Nearly a Third of Parents Don’t Communicate With Their Children About Paying For College

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Posted By Abby Perkins on June 26, 2015 at 2:47 pm
Nearly a Third of Parents Don’t Communicate With Their Children About Paying For College

Have you had the talk with your kids yet?

No, not that talk. The talk about college finances – how you’re planning to pay for college, what you can afford, and what you expect your children to do to pitch in. If you’re like most families, the answer is probably no.

According to a recent study, nearly a third of teens and parents are not on the same page about plans to pay for college. The study, which was conducted by Junior Achievement USA and the AllState Foundation, highlights a alarming communication gap between teenagers and their parents about financial matters:

  • 48% of teens think their parents will pay for their college tuition, while only 16% of parents plan to pay for their child’s college costs
  • 89% of parents say their child learns money management from them, although 34% of parents do not discuss money with their children at all
  • 40% of girls and 24% of boys say their parents don’t talk to them enough about money management
  • 31% of boys and 20% of girls say their parents keep them on track with money

Faced with these numbers, we spoke with 10 finance and family experts to get their advice on the best way for parents to talk to their children about paying for college and managing finances. We asked them:

What is your best advice for parents about how and when to talk to their teens about paying for college, and/or managing finances in general?Click on the images below to learn more about and read quotes from our experts, who range from personal finance bloggers to family therapists:

[one_third extra=”” anim=”bounceInRight”]Linda Vergon[/one_third]

[one_third extra=”” anim=”bounceInRight”]Jeff Rose[/one_third]

[one_third extra=”” anim=”bounceInRight”]Alex Chediak (1)[/one_third]

[one_third extra=”” anim=”bounceInRight”]David Ning[/one_third]

[one_third extra=”” anim=”bounceInRight”]Dr. Stephanie Mihalis (1)[/one_third]

[one_third extra=”” anim=”bounceInRight”]Kari Luckett[/one_third]

[one_third extra=”” anim=”bounceInRight”]Esther Boykin[/one_third]

[one_third extra=”” anim=”bounceInRight”]Shannon Schuyler[/one_third]

[one_third extra=”” anim=”bounceInRight”]Mark Kantrowitz (1)[/one_third]

[one_third extra=”” anim=”bounceInRight”]Mary Johnson (1)[/one_third]

[modal_box id=”vergon” content title=”Linda Vergon, Editor at GetRichSlowly.Org” text=”

What is your best advice for parents about how and when to talk to their teens about paying for college, and/or managing finances in general?

The best advice for teens is to start making plans. Start making a weekly plan, a monthly plan, a 1-year plan, a 5-year plan, and a 10-year plan. The further out you can think about how you want your life to be, the better. What do you want to accomplish? What experiences do you want to have? Where will you live? And then start thinking about what you have to do to get there.

Set guidelines for your accomplishments. This type of activity will help you further your goal, and start breaking it down into its relevant parts. Decide how much time you have to spend to further your goal, and the most effective thing you can do each day to reach it.

Then at the end of the week (or month or year), review your progress. See what you spent your time on. Determine how successful you were at reaching your goal, and figure out why you succeeded or didn’t. Then make your plans for the next week (or month or year), incorporating your new suggestions and insights.

Making plans is like anything else: You aren’t very good at it at first. But if you keep it at the top of your mind throughout the week, and then you reevaluate what you did – and then follow that up with better things to try each following week – you will make more progress faster, and you will start to visualize the future better and make better, more realistic plans from the start.

An example: The Rockefellers were famous for keeping daily records of their spending choices and financial accounts as children. Every week, their father would review their records and go over their choices with his children. Many of them kept this habit well into their adult lives, too.

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[modal_box id=”rose” content title=”Jeff Rose, Financial Planner, CEO and Founder of Alliance Wealth Management, and Personal Finance Blogger at GoodFinancialCents.com” text=”

What is your best advice for parents about how and when to talk to their teens about paying for college, and/or managing finances in general?

As in any relationship, communication is key. That discussion between a parent and a child about how college is going to be paid for is one that definitely has to happen sooner rather than later.

I think it’s also important to understand how much college is really going to cost. Most parents (and teens) are in for severe sticker shock when they find how much college is actually going to cost. That’s including tuition, books, fees, living expenses, computers, and more. Take some time and and identify what the approximate cost of college might be, and start a savings plan today.

