Mind on Money: Long-term planning key for financing college
Last week my family began the college visit process for the next teenager on deck. As all parents know, each child is unique, and for us, so has been each college due diligence process.
When we went through this process for the older girls, they both had clear visions of their strengths and a loose plan for their careers, and so in many ways, the process was quite straight forward.
This third guy is another story. He’s chocked full of talent, a good student and strong athlete, but he has absolutely no idea what he wants to pursue, or where he wants to go to school. So far, his only hint of motivation is for visiting IU Bloomington, where a bunch of his buddies live together in a house, which he says sounds “cool.” Not really what Dad wants to hear. Luckily, he is only a junior and we have a little time.
As we get into the process once again, I am also once more confronted by the issue of college costs. My wife and I have an on-going debate going about this topic. Early in the process, she likes the kids to be free to explore all the college options they’re curious about. So, we’ve set out to look at state schools, private schools, and out-of-state schools, in a way that is supposedly cost agnostic. “We can talk about the money later,” is her approach.
I, on the other hand, embrace the “let’s talk about the money first” tactic. Although I must admit, I have indulged her method, partly to maintain a positive vibe over the process and partly because I just like to see new colleges. But we’ve shared some glances (while I hyperventilate) during the cost of attendance part of the “propaganda” videos each school shows during visits. Honestly, I can’t just not talk about the money when we get back to the car after the visit. It’s not in my nature.
As a financial adviser, I have to admit I enjoy talking about paying for college. The approach to this subject is highly personal, complex and unique in every family. Perhaps no other financial topic has so many clearly expressed “best practices,” that are so routinely mismanaged.
I have to believe every parent with a new baby has stumbled onto some terrifying article about the future cost of college being a “bazillion” dollars. I remember thinking as a 25-year-old broke Dad “how the heck is that ever going to happen.” The rub is, odds are, in order to produce an independent adult, it is at some point going to happen. So, ignoring the issue won’t make it go away.
In my experience paying for college is about hitting financial “singles and doubles.” Families can start with small saving steps early; they can sacrifice lifestyle during college or they can pay loans for years afterwards (or a combination). Some families will choose to shift this process onto the student, which is their prerogative, but a modern four-year college education will take 10-15 years for most families to pay for, it’s all a matter of who pays and how.
As I start this third round of college shopping I am also struck with the relative absurdity of the process as well. We ask 17- and 18-year-olds to make choices not only to create a road map for their own lives but choices that could have profound impacts on the finances of the whole family.
I recently listened to a Dave Ramsey Town Hall called "Debt Free Degree" on YouTube. I thought the program was great and my favorite line was early on, “we are asking children to make adult decisions” regarding things they are not yet ready to fully understand. Every parent knows the potential perils of that process, and I have to believe with a little planning and some good advice most of us can do better.
Opinions are solely the writer's and are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing involves risk, including loss of principal. Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at email@example.com. Securities offered through LPL Financial, member FINRA/SIPC.