When my husband and I have budgeted before, it’s been sort of a disaster. Here’s a sample conversation:
Him: “Uh, sorry, honey, we had some emergency car repairs.”
Me: “Well, it’s okay because I accidentally went $100 over budget on groceries. I’m so sorry.” (It was always things we couldn’t live without, I swear, like milk and toilet paper — not Pop-Tarts and ice cream!)
When you want to help pay for your child’s college education, are you thinking you’ll need the budget fairy to wave her magic wand? Are you thinking there’s no way you’ll get the hang of budgeting before college rolls around?
Budgeting isn’t always the answer to having enough to pay for college, though. And extreme cheapskate money hacks aren’t always the answer, either.
In fact, it drives me bonkers when I see blogs and websites that encourage you to make your own laundry detergent to save $34 a year. Or the ones that suggest only showering at the gym to save on the water bill. (Those articles are admittedly fun to read, though they should all be titled “The Best Frugal Ways to Torture Yourself.”)
I read about not budgeting in “Automatic Millionaire” by David Bach. Bach’s premise is that you pay your bills, your emergency fund, tuition — everything — online. (The big takeaway is that you save for retirement automatically, too.)
He says budgets don’t work, and I tend to agree. Budgets can be so impossible because something unexpected seems to crop up every month. If you make a budget work, my hat’s off to you, because I’ve never been able to.
It’s a really good idea to automate money before your kiddo goes off to college, and not the week after move-in day. Why? Because automating takes some getting used to.
At this point, you might be asking, “This is handy and all, but what does this have to do with college?”
Great question.
The reason I’m writing about it is because automating can help you keep your financial ducks in a row. Knowing exactly how much is automatically whisked away can help you get organized and it can also help you understand how much you have left over to help your child with college expenses. The “stuff” that’s whisked away are the steady items that you know will come out each month and that are for relatively the same amount — such as your water bill, which usually hovers between $50 to $60 per month. Automating can help you get organized and help you understand how much you have left over to help your child with college expenses.
Even if you plan to contribute just a little bit toward college costs, automating will still help you more easily see how much is left over at the end of the month. It’s quicker and you know exactly how much is in your account.
What Can You Automate?
Remember how people (just one generation ago!) had to pay all the bills via check? I now marvel at how they had to keep track of it all.
I remember that my mom used to sit down at the table with a stack of envelopes, her checkbook and her signature roll of stamps. She so very carefully balanced her checkbook several times a month, something I obviously never do because I don’t have to. How did she carve out the time to do that?
Automating offers the solution to a whole host of frustrations: “I don’t like to budget” to “Did I pay that bill already — or not?” Consider these massive benefits:
Automating helps you protect your credit. Your credit score can’t take a zillion missed payments. The three credit bureaus — TransUnion, Equifax and Experian — receive information about your financial activity from your utility company, your garbage service and your mortgage lender — everything. Automating ensures that you pay for things on time so you don’t have a ding on your credit.
You get used to it. Simple, right? You get used to living on less. In terms of retirement savings, it’s the fastest way to wealth building because you don’t even miss it. For example, you won’t spend extra money on Target runs, cute new rugs for the patio and whatever else you can’t resist.
You ensure that you’re saving money without thinking about it. Automating works beyond paying bills! This is my favorite reason to automate: You can save for your future. Automating savings is a great way to save for college because it automatically funnels your money into an account. (The retirement savings advantages are astounding!)
Automating helps you practice living on less. This can be such an advantage. You can funnel your money into a 529 fund or a different type of fund. You’ll never know you’re missing it! Put money into a low-risk fund instead of a 529 plan if college is just around the corner.
Finally, there’s one more benefit: If you’re using automation for savings, it takes some effort to stop making automatic investments. In other words, it might be a major chore to stop automation for important things like college or retirement savings. For example, you might have to go online, remember your login and password, find the button to suspend payments, and on and on. Or you might have to call in and be on the phone with a representative for an hour. (Hardly something you have time to do, right?)
See how this is a good thing? The complicated steps might make it harder for you to stop payments so you continue to put money into your accounts.
How to Automate Your Entire Life
Okay, now I realize that most of you probably already automate. However, here’s the question: What are you missing that you haven’t automated yet? I just realized I’m paying doctor bills by calling into the hospital and our water bill via check. Uh, why?
And if you say, “I’m already automating everything,” are you automating money into savings, too?
It’s not too hard to figure out how to automate your money and long-term financial goals. Simply sign up for autopay at all the companies you make payments to. Automate the following:
Bills
Mortgage payments
Car payments
529 plan payments
Credit card payments
IRAs and other long-term investments
Emergency fund
Soon, you can add college payments to the list and you’ll automate them, of course! You can sign up for a tuition installment plan that will whisk that money away before you’ll even realize it. Check out my article on tuition installment plans if you’re curious to learn more about how they work.
Put yourself on autopilot for everything!
