Los Angeles Times

How to talk to your teen about college tuition costs

Parents should include their children early on in the saving and planning process.

- By Kevin Voigt Voigt is a staff writer at NerdWallet, a personal finance website.

A four-year journey to decide where to go to college ended for Sofie Adams when a college recruiter approached her after a softball game and asked, “Do you want to study abroad?”

“No one else had asked me that, and yes — I really do want to get overseas,” said Adams, 18, who considered several schools before taking an academic scholarshi­p and an offer to play this fall for St. Lawrence University, a 2,500-student private college in upstate New York with a study abroad program.

Her father, Urban Adams, a financial planner in Irvine, was delighted too. He also was relieved: The scholarshi­p will pay the majority of his daughter’s tuition, and Sofie is the first of his three children, all of whom plan to enter college in the next four years.

Begin by the time high school starts

Whether you have three teenagers or just one young one, planning is essential when it comes to the cost of education. Sometime after telling your kids about “the birds and the bees,” but before you hand over the family car keys, financial advisors recommend having the talk with your teen about who is paying for college.

The opportunit­y to study abroad was the last box Sofie checked as she narrowed her choices: a small liberal arts school with a strong softball team and business degree program, as well as four seasons of weather (unlike Arizona and Southern California, where she grew up).

That list didn’t exist when she first discussed college options with her parents when she was 13. “At that time, I barely knew what I wanted for lunch, let alone college,” she said.

But she learned her parents wouldn’t be footing the full bill, and realized her grades and her love of softball could hold the keys to attending the college of her choice.

“For Sofie, it probably started in eighth grade when she started showing some promise in softball, and seeing it as a potential opportunit­y for — and importance of — a subsidized education,” Urban Adams said.

“We would talk about it often,” he said, “and as time went on, preference­s would change. And I would stress that I am not trying to save enough to pay 100% of their college expenses.”

They should have ‘skin in the game’

Adams’ reasons are both practical and philosophi­cal. “With my three, because they are so close in age, it was really a moving target in terms of how much to save — will it be private, in state, out of state, some community college followed by state or private school?” he said. “We looked at it all.”

As a financial planner for Dynamic Wealth Advisors, he sees clients who want to tap their retirement savings to cover college costs — which can spell big trouble later in life. “There are loans available for paying for college,” he said. “There are no ‘retirement loans.’ ”

“I also believe that kids will take success [graduating] from college more seriously if they have some skin in the game,” he added. “If they bear none of the costs, they may not take it as seriously.”

Set realistic expectatio­ns

Your top savings priority should be for your own retirement. Save at least 10% of your income in an employersp­onsored plan such as a 401(k) or a tax-advantaged individual retirement account, advisors recommend.

Next, open a college 529 savings plan. Like your 401(k) or IRA, a 529 plan can grow your money much faster than an ordinary savings account would. That’s why putting in even a little bit soon after your child is born is much better than waiting until you can put in more, as you have nearly 20 years to let compoundin­g work its magic.

As your children get closer to high school, start including them in discussion­s and set realistic expectatio­ns about how much you can afford to help. Your child’s choice of schools and whether your family qualifies for financial aid will determine how big a student loan your child might need.

Talk about other funding strategies

Besides targeting academic and athletic scholarshi­ps, as Sofie Adams did, there are other factors that advisors say students and their parents can consider:

Apply for financial aid. The Free Applicatio­n for Federal Student Aid, or FAFSA, opened Oct. 1. The earlier you file, the better, as deadlines may vary by state or college to qualify for aid next fall.

Attend community college first. Community college for the first couple of years is a low-cost way to start your education before transferri­ng to a public or private university.

Put a GPA requiremen­t on parent contributi­ons. Agree to a sliding scale of contributi­ons based on your child’s academic performanc­e and your budget.

Split allowance with college savings. As your children get older, split their allowance so that half is theirs to spend and half goes into their college fund.

The last weekend in September, Urban Adams and his wife, Lia, traveled to St. Lawrence to watch Sofie play center field and bat leadoff in her first college game — and experience her first upstate New York fall.

“I’m loving it here,” Sofie said. “The classes are small, which I like, the team is great — and all the trees are yellow and red.”

She hopes to study in Denmark her junior year.

 ?? Urban Adams ?? URBAN ADAMS, a financial planner, was relieved his daughter Sofie received a scholarshi­p for college.
Urban Adams URBAN ADAMS, a financial planner, was relieved his daughter Sofie received a scholarshi­p for college.

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