Putting Together a Payment Strategy for College

After your child has deposited at the college of their choice, the pressure of meeting college costs all of a sudden becomes very real. That first college bill is usually sent out in July with a due date in August. What takes many parents by surprise is that the bills are sent directly to the student, either via snail mail or, much more commonly, via an electronic notification, either to the student’s new college email address, or to their student account portal, which typically requires the student to log in and retrieve their billing statement.

This is the third of a four-part series on the subject of overparenting, this post digging into how to pay for college. Be sure to also check out our recently published posts on how to play an appropriate role in your middle schooler’s life and in your child’s college admission process, and stay tuned for our upcoming post on your role as a parent in the life of your college student.

It’s that time of year again- families are receiving scholarship and financial aid awards and comparing net costs at different schools. And while it’s certainly important to read the fine print of an award letter, understanding what you are going to pay for one year is just the beginning.

According to Sallie Mae, college savings for the average family currently hovers just over $16,000, not quite enough to pay for one year of public college in most states.  As few families are able to save enough money to finance college in its entirety out of their college savings accounts, most parents are faced with the quandary of how to spend the limited college savings that they do have. If you have a 529 college investment account for your child—maybe enough to cover about one year of college—what is the most beneficial strategy for spending down those funds? Should you spend it all on the first year? Save it all for the last year? Divide it evenly across the four years of college? While there is no definitive answer to this question, here are the primary considerations parents should keep in mind:

This is the third of a three-part series on saving for college. The blog posts have focused on strategies and advice for parents of newborns, elementary schoolers, and, now, middle and high school age kids. In other words, no matter how old your child is, it’s never too late or too early to start saving for college!

I Received a Letter From the IRS! 

Words no one ever wants to utter, but, until it comes, many of us don’t give tax breaks a second thought. We pay our bills as required, and at the end of the year hand over our statements and shopping bags full of receipts to our accountants. Or we let our home-based software figure out what’s in our best interest and never actually sift through the bag of receipts we’ve been hoarding because we “remember” what we paid.

Parents are increasingly sacrificing their own retirements in favor of their children’s educations. As recently discussed in the Boston Globe, three-quarters of parents report a willingness to delay retirement in order to pay for college, and, in fact, by 2024 nearly a quarter of those over age 65 are anticipated to be either working or looking for work, almost twice as many as in 1984, the increase aided in no small part by ballooning college tuition rates.

This is the second of a three-part series on saving for college. Each part will focus on strategies and advice for parents of newborns, elementary school, and middle/high school age kids. In other words, no matter how old your child is, it’s never too late or too early to start saving for college! If you’d like to read the first part of our series, start here: How to Save for College: Starting With Your Newborn.

We all know college is expensive. However, far too often families don’t start to really dig into the college finance process and create a realistic plan until it is too late. When working in a financial aid office, I’d regularly speak with parents who were absolutely set on having their child enroll, yet had no plan to cover their share of the costs. In addition, the family’s share was often much more than they anticipated because they did not do any research prior to applying.

The colleges don’t care how you pay, as long as you pay on time. This statement elicits some giggles, but it is the truth! Whether you are paying with your savings, your current cash flow, or a loan, it makes no difference to the college, as long as all funding is processed by the tuition bill’s due date.