Automating Helps You Practice Replacing Old Expenses with New
It may seem like you’re constantly replacing old expenses with new expenses as your child has gotten older. For example, as your child has grown, you may have replaced:
Formula for baby food
Diapers for Pull-Ups
Daycare costs for private school tuition
Swimming lessons for swim team fees
Youth soccer fees for private coaching sessions
Private school tuition for college
529 savings for actual tuition payments
It seems like once you’re excited to be done paying for one thing, another expense takes its place! (How does that happen?)
It can actually work in your favor when you automate because you can start thinking about which expenses you’re automating now and can later trade for college tuition payments. For example, can you trade your automatic mortgage payment for college tuition?
Here are some examples of current expenses you might be able to trade for college tuition:
Your mortgage (wouldn’t it be so exciting to pay it off?)
Expensive music lessons
Pricey club athletic fees
Private high school tuition
A car (kids often don’t need them in college)
You Can Still Automate Your Money if Your Child’s Ready for College this Fall
If your child’s getting ready to go off to college and you haven’t started automating your finances, it’s not too late. You can still get going now!
Figure out how much you want to contribute for college and start socking that amount away into a separate account — just to get used to having that amount subtracted from your accounts before real payments start in July, or whenever your first tuition payment is due.
The key is to take a look at everything once it’s all automated and then figure out how much is left over, particularly now that you can do a “find-and-replace” now that high school’s over. (No private school tuition, remember?!)
Automate Starting Now
Now, I realize you can automate your money to your heart’s content, but the fact remains: You still have to have the money in your checking account to begin with in order to pay for college.
This is where you might have to get creative. If you need to pull back on certain automatic deductions to make room for college tuition, do it. (Just maybe don’t peel back on your retirement accounts unless you’re sure you’re fully stocked for retirement.)
By the way, speaking of retirement (though it’s a little off-topic, sorry, sorry): “Automatic Millionaire’s” premise is that automating your money can even make you rich. If you’ve automatically deducted money from your paycheck into your retirement fund over a number of years, compound interest will make it so easy for you to save a lot of money. And if you haven’t been deducting money automatically from your paycheck up until now, you can still save a comfortable amount for retirement. You just need to make up for lost time by saving even more. I encourage you to listen to “Automatic Millionaire” or buy the book.
Think of all the ways automating (yes, even while your child’s in college!) can help you save your pennies during your child’s college years. One of the truths I know is that you can always have your child take out a student loan to go to school but you can’t take out a loan to retire.
Your high school graduate may be dragging his feet on the college decision, and it’s not hard to figure out why. During this corona-crazy time, you’re trying to figure out how to put one foot in front of the other. Your teen may be struggling to a degree you can’t even fathom.
His life has flipped upside down — arguably even more than yours. (Did you withstand a worldwide epidemic that required you to kiss prom, graduation and the senior state track meet good-bye? Of course not.) You might feel a tiny whirl of relief to know that your child may not have to decide on a college until July 1. Whew! (Some schools’ deadlines are still May or June 1, however. If your child had a pile of schools with June 1 or July 1 deadlines, never fear. Most schools still have openings past the deadline.)
Your child might be a bit fearful of the future. As a parent, these changes have crushed you too, and you might be grieving the loss of “what should have been.” Here’s how to help pilot your college-bound child through the next hurdle (with baggage nobody could have anticipated).
I worked in college admission for 12 years and I heard so many parents say, “It’s my child’s decision, not mine.” I never loved that response because I always knew students wanted their parents’ input when it came to making such a big decision. Now more than ever, your child needs to know that you’re there to help.
Furthermore, your teen could be taking cues from you. Do you watch the news on a constant loop or fret about the future?
Remember that it might be hard for your teen to articulate everything he’s feeling — kind of like when he was two and couldn’t explain that his shoes were too tight.
Create a safe communication environment and listen when your child talks. Don’t forget to check your own fears about what’s coming down the pike.
Let your college-bound teen know that you’re there to help him through the decision. Just remember, teens want their parents to help them with this decision, particularly when they’re struggling. Talk about how life can be uncertain but things will get back to normal.
Take Advantage of Colleges’ Extended Deadlines
Carnegie Dartlet, a marketing services company that specializes in higher education institutions, surveyed 4,848 high school seniors about how current events have impacted their college search. The survey found that many students want an extension to the traditional May 1 National Candidate Reply Date — the national deadline for making a college decision.
In fact, 67 percent of students surveyed say they want an extension, at least until June 1 or July 1, and those numbers jump to 74-80 percent for underrepresented minority populations and students with higher financial need.
Breathe! As you can see, your child isn’t the only one who feels this way.
Many colleges have complied with students’ wishes and extended the deadline to accommodate these needs. Take advantage of the extra time — and be proactive. Launch a pros and cons list. Dive even deeper and do a heart/gut check. Don’t be afraid to take a trip down memory lane with your child. Remind him about the awesome college visit at College ABC last fall where you snagged a picture of him beaming during his college visit.
Ask What’s Holding Your Child Back from Making the Decision
What’s holding your child back from making the decision? Is it all the changes combined — summer orientation changes, school delays and extensions? Is it the distance from home? Maybe it’s you? (Again, you may be unwittingly showcasing some anxiety yourself.)
