Education is near and dear to me.  My wife spent four plus years as a teacher, and I invested the time to get my BS, MS, and PhD degrees in engineering.  We’ve emphasized the importance of education to all three of our children since an early age.  And we are blessed that they all love reading and are continually learning new things.  That said, paying for college for three kids is NOT a trivial task.

When it comes to education planning, here’s the process that I recommend:

• Sit down with your child and find out what their interests are.  I’m not talking about asking them “what they want to do”, but what their interests are.
• AFTER you find out what their interests are, discuss with them some potential career options. It’s highly likely that the kid’s school will already have provided you with some information on this topic as part of the testing/surveying that they do with the kids.
• Decide whether a college degree is the right path.  Too many parents INSIST that their kids go to college.  That’s not always the right choice.  Different kids have different aspirations.  And there a ton of great jobs available – along with the option of possibly serving in the armed forces – that may be a better choice.
• Now the REALLY IMPORTANT step.  Commit to understanding the difference between “NEED” and “WANT”.  This isn’t meant to be funny.  The next step is to decide on the potential candidate schools.  College is an investment in the individual’s development that will help him/her in their chosen path through life.  If they’ve got an aptitude and interest in politics, then Princeton may be where they NEED to go to maximize the probability of success on their chosen path.  However, all too often, when deciding on the school it’s the WANT that drives the decision.  A couple of cold, hard facts:

o   Attending a two year community college and transferring to a four year school will likely be more cost effective than going directly to a four year school.

o   Attending a public, in state university will likely be more cost effective than a public, out of state university.

o   Attending a private university will likely be the most expensive option

• When looking at the potential list of schools you need to consider the “fit” to your child’s personality AND your child’s maturity level / ability to handle the school.  Some kids are ready for the freedom of being away from home.  Some aren’t.  Some kids will thrive in a large university setting.  Some won’t.  Some kids need to be far away from home.  Some don’t.  The key here is to be honest with yourself about what is best for your child.
• Take the time to have your child visit the school.  Ideally, one visit will be with you and a second visit will be by themself.  Also, the solo visit should be at the LEAST desirable time climate wise (winter in the Midwest, summer in the South) – you’ll want to make sure that they see the reality and not just the bells and whistles.
• Take a look at the financial aid package that is offered.  Fair warning, it is VERY unlikely that you’re going to find a “full ride” available.  However, it is quite possible that SOME private and/or out of state public schools may be willing to provide you with a financial aid package that brings them to a cost level equal to your in state university.
• Make the decision on what you’ll pay versus what they’ll pay.  All total, the four year outlay for a in state university will be around $100,000.  That’s a big chunk of cash.  You need to make sure that if you’re footing the bill, it (i) will not be an undue burden on you and your retirement and (ii) that the investment will pay off by NOT having junior return to the nest after graduation.  Some folks feel strongly that they “owe” their kids the education.  Others are at the other extreme and feel that their kids should foot the bill on their own.  There is no right answer to this.  However, you need to be clear up front on what you are paying versus what they are paying.

RULE #7 – Paying for your child’s college is not your obligation.  You get the choice and you need to exercise that choice with full understanding of the ramifications on your financial situation.

Some additional thoughts:

• Student loans are sometimes available.  If you go this route, I’d STRONGLY recommend these loans be in the name of the children.  If you can’t afford to pay without loans, piling on debt to your situation is likely going to lead to financial challenges down the road.
• There’s nothing wrong with asking your kid to hold a job while in school.  Ten hours a week is not unreasonable.  It’ll give them skin in the game, provide them some spending money at the very least, and will help them focus – believe it or not your kid’s likely to spend a fair amount of time screwing around while on campus / they can afford the ten hours.
• You should leverage your states 529 to pay for college.  There’s often tax advantages associated with using this option.
• College is a transition time / it’s about cutting the cord and kicking the little birds out of the nest.  It’s highly likely when they come home after being away, they’ll have a new sense of independence and push some boundaries.  Remember, they’ve been living away on their own successfully and you need to give them some latitude.

At the end of the day you need to make sure that you do what is right for BOTH your kids and you.  That may mean paying their way, it may mean having them shoulder the payment burden.  Keep in mind that they will have a lot more years of earning available than you will when you make the decision on the cost sharing.  Also keep in mind that things you pay for are often valued much more than those you do not.  That’s a lesson that me be appropriate for them to learn as they go through the college experience.

ACTION ITEM:  Review the above list with your child.  Ask them for their thoughts and perspectives.  Together decide on how you will work through the decision on the next steps in their education.

[author] [author_image timthumb=’on’]https://www.f5fp.com/wp-content/uploads/2012/02/100_3458-Cloned-background-1-214×300.jpg[/author_image] [author_info]F5 Financial Planning, L.L.C. (F5FP) is a comprehensive, fee-only, financial planning firm serving Naperville and surrounding communities.

Led by Curt Stowers, F5FP focuses on providing corporate executives, entrepreneurs, and families with comprehensive financial planning that leads to financial security, simplicity, and success. As an executive with Caterpillar for 18 years, Curt brings real, practical experience to financial planning. Curt has successfully passed the examination to be awarded the CERTIFIED FINANCIAL PLANNER™ credential.[/author_info] [/author]