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[modal_box id=”chediak” content title=”Alex Chediak, Professor at California Baptist University and Author of Beating the College Debt Trap” text=”

What is your best advice for parents about how and when to talk to their teens about paying for college, and/or managing finances in general?

Parents should start talking with their teens about paying for college as soon as they start talking about college – ideally, no later than the summer before their teens’ junior year. That way, the issues of college and paying for college stay connected. It’s important to be honest and realistic about what you can afford and how much you expect your son or daughter to share in the financial burden. The good news is that the structure of a part-time job helps students use the rest of their time wisely, and having skin in the game helps teens be more invested in their coursework. And, as I explain in my upcoming release, Beating the College Debt Trap, diligent students can earn significant money by leveraging their skills, particularly when classes are not in session. Covering some of their educational and/or living expenses is a great way for college students to develop financial responsibility and minimize (if not avoid) student debt.

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[modal_box id=”ning” content title=”David Ning, Published Author, Entrepreneur and Founder of the Personal Finance Blog MoneyNing” text=”

What is your best advice for parents about how and when to talk to their teens about paying for college, and/or managing finances in general?

Parents should really make an effort to discuss college tuition responsibilities with their kids as soon as possible. The more time you give everybody involved to talk things over, the better chance everyone has to find ways to manage the situation. For instance, kids may find the motivation to apply for loans, or they may make plans to work part-time while they go to college. On the other hand, you may find out that you do not like your kids working while they go to school, which will give you time to save more for their education.

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[modal_box id=”mihalis” content title=”Dr. Stephanie Mihalas, Ph.D., NCSP and licensed psychologist and nationally certified school psychologist” text=”

What is your best advice for parents about how and when to talk to their teens about paying for college, and/or managing finances in general?

Money is one of the most sensitive topics families need to discuss, particularly when the discussion is between parents and their older children.

Conversations about paying for college are best done early, even if these early talks are more basic in nature. Make sure that your teen knows at least several years before college application time what their financial realities will be, so they can plan ahead.

Here are some tips for parents on how to handle these discussions:

  • Start off by asking your teen whether they have given any thought to how college would be paid for and, if so, what their thoughts are.
  • Don’t talk down to your teen, but instead speak to them respectfully, as if they were an adult.
  • Be as transparent as possible about the financial realities. This will help prevent your teen from taking these issues personally, or as a sign that you do not care about them.
  • If your teen expresses difficult feelings, listen with empathy and avoid becoming defensive. Let your teen be heard, as long as they are not being verbally abusive.
  • Make the challenge of paying for college a collaboration between you and your teen, rather than a series of edicts that you, as parents, pass down. Make it clear that you are on the same team and that you, as parents, will support your child’s education in whatever ways you can.

“]

[modal_box id=”luckett” content title=”Kari Luckett, Finance Writer at CompareCards.com” text=”

What is your best advice for parents about how and when to talk to their teens about paying for college, and/or managing finances in general?

The conversation should start when the teen turns 16, which is about the time they can drive, get a job, and start planning their next steps post-high school. The conversation should focus on the following:

  • Interest. Parents should make sure their child understands how interest works. Many students don’t realize that what they borrow is not what they must return when it’s all said and done. A good way to enforce that lesson is to charge your own kids interest if they borrow money from you. Even a small rate, such as 2%, will make them realize they are paying back more than what they borrowed.
  • Paying. Encourage, even help, your child apply for every single grant and scholarship available.
  • Borrowing. One should borrow money only when necessary and preferably for things that will appreciate in value.
  • School. Attend a community college or attend school online for all general education courses. If your child plans to achieve a bachelor’s degree or more, they should attend a public, in-state college, and be sure to choose a career that’s in demand so they aren’t stuck with an entry-level job that pays $23k.

“]

[modal_box id=”boykin” content title=”Esther Boykin, Marriage and Family Therapist, Author, and Relationship Advocate” text=”

What is your best advice for parents about how and when to talk to their teens about paying for college, and/or managing finances in general?

Talking to your teens about finances is a lot like talking about sex: The conversation will go better if you start having it when they are little. Money creates a lot of stress for parents and kids alike, so start by managing your own anxiety and getting clear about what you want your child to know and learn about financial literacy, especially in relationship to their college education. Don’t expect to sit down once to talk about how to pay for college. Rather, start including the financial aspects of college in every discussion about their future goals. When you wait until they’ve chosen a school or you have become panicked about how to afford college, the conversation becomes one of stress and anxiety instead of information and education. Be patient, be honest, and don’t be afraid to pull in a professional, be it a therapist to help with communication skills or a financial advisor to give you some insight into how to make the best money decisions for you.