Get to the root of the problem. Ask straight up, “Is there any reason why we can’t put down a deposit for School X right now? It’s the school you’ve been talking about all year.” Then listen carefully to your child’s response.
Here are some common reasons that might be holding your child back.
The Coronavirus (or Worry in General)
Everyone’s plans have changed and it could also cause your child to question everything. It’s up to you to be a calming influence. Try to help your child gain some perspective on his college choice. Try as hard as you can to be a positive, uplifting influence.
In some cases, you may recognize that COVID-19 has aggravated anxiety in your teen and it may be a wise decision for your child to stay closer to home or make a different decision altogether. If necessary, seek outside help.
Distance from Home
The majority (56.2 percent) of public four-year college students attend an institution under an hour’s drive away. Nearly 70 percent attend within two hours of their home, according to the latest Higher Education Research Institute’s CIRP survey.
Your child might be feeling a tad unsettled about making a decision to attend school 10 hours away. Ask if that’s an issue and whether there’s a school that appeals to your high school graduate that’s closer to home. Note: Your child would not be the first one to change his mind at the last minute. It happens — and it’s okay. It’s better to realize this now instead of later!
Money
Is your cost-conscious child close to choosing a college with a hefty sticker price — which would require a handful of loans? If so, that could be what’s holding him back. (And you might be nervous, too.)
There are lots of ways to remedy this situation. Now that COVID-19 has happened, your financial situation may have changed considerably. If it has, let the college know. You may be able to fill out the college’s special circumstance form, where you can indicate a job loss or some other changes in your financial status, including excessive medical bills or another type of serious expense.
Are there other scholarship opportunities available? Find out whether there are additional scholarships your child can still apply for. There may be some new ones that have popped up since the last time you talked with the admission office!
Is work-study available? Work-study is a federally-funded program that can help your son or daughter pay for college. Your child will work on campus (sometimes off campus) and earn money just like in a regular job. Your son or daughter may not have been awarded work-study at all, and this is the time to ask whether it’s available. If work-study is already plugged into the financial aid award, ask if more work-study money can be added.
Was my FAFSA information correct? Ask some deeper questions about the FAFSA — you might have filled it out incorrectly! Was your expected family contribution (EFC) inflated due to one-time income? (EFC is an indicative number that colleges use to determine how much financial aid you’re eligible for.) Did you include an IRA or 401(k), which isn’t required for the FAFSA?
The bottom line: Ask the admission office good questions!
Don’t forget to communicate with colleges about changes in your financial situation. If you or your spouse has lost a job, tell the colleges on your child’s short list. Talking about financial changes could change your college-bound teen’s financial aid awards — in a good way.
Seek Answers to Objections
Help your child get the answers to what’s holding him back from making a decision. For example, if he’s worried about the strength of the engineering program between two schools, reach out to the admission counselor at each school to get some more data. Reach out to a professor. Ask more questions! Draw on those relationships you’ve built throughout the process to help your child make a final college decision.
Maybe your child’s holding back because his friends or his girlfriend are all headed to the state school down the road and he’s been planning to go to a school on the opposite coast. (I hated it when this came up when I was an admission counselor!)
If he’s starting to get cold feet, remind him why he initially chose that institution. (There were likely some good reasons!) It’s important that he chooses the best school for him.
Once you’ve gotten answers to everything, sit back and relax. In most cases, you still have time, even if the deadline has passed. When push comes to shove, every student does decide.
Do the Heart/Gut Test
The heart/gut test is something that a former college president of my alma mater used to talk about all the time. He’d explain that it’s not enough to take numbers into account. College isn’t a transactional experience — it’s about people! It’s not just about pretty buildings or the number of electives you have to take. He used to urge students to take into account the feeling you’d get — did your child feel like he belonged at a particular school?
Which campus did your son thrive on during the visit? Did he seem to come alive as soon as he met the tennis team? Withdraw when he met the abrasive engineering professor at your alma mater? Did your daughter light up when she met her admission counselor or the quirky communication studies professor with “Citizen Kane” posters plastered all over his office?
You get the idea. Don’t be afraid to go deep on this. Also, don’t be afraid to share your observations with your child. Say, “I noticed you loved the tour at College X and chatted animatedly with the tour guide. Do you think you felt just as comfortable at College Y or not?”
Look for the academic, social and financial fit — and do the gut and heart test. Ask your child where he or she felt most at home.
When you know, sometimes you just know.
If your child hasn’t gotten that “feeling” anywhere by now, go back to the drawing board — there are still openings at schools across the country. Another visit might be in order over the summer, though without students on campus, it can be tricky to feel the same energy.
Communicate with Admission Counselors
Contact admission counselors at the schools your child’s still considering. Trust me, my experience as an admission counselor tells me that colleges want to hear from you and build relationships. They don’t want you to go through turmoil alone.
Explain what’s going on and why there are some concerns. Most colleges have trained their admission counselors on how to communicate their college’s COVID-19 response. Talking with admission counselors is also a good way to evaluate how well a particular college has handled the crisis!
Colleges should make your teen feel better about the situation, provide a real human connection and help your child make a final decision.
