds of dropping out. But it’s OK — smart, even — to expect them to contribute something through part-time or summer jobs, says CFP Leon LaBrecque of Troy, Michigan. All three of his kids worked summer jobs, and two worked multiple jobs during the school year.
“Busy people get more done,” LaBrecque says.
If your child plans to borrow, they probably should stick to federal student loans, which are limited to $5,500 the first year and no more than $31,000 for a typical undergraduate education. Scholarships can be another way to help pay the bills. Talk about the gaps Discussing options can keep your child from fixating on an education you can’t afford. Alternatives might include choosing the school that gives the best financial aid, starting at a community college or living at home rather than in a dorm. Also, be careful about making promises, since life happens. A divorce left CFP DeDe Jones of Lakewood, Colorado, with less money for college than she’d hoped. Each of her twins, now 26, received a fixed amount for college that would allow them to graduate without debt, but only if they chose in-state schools and lived at home. Both did. Her daughter stretched her college fund to pay for six years of college after she switched majors from nursing to computer science. Her son got both a bachelor’s degree and a master’s in just four years and is now pursuing a Ph.D. on a fellowship.“They really took it to heart,” Jones says.
Liz Weston is a columnist at NerdWallet, a personal finance website.
The article Teach Your Teens About College Costs Long Before They Apply originally appeared on NerdWallet.
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