My parents told me they would pay for college.  This is what I will tell my kids instead.
July 11, 2019
Lia Bertelson
Lia Bertelson
Certified Financial Planner™
Investment Adviser Representative
470.443.1808

I was a very lucky kid.  My parents worked hard and instilled a work ethic and ambition in their three children.  They achieved financial success and were grateful to be able to offer us opportunities that they did not have.  We benefited from music lessons, dance classes, enrichment opportunities and travel.

They also told us that they would pay for college wherever we wanted to go—all we had to do was get in.

I dreamed about college from a very young age.

I grew up in Gainesville, Florida where the University of Florida is, but that is the one place I didn’t consider going to school.  I had itchy feet.  I wanted to go away more than anything—to experience something new.  Perhaps because of the travel I had done with my family, and the encouragement that my parents gave me to pursue any dream I had, I dreamed of new landscapes.

My brother is four years older than I am and he was the first to go to college.  I loved looking through his college books when he was beginning his college search. I was only in middle school, but I would spend hours reading about the culture of various schools, the programs, all the ratios they listed. I imagined myself on some northern campus wearing flannel and carrying a stack of books into a beautiful library.

Lucky for my parents, I didn’t challenge their checkbook too much. I did well in high school and was accepted to my top choice school, the University of North Carolina.  Tuition for out-of-state students was $10,000 per year when I started and $11,400 when I graduated four years later.  I chose a school with a very high value for the price, even though my parents would have been willing to pay for a more expensive school. My dad’s promise worked out well for all of us.

As happy as that story is, my husband and I do plan to include cost in the conversations when our two boys start looking at colleges. They are only 7 and 10 now, so we have some time. It is not that we don’t want them to dream about going somewhere fun, or that we don’t want to pay for them to have a wonderful college experience.  We do!  We have been saving for that every month since our oldest was less than a year old. But we won’t be giving them a blank check and ignoring the cost factor. Here are some reasons why.

The value proposition of college has changed.

College costs more now than it did in the 1990s. Tuition for one year at UNC is now more than $34,000 for an out-of-state student, and it is still considered a value college.  Two other schools on my short list when I was looking for a college were Duke and Washington & Lee.  Tuition there is now $58,198 and $53,730.

While tuition has tripled at my alma mater, starting salaries for college graduates have only increased by about 40%.  The payback on a college education is longer and more dependent on how much you spend, how well it fits with your chosen career, and how much that career pays.

A college education can now cost $300,000 or even more—easily the largest investment you will make in your children. It is worthwhile to spend at least some time considering how to improve the return on that investment.

College is a business. Hire a good one.

College admissions are based on numbers.  The college will evaluate your student largely based on GPA, ACT score, and other numeric factors. As much as it can be an emotional decision for families, schools are quite calculating on their end of the decision. You may benefit from thinking of the decision based on numbers too.

Did you know that most students don’t pay the “sticker price” for private colleges, even those students without a financial need? Colleges are competing for the best students, and many of them will offer attractive packages to students who are in the top half or top quartile of their applicant pool. Colleges are now required to offer calculators on their web sites that can help you project what the net cost will be for your student. The net cost is the one that matters—it is what you would pay after financial aid offers based on your family’s financial situation and your child’s academic achievement.

You can also consider some other numbers that will help you determine which college offers the best bang for your buck: 1. How many students graduate in four years? The fifth year is a huge cost factor. 2. What is the average starting salary for a graduate of that college in the major your student plans to pursue?

It is best to compile this data before visiting the schools on your list.  Know before you go which colleges will make the most sense financially.  You may be surprised which schools will be a better buy.

When it comes to a great college experience, you have options.

I fell in love with UNC on a summer campus visit before my senior year of high school. I can completely relate to students who have their hearts set on a particular university. Even if there is a dream school that is the #1 choice, it is good to remember that it is not the only place where you can find what you seek.

My college experience was great.  I learned a lot, made some great friends, enjoyed living in a beautiful town and studying on a beautiful campus.  I loved experiencing four distinct seasons after growing up in Florida.  When my family came to visit, I got to show them around and be the tour guide for a change.  UNC has a great business school where lots of companies recruit, and I was lucky to graduate with a valuable degree and a job offer.

Are any of those things unique to UNC? Well, no. There are at least a handful of other schools that could have offered a similar experience. If there had been a huge difference in cost between one school and another that offered a similar experience, I think it makes sense to consider that.

We appreciate things more when we know what they cost.

The final reason why we will include cost in college conversations with our kids is that I think it will help them make a better decision.  They make better small-scale decisions when they have a budget and have to make a choice, so why would we set that aside for the biggest decision of their young lives?

A couple of years ago we realized that every time we were out with our kids, they would beg for some small trinket in the store that seemed incredibly important to them at the time.  How did we get to that point?  I can’t say.  Tired, lazy parenting I suspect.  We needed to stop the madness.  We started giving them an allowance of a few dollars a week and then completely stopped buying them anything on a whim, including gum in the check out line.  If they wanted it, they had to pay for it.  An amazing thing happened.  They started to think critically about what they really wanted and whether it was worth the cost.  They started to save money for several weeks at a time to buy something that was truly worthwhile. You can read more about that here.

The same power can be seen in college planning.  Involving a teen in the selection of schools based on all of the criteria, including cost, will lead to a better decision.  Even if the priciest school is chosen, it will have been an intentional decision and the student will have a deeper appreciation of the investment that is being made on their behalf.  Do you think that might lead them to work harder and perform better? Do you think they will take more advantage of the opportunities they have, knowing how precious they are?

I look forward to the college search and selection process with my two boys. We are grateful that we will be able to support them in their educational journeys.  It will be fun to see what is most important to them and where they are drawn.  I can’t wait to visit them and let them be my tour guides in their new homes. The whole experience will be even richer, I think, because we will work together on making the best decision we can make to find the best fit for them that makes the most financial sense.

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