A Different Decision May Be Necessary — and That’s Okay
Your teen may not be able to stomach leaving to go to college 1,000 miles away at this point, no matter how many times you remind him about his last wonderful on-campus experience.
This crisis has changed everyone. Tell your child that it’s okay to stay closer to home. Spend time thinking about what other options are out there. Remember, just because your child feels more comfortable with a semester at the local community college, it doesn’t mean he will never go to College ABC. He could be saying “See you later!”
Take a Deep Breath and Be There
Sometimes, it takes the good ol’ pro and con list to finally make the final decision. Sometimes seeing the solid “pro” column helps.
What happens when the “pro” side is a mile long for one school but your daughter really feels the fit more at a different school? Hey, it’s proof that the heart/gut test works!
Teens can feel their parents take an emotional and financial hit during this downturn and need more reassurance and guidance than ever. Support your teen through this all-important decision-making process. Remember, this could very well be the very first really big decision your child has ever made. Think positive: COVID-19 could make you (and your teen’s) decision making processes stronger than ever!
Good luck! I’d love to hear about your child’s final decision!
Got a pile of financial aid awards from various schools cluttering your inbox? Are the paper versions of all those financial aid awards stacked up in your home office? I’m sure you can’t wait to toss them into the recycling bin! (Except for maybe one from a very special school — the one your kiddo’s leaning toward… Yay!)
Your college-bound kiddo may not have quite decided where he’s going to school. That’s okay!
As you take a look at these financial aid awards, you know instantly that they’re not the same. I’m not talking about the types of scholarships or the work-study awards on each one, I’m talking about the layout of each award and what’s disclosed on each. Some colleges even employ a little bit of deception and as a result, may make the school look like it’s cheaper than it actually is.
This can get super confusing, and I encountered this problem a lot as an admission counselor. Parent to me over the phone: “Financial aid awards aren’t the same! Why???” To be honest, I wish there was one standard financial aid award that every college in the country would use.
They’re not standardized, so the best I can do is tell you what to watch out for!
1: Schools Often Don’t Separate Aid that Needs to Be Repaid from Aid that Doesn’t
Many, many financial aid awards don’t separate gift aid from work-study or loans. In other words, you may see various types of aid — scholarships, grants, work-study and loans — all lumped together. Can you see why that can be problematic?
Here’s an example. Note: The amounts, scholarships and grants I’ve listed below are part of a completely fictional aid award and for demonstration purposes only:
XYZ Merit-Based Scholarship: $15,000
XYZ Grants: $5,000
Federal Direct Subsidized Loan: $3,500
Federal Direct Unsubsidized Loan: $2,000
Federal Work-Study Program: $3,000
Private/Alternative Loan: $8,000
Total: $36,500
Grants and scholarships don’t have to be paid back, work-study money must be earned and loans must be repaid with interest. Even when schools put forth a confusing, mixed-up aid award jumble, some colleges and universities don’t do a great job distinguishing between what you need to pay back and what you don’t — like in the example above.
It’s your job to make sure you understand every line of the aid award and explain it to your high schooler.
Here’s the list again, broken down into categories, so your high schooler can understand it more clearly:
Does not need to be repaid:
XYZ Merit-Based Scholarship: $15,000
XYZ Grants: $5,000
Must be repaid with interest:
Federal Direct Subsidized Loan: $3,500
Federal Direct Unsubsidized Loan: $2,000
Private/Alternative Loan: $8,000
Must be earned:
Federal Work-Study Program: $3,000
Total: $36,500
I like that layout much better — it’s much easier for a 17- or 18-year-old to understand.
2. Some Financial Aid Awards Do Not Include the Total Cost
So, this sounds like no big deal, right? You can just look up the total cost of the institution online. Sometimes when you’re comparing financial aid awards, this can get lost in translation, particularly when a college only lists scholarship amounts and it looks like your child will get more money from that college compared to another. I remember one conversation I had with a mom over the phone when I worked in admission that went exactly like this:
Me: “Hi, Mrs. Jones! Have you and your son, Charlie, had a chance to review our generous financial aid award offer?”
Mrs. Jones: “Hi, Melissa! Yes, we have, but Competitor College XYZ is giving him $5,000 more in scholarships and other aid. That’s $20,000 over four years!”
Me: “Oh, really? Mrs. Jones, did you realize that Competitor College XYZ is $5,000 more expensive than our college?”
Mrs. Jones: “Oh, I guess that’s not on the aid award. Yes, yes, I’m online now and see that.”
Me: “I know our college is Charlie’s first choice. Would you be willing to pay the $200 deposit today?”
Mrs. Jones: “Yes!”
Hand to heart, that’s exactly how the conversation went. The financial aid awards that don’t include the total cost right on the award may require you to do a little digging. Make sure you know the full cost — tuition, room, board and fees.
3: Some Financial Aid Awards Include Loans Beyond Federal Student Loans
Let’s bring back my example “aid award.”
