The sooner you face soaring college costs, the better prepared you will be to preserve your family’s wealth.
College acceptance letters used to be a cause for celebration in most families. These days, with soaring costs, they can be a cause of tremendous anxiety and handwringing.
It’s never been harder to send a child to college. Today, we have colleges billing for a staggering $70K a year. That breaks down to more than $1300 a week…and students aren’t even attending classes for about 14 of those weeks!
For the average American family, college costs can easily become the most costly expenditure of your entire financial lives—far outpacing your mortgage—particularly if you have more than one child.
It can also be the most complicated purchase, because it is never straightforward. There are financial aid offices and even the federal government involved in this non-routine transaction.
Colleges will tell you they have all sorts of ways of helping you and your child meet the staggering costs, but most of these come with strings (commonly known as interest payments) attached. In fact, for many borrowing students, the accumulated cost of their student loan INTEREST payments will outstrip the original whopping cost of tuition. Try wrapping your head around that!
This is the time of year when colleges may try to rush you into making a commitment and emotions run high.
In the era of the quarter-million-dollar bachelor’s degree, you can’t afford to make this decision with just your heart. You need to include your head and your pocketbook in the calculation, too, or you and your child could end up with decades of regret.
Here are a few rules of thumb to guide you as you review your financial aid offers and make your final college decisions, taken from my Amazon bestseller The New College Reality.
You might be in over your head financially if:
- You’re thinking of re-mortgaging your home to pay for tuition
- You’re thinking of cashing in your retirement accounts or stopping annual contributions to pay tuition
- You can scrape up enough cash for freshman year but have no idea how you will pay tuition after that
- You have to borrow money to pay for freshman year or to reach your EFC (Expected Family Contribution)
- You’re going to be losing sleep or risking your emotional health over the size of the tuition or loan payments
- Your child has no idea what career s/he is interested in, hence you have no idea how much potential income to anticipate.
Rest assured that there are solutions if you find yourself in one of these situations…but you have to ask for advice and arm yourself with information before you enter into a financial arrangement you and your child can’t afford!
The more you learn about how college finances work, the more control you will have over your family’s financial destiny and the better equipped you will be to preserve the wealth you’ve earned.
Want to learn more? Check out my Outsmarting College Tuition Audio program or new online course.