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[modal_box id=”schuyler” content title=”Shannon Schuyler, Principal and CR leader at PricewaterhouseCoopers (PwC)” text=”

What is your best advice for parents about how and when to talk to their teens about paying for college, and/or managing finances in general?

Many parents aren’t confident in their own understanding of certain financial matters – such as compound interest, stocks and retirement savings – let alone their ability to teach them to their children. However, teaching values counts more than formulas and statistics.

Demonstrating behaviors to motivate smart, responsible decisions will go a long way toward increasing financial security for families and communities. Simple yet critical messages, such as not spending beyond one’s means and holding off on today’s wants to reap rewards down the road, help set the stage for financial stability.

It’s critical to start early and provide the context to shape a child’s life-long approach to finances. Small children can learn about smart ways to spend or save money from the tooth fairy or grandparents. Later, parents can introduce the need to save for college (including how much parents will be able to contribute), how to manage earnings from an after-school job, and what it takes to purchase and maintain a car. Discussions about debt, credit, loans, and the risks and rewards can also come as the child matures.

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[modal_box id=”kantrowitz” content title=”Mark Kantrowitz, Senior Vice President and Publisher at Edvisors.com” text=”

What is your best advice for parents about how and when to talk to their teens about paying for college, and/or managing finances in general?

College is the beginning of the student’s transition from a sheltered existence to the real world. It is a good opportunity for parents to teach good money management skills to their children. But some parents do not take advantage of this opportunity.

Sometimes, the parents have made promises that they won’t be able to keep, such as ‘you can go to the college of your choice.’ When it becomes clear that the parents won’t be able to afford the student’s dream school, they delay the conversation about college affordability, not wanting to disappoint their child. Sometimes, parents feel uncomfortable talking with their children about finances. They feel that the information is private or sensitive. They worry about their children telling their friends how much (or how little) the parents earn. Sometimes the parents have trouble managing money and could themselves benefit from financial literacy training.

Parents do not need to share their income and asset information with their children to have a conversation about college affordability. Instead, they can share just how much they have saved for their child’s college education and how much they’ll be able to contribute while the student is in college, as well as how much debt they can afford to borrow, based on their ability to repay. The focus of the conversation should be on the resources the student and parents can contribute to the student’s college education (e.g., how much student loan debt is reasonable, given the student’s likely career path) and on college affordability. Instead of telling the student that certain colleges are unaffordable, the parents can show them, comparing available resources to the college’s net price.

“]

[modal_box id=”johnson” content title=”Mary Johnson, Financial Literacy Expert at HigherOne.com” text=”

What is your best advice for parents about how and when to talk to their teens about paying for college, and/or managing finances in general?

While you’ll want to encourage them to prepare for college by keeping their grades up and taking the right courses, it is equally important to have another talk about how to finance their college education. The ultimate goal should be finding the right balance between a good college match based the type of institution and program offerings, and what you can reasonably afford without leaving you and/or your student with unmanageable debt. Open communication is key, and clarifying expectations is the best place to start.

1. Learn as much as you can with your teen about the financial aid process.

2. Estimate the total amount of student loan debt and the monthly loan payment.

3. Prepare teens for managing money before they leave home.

4. Teach teens about the importance of protecting their identity.

The more parents do on the front end to prepare their students for college financially, the better off their students will be in the long run.

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A special thanks to all our contributing experts, including:

Linda Vergson, GetRichSlowly.org
Jeff Rose, GoodFinancialCents.com
Alex Chediak, AlexChediak.com
David Ning, MoneyNing.com
Dr. Stephanie Mihalas, AskDrStephanie.com
Kari Luckett, CompareCards.com
Esther Boykin, EstherBoykin.com
Shannon Schuyler, PricewaterhouseCoopers
Mark Kantrowitz, Edvisors.com
Mary Johnson, HigherOne.com

Abby Perkins
Email | Twitter | LinkedIn Abby Perkins attended Davidson College, where she graduated with a B.A. and Honors in English and wrote for The Davidsonian newspaper. Abby's work has been featured on Yahoo! Finance and Entrepreneur. As Managing Editor, Abby is a regular contributor to the GoodCall newsroom, covering education and financial aid.

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