XYZ Merit-Based Scholarship: $15,000
XYZ Grants: $5,000
Federal Direct Subsidized Loan: $3,500
Federal Direct Unsubsidized Loan: $2,000
Federal Work-Study Program: $3,000
Private/Alternative Loan: $8,000
Total: $36,500
Direct Subsidized Loans and Direct Subsidized Loans Included
Look carefully at the loans I’ve included — particularly the last line. Many schools include loans on their financial aid awards — usually Direct Subsidized and Unsubsidized federal student loans. Quick details:
Direct Subsidized loans are available to needy undergraduate students. Each college determines the amount your child will receive. The U.S. Department of Education pays the interest on Direct Subsidized loans while your child is in school at least half-time, for the first six months after he leaves school and when your child defers (postpones) loan payments.
Direct Unsubsidized loans are available to undergraduate and graduate students but it’s not based on demonstrated financial need. Each school determines the amount you can borrow based on that school’s cost of attendance and other financial aid you receive. Interest accrues on Direct Unsubsidized loans while your child is in school.
PLUS Loans and Private Loans Might Be Part of the Mix…
Here’s the kicker: Some financial aid awards also include Parent PLUS loans (also called the Federal Direct PLUS loan (Direct PLUS Loan) through the William D. Ford Federal Direct Loan (Direct Loan) Program). Parent PLUS loans are federal loans that parents of dependent undergraduate students can use to help pay for college or career school. The U.S. Department of Education is the lender and the current interest rate is 7.08 percent.
The government doesn’t lend private student loans. Instead, you can get private student loans through a lender such as a bank, credit union, state agency or more. Interest rates are sometimes higher than for federal student loans. (A survey of SunTrust, Ascent, SoFi, CommonBond, Discover and Sallie Mae showed fixed rates ranging from 4.29% to 12.49%, while variable rates were offered from 1.80% to 14.18%, according to Debt.org.)
When financial aid awards include alternative or private loans, it may even look like you owe next to nothing, and that’s why I’m not a fan. It takes a little bit of the critical thinking out of the equation when the college “fills in the blanks.” I’d rather see the out-of-pocket costs at the bottom so you get creative on how you handle these costs — through a side hustle, your kiddo’s summer job, etc.
Don’t assume everything’s covered — show your kiddo how to understand the difference between loan types.
4: Work-Study May Be Part of the Award Letter
Some schools add work-study as part of the award calculation. I’m really not a fan of this tactic because it looks like work-study’s guaranteed, but nothing could be further from the truth. Your child must earn work-study money.
Your kiddo has to go through the trouble of visiting the human resources office at the college, choosing and applying for a job and possibly interviewing. Finally, your child must show up for that job. Not foolproof, is it? (Particularly because your kiddo may realize college is a lot of work and decides he’ll need to spend more time studying rather than working. Or he might decide he’ll earn more money working for a local landscaping company or as a server at a restaurant and will forgo the work-study job altogether.)
Furthermore, most schools pay students via direct deposit. The school won’t apply these funds directly to your child’s tuition bill. Your child may need work-study money for groceries or toiletries instead. Work-study is truly meant to be spending money — which is why I never like to see it lumped together with everything else.
The bottom line: Be wary if financial aid is included in the major calculation like it was in my example from above:
XYZ Merit-Based Scholarship: $15,000
XYZ Grants: $5,000
Federal Direct Subsidized Loan: $3,500
Federal Direct Unsubsidized Loan: $2,000
Federal Work-Study Program: $3,000
Private/Alternative Loan: $8,000
Total: $36,500
It’s terribly misleading.
5. Fees Aren’t Disclosed
Do you see the full costs listed on the financial aid award? Are you sure? Many colleges and universities list only the direct costs on financial aid awards — tuition, fees, room and board (if the student lives on campus).
Look carefully at a school’s costs page online or call your child’s No. 1 choice right now to be absolutely sure that you’re considering all costs. Some colleges may require fees like these:
Lab fees (if you’re child is going to major in the sciences)
Orientation fees
Campus fees
Athletic fees
Health and wellness fees
Tech fees
Transportation fees
Other fees
Get absolutely clear about which fees are part of the financial aid award. t ny do not list all college costs.
6. Loan Terms and Interest Rates Aren’t Included
You’ll never, ever see how much fees and interest rates will cost you just by looking at your financial aid award. There are too many variables for that to be possible, including things like interest rate changes. I wish you’d be able to see what it could look like, similar to an amortization schedule you receive when you get a mortgage.
The only real way to estimate the full loan costs over time is to use an interest rate calculator or ask your loan servicer detailed questions about payments over time. I encourage you to do that!
7. Colleges Leave You in the Dark on Tuition Increases
You’ll never be able to see what the tuition will be in three years, when your child is a fourth-year student. Why not? Because colleges typically don’t implement tuition increases until mid-year — they don’t even know what the increases will be yet.
The other side of this is that in the majority of cases, scholarships don’t increase as tuition increases. So, for example, the $15,000 scholarship in my example wouldn’t increase two percent if tuition goes up two percent.
Now, it’s possible to find colleges that freeze tuition for you after your first year of college. It’s also possible to find colleges that do offer merit-based scholarships that keep pace with tuition changes. It’s just a matter of figuring all of this out ahead of time.
Do Some Sleuthing
I liken this part of the college search to being a detective. You really have to analyze everything, take more than a passing glance at most financial aid awards and explain them in depth to your high schooler. Even if you do get it all, he’s likely in the dark.
Don’t be afraid to call up a financial aid officer or admission counselor and ask them pointed questions about the financial aid award. Ask them to go through it line by line with you and explain everything in detail. Here are a some really good questions to ask related to everything in this post:
Do scholarships increase as tuition increases?
Which aid must my child repay?
What are the college or university’s total costs? What are the fees?
Tell me the exact out-of-pocket cost — without loans and work-study.
What are the loan interest rates?
Be your own advocate and have your student go along with you for these conversations. The last thing I want is for you and your student to think your share of the costs is lower than it really is and fall prey to the tricky techniques colleges use.
“Did I save enough? If not, where will we pull the extra cash?”
Paying for college: The thought alone is enough to make any parent sweat right through her socks.
You may want so badly to contribute to your child’s college education, even if it’s just a little bit. Maybe you’d like to try to avoid taking out a Parent Plus Loan.
Guess what. There’s no law that says you have to use already-saved money to pay for college. You’re not doomed because you didn’t save money when your kid was in diapers!
I remember meeting with a couple from Chicagoland when I worked in admission. They really wanted to help their son pay for college. The mom decided she needed to get a job, though she wasn’t sure she wanted to spend long days in an office. Her husband said, “Looks like it’s time to get a work-from-home gig.”
She said, “Now there’s an idea!”
So she did!
There’s never been a better time to consider how to make money from home. If the COVID-19 outbreak has done anything, it’s taught that it’s possible to work a lot of different jobs from home!
First, it’s important to understand how you’ll be asked to pay for college. Obviously, you won’t need to pay for tuition for the whole year upfront. Here are a couple of quick notes on how to pay for college.
After all scholarships, grants, etc. are taken into account, what’s leftover are your out-of-pocket costs.
You’ll have a few options as to how you want to handle out-of-pocket costs. For example, you (and/or your student) can pay for them outright. You could also decide you’d like to pay for a portion of those out-of-pocket costs and get a loan for the remainder.
Most colleges send a bill twice a year. For example, colleges usually send a bill for the fall semester in late June or early July, with a payment deadline of early to mid-August.
You can break up the cost even more by using a monthly tuition payment plan. Tuition payment plans are installment plans which are usually broken up into equal monthly payments over 12 months or less. (Be sure to ask the college whether there’s a finance charge included and read my post on how a tuition installment plan can make college affordable.)
Tap into Your Talents
I’m going to go out on a limb here and suggest that it’s a great idea to leverage your talents, passions and capabilities and use those to make money. Have you ever heard the phrase, “Do what you love, the money will follow?” I love it!
I have a friend who’s an excellent graphic designer. She used to work with me at the college and now she has her own graphic design business. In fact, she’s going to help me redesign my site! She’s a real rock star in my book because she works from home doing what she loves to do.
So what’s your special talent? Are you great at gardening? Tell people about your stellar landscaping skills! (People will pay good money for that, especially if you plant it for them. I wish someone would do that for me!)
Are you or your spouse handy around the house? You’d be surprised how many people will pay to fix a washer and dryer or air conditioner.
Do you find painting to be a soothing activity and wouldn’t mind painting houses, fences, rooms, etc.
Are you a potter? Knitter extraordinaire? Use those talents to your advantage!
Pick Up a Work-from-Home Gig
The on-demand gig economy makes it so easy to get an extra job, even if you work a standard nine-to-five job. Gig websites are .
Some in-demand skills clients are often looking for include:
Tutoring: Do you have a passion for teaching a particular subject? If so, now’s a great time to take advantage of lockdown. Many parents will pay to keep their children’s reading or math skills ready to go for next year with virtual tutoring. Some companies require you to have an education degree — check the requirements beforehand. However, some don’t require an education degree.
Freelance writing: Many marketing companies and websites hire freelancers to create content on their behalf. If you’re a good writer, learn the art of the pitch and start pitching companies. If you have a good pitch and some writing samples you can share, you’re likely to have a few nibbles in no time.
Video editing: Do you have some great experience putting together video footage? If so, seek out clients for everyone from bloggers to marketing agencies.
Graphic design: More companies than ever need designers to create websites and redesign existing pages. If you have some coding background, even better!
Translating: Sure, automatic translators are a thing now, but if you have a lifetime of French lessons under your belt, know that there’s still a market for your skill. Many translating companies need freelancers to help with translation tasks through Gengo and Unbabel.
Coordinate social media: Every brand needs a strong social media presence. If you’ve got a good sense of what companies need for their social media engagement.
Freelance consulting: As an expert, you can consult others on their personal or business goals. Clarity can help you promote your consulting services. People who need your services can find you on the platform and book a paid session with you. Once you create your own client base, it might be possible to turn this into a full-time job.
Next, I’m going to list some other options that might be a great fit. They don’t require specific talents but can make you money. Some take more time to accomplish and others can happen lickety-split.
Rent Out a Room in Your Home
Your child’s getting ready to go off to college! Why not consider opening a room in your house up as a guest room? You could convert a basement kitchen to a full apartment living space. You could open up just one room to someone who needs one. Why not rent out a room to travel nurses through Travel Nurse Housing? The possibilities are endless.
I have a friend who lived in a teeny tiny carriage house right after college and she loved it. It was like real tiny house living!
Invest in Real Estate
Does your child need a place to live? Why not invest in real estate, rent to his or her roommates, and make some extra money in the process? It can help pay for college tuition. It’s a double bonus if you can buy the rental house outright.
You could do the house-hunt the old-fashioned way: Call up a real estate professional in the city where your child is going to school. If he’s going to school in North Carolina and you live in Minnesota, you could hire a management company to maintain it so you exert a little more control over the process.
You could also look for homes with Roofstock. Roofstock lets investors manage rentals like stock portfolios. You get to focus on your investment, rather than dealing with everyday headaches, like, “The roof is leaking!” or “The shower head flew off!” Roofstock’s property managers are available to handle operational responsibilities, supervising upgrades and day-to-day management.
You can also diversify your real estate portfolio in different cities.
Drive for Uber or Lyft
Okay, so this isn’t technically working from home. Still, it’s nice to work from the comfort of your own car. You can earn money right now by signing up to work for a ridesharing app like Uber or Lyft. Hospital staff, public safety officers and other essential workers still need rides to work, even during a quarantine.
During a pandemic, it’s especially important to keep your vehicle sanitized when offering rides.
Of course, how much you make is dependent on how many rides you offer. A 2016 Nerdwallet study found that in order to achieve an annual income of $50,000, Uber drivers had to complete 60 rides a week and Lyft drivers needed to offer 84 rides.
You’ll also need to consider maintenance on your car — including gas, repairs, insurance, taxes and the commissions that Uber and Lyft take.
Try Dropshipping
Dropshipping is a good option if you want to own a store without investing a lot or having a lot of risks. You don’t even need to own your inventory. Here’s how it works: After you receive an order, you buy the product from a third party, which is usually a wholesaler or manufacturer.
The third party ships the ordered product to your customer. This way, you don’t need to handle the items, see them or even ship them. You’ll make a profit between the price you charge your customer and the cost of the product that the third party charges you.
You can use an e-commerce site like Volusion to start your own dropshipping business. Try Volusion for free for 14 days.
Evaluate What’s Important
One more thing. If you’re kind of a hustler by nature, it’s easy to get addicted to it. My friend (the graphic designer) loves the hustle and finds herself up at all hours of the night — with kids and a full-time job!
Do you have a full-time job and a side hustle already? Your time is precious! How important is your time with family, time for self-care, time for everything you need to do?
Continually trading your time for money is certainly one way to do it, but consider ways to make passive income first — if possible. Making money in your sleep is always the best way to go.
When your child is college-bound, financial stress is a very real thing. In fact, the financial part of sending a child off to college can be overwhelming.
I spent 12 years working in college admission at my alma mater. Every so often, parents would break down in tears in my office. They wanted so badly to be able to pay for college. I’ve never forgotten these conversations and I still think about those families.
Money is one of the most commonly mentioned personal stressors, according to the American Psychological Association’s 2019 Stress in America survey. In fact, 60 percent of people from the survey cite money as a major stressor.
Chances are, you probably feel some financial stress — I mean, 60 percent is a heckuva lot of people!
It’s easy to say, “Think about something else! Go for a bike ride!” You know, common ways to de-stress your life. But financial stress is so different — it doesn’t go away when you spend 30 minutes with a yoga mat. It may take time and involve some serious planning.
So instead of telling you to grow your own potatoes or start extreme couponing, here are six ideas for how to attack financial stress. Warning: They’re not all quick fixes, but they will help you feel better about financial stress later on. Promise.
1. Recognize how you deal with money-related stress.
The first thing you can do to alleviate financial stress is to recognize how you handle money. Have you ever stopped to evaluate how money in general makes you feel?
Maybe you:
Never talk about it. You just let the stress build up like a hot air balloon.
Talk about money (or lack thereof) with everyone — your spouse, your kids, your friends — everyone!
Fall somewhere in between these two approaches.
Suze Orman, award-winning author and financial personality, believes that how your parents handled money paved the way for you to formulate your own attitudes about money.
Did money cause stress in your family? Did you parents spend more than they earned? Was money a source of pain? Were your parents controlled by money instead of the other way around?
Orman grew up in a poor family. She often tells the story about how her father’s small takeout restaurant burst into flames. He still ran in to get the cash register, burning his hands in the process. It showed a young Orman that money is more important than life itself!
Money is so closely tied to emotions. For families, a big source of stress can be the cost of preparing teens for college, but resources like Educo provide affordable SAT, ACT and AP exam prep designed to ease both financial and academic pressure.
You may want to think of it this way instead: You define your money. You tell it what to do! You’re in control of it! You can make as much as you want. (You just might not be able to do that completely through a traditional nine-to-five job. Check out my piece on how parents can make money!)
2. Write down your goals.
When I worked for the college, I gave a presentation to my team during our annual summer retreat about writing goals. When I announced my topic choice, I’m pretty sure everyone groaned. “Why do you feel that way about goal setting?” I asked.
I laughed and said, “What’s boring about getting exactly what you want? Let’s say you write, ‘I’d like a new car in a year and I’ll do A, B and C in order to save for it.’ What’s boring about that? You get a new car!’”
I’m sort of a geek when it comes to goal-setting. Let me tell you, writing down your goals works. For example, my husband and I resolved to save a certain amount of money by this spring because he wants a new shop. It’s currently in the works — all because of a little Google doc (and a bit of willpower, too).
The premise is simple: Write it down, make it happen!
You can write down your goals associated with paying for college. Let’s say you write, “Get a side gig by July 2020 to earn extra money for Junior’s college fund.” And yes, you can do this even if your child is set to go to college this fall.
Try it! Write it down! I promise, it works. There’s something empowering about writing down your goals and posting them where you can see them. And man, oh, man, is it cool when you turn that goal into reality.
3. Meet with a financial advisor.
You may already have a financial advisor, but if you haven’t met with him or her recently, it may be time for a financial checkup.
Never worked with a financial advisor before? One of the best ways to find a great financial advisor is to ask around. Ask your family and friends who they use in town. It’s important to have a financial advisor who has a good reputation in your community.
Next, meet with a few financial advisors and ask good questions! Here are some you can ask:
Are you a fiduciary? A fiduciary will put your financial interests before their own. If a financial advisor is not a fiduciary, don’t choose that advisor.
How do you get paid? Focus on fee-only advisors. Fee-only advisors might charge a percentage of the assets they manage for you — a flat fee for services or an hourly fee. If costs are a concern, use a robo-advisor like Betterment, WealthfrontorSigFig.
What are your qualifications? You can check the legitimacy of a financial advisor by visiting FINRA’s BrokerCheck. BrokerCheck is a free tool that can help you research advisors and firms.
How will you help me map out a plan to pay for college? Whether you’ve saved nothing at all or have some money in the bank, an advisor should be able to give you an idea of how he will help you approach paying for college.
Make sure the advisor meshes well with your personality. Your best friend may have recommended a particular advisor, but that person may not click with you. It’s okay. Move on to someone else. In all cases, your first consultation is free.
Believe it or not, talking with financial advisors is often very soothing. The reason? They help you come up with a concrete plan to help you tackle your goals.
4. Use financial aid to your advantage.
Yes, this could be the most obvious de-stressor of all — getting financial aid!
Class of 2020 parents, you can combat financial stress during this corona-crazy time. All it takes is a simple phone call. Ask the financial aid office at your child’s chosen college if there’s any extra money laying around. Inquire about extra scholarships. Ask about work-study. Tell the financial aid office about a recent job loss. Talk to someone in financial aid about any financial situation you’re going through. Colleges want your child to go to their college and can help you alleviate financial stress.
If you’re the parent of a sophomore or junior, financial aid can go a long way to help you and your child afford college. It’s a great idea to start planning now. Check out my short piece about financial aid (What is Financial Aid? Plus, 6 Steps to Get It) so you start understanding the basics.
5. Reduce other stressors.
What’s a great way to reduce stress? You can make a long list of temporary stress relievers, I’m sure: Go for a walk. Talk to a friend on the phone. Color rocks with sidewalk chalk (that’s what I’m watching my kids do right now).
Do you know what seems to exacerbate one stress? Another stressor!
For example, let’s say you’re already stressed about paying for college. It doesn’t help if you’re stressed about, say, the 2020 presidential election. (I’m not pulling this out of thin air — the American Psychological Association’s 2019 Stress in America survey actually cited the presidential election as a major source of stress. It would be interesting to know how coronavirus would rank now.)
As much as you can, try to reduce other stressors in your life. Have a talk with your neighbor about his dog’s incessant barking. Talk to your mailman about firmly shutting your mailbox door so your mail isn’t soggy every time you grab the mail. (These seem little, but man, are they irritating!)
Eliminate the little stressors so you can tackle your financial stress before college head-on and talk to your spouse or others about what’s really stressing you out.
6. Talk to someone.
Chances are, you know someone else who’s sending a child off to college this fall. Or better yet, you know someone who already has three kids in college right now. This is your tribe! Your friends and community can be a great sounding board for your fears.
If your regular tribe doesn’t include parents of college-bound kids, it may be time to find a new tribe or add to your existing tribe.
You might need to go beyond your tribe and your spouse or partner and seek counseling if you’re really stressed out. If you find daily life to be a struggle or feel that your emotions are overwhelming, seek help. Just remember, money fears are real. It’s okay to reach out to a professional.
Reduce Stress Now
First and foremost, remember to celebrate one major thing: That your child’s going to college. Focus on what’s important. He or she is going to get the college education that he or she (and frankly, you!) have always dreamed about.
Remember that even though you may want to help your child pay for college, it’s still possible for your child to get loans to fund college completely.
Above all else, consider your attitudes toward money. Again, you may want to reframe how you think about money. If you think of money as unlimited — flowing in abundance! — it might just happen and help you and your kiddo pay for college.
