As college tuition costs continue to rise, many families feel the financial strain that comes with funding their child’s education. Along with potentially hefty price tags, the safety of student loan repayment remains in flux as the U.S. Department of Education cracks down on debt default, putting millions of Americans at risk for wage garnishment and other penalties for not paying on time.
Adequately preparing your child to pay for college is crucial, no matter your family’s financial situation. But how can you discuss the topic with your teen in a way that helps them to feel empowered and in charge of their future? First, you’ll want to come armed with knowledge — and, like any important parenting convo, a whole lot of patience and curiosity.
Break Down the Budget
Experts agree that taking full stock of your finances is the first step before even broaching the subject with your kid. “That means looking at savings, current income, any existing education funds like a 529 plan, and your monthly budget,” says Courtney Alev, consumer financial advocate at Intuit Credit Karma. “Once you know what you’re realistically able to contribute, you can approach the conversation with clarity and less stress. It’s also important to explore what financial aid might be available so that all options and resources available are factored in.”
Jennifer Seitz, CFEI and director of education at Greenlight, adds, “Consider how much you can realistically contribute without impacting your own retirement accounts. Think about your limits, including the ballpark maximum you’re able or willing to spend each year. Consider your expectations for the future, such as if you will pay for four years or more, or have any other requirements.”
Try not to get overwhelmed. Think baby steps! “For parents who don’t know where to start with a 529 plan, which is a tax-advantaged savings plan specifically designed for education expenses, taking small, manageable steps can make the process easier,” notes Alev.
Here are her top tips:
- Start by looking into your state’s 529 plan: Confirm any tax benefits or incentives for residents.
- Set a realistic contribution amount: Take a look at your monthly budget and decide how much you can comfortably set aside. You don’t have to start with a large sum: small, consistent contributions can add up over time.
- Automate contributions: Setting up automatic deposits, even if it’s just $25 or $50 a month, can help you stay on track without extra effort.
- Ask for contributions as milestone gifts: Many 529 plans allow relatives to contribute, making birthdays and holidays a great time to boost savings.
But First, Take a Deep Breath
Parents “don’t need to have all the answers to feel ‘ready’ to talk, because a rough outline can help frame a realistic conversation,” adds Seitz. “It’s also helpful to research average costs for your kids’ target schools — tuition, housing, meal plans, and other expenses, like books or supplies — so that you’re walking in with a shared understanding of the financial landscape. Tuition varies widely between private and public schools for in-state and out-of-state residents. Also, consider the cost of living expenses during college and who will be paying for them, along with transportation to and from school, whether it’s local or long-distance.”
One hack for kicking things off? Ease into the conversation with a collaborative spirit.
“Money can feel like a scary topic,” says Alev, “especially when a major expense such as college is involved, so it’s helpful to approach this conversation as a team. Instead of jumping straight into the numbers, start by asking your child what they envision for their college experience. This opens the door for a two-way conversation. Then, gently introduce the financial side by explaining that paying for college will be a shared effort, and you’re in it together to make a plan that works for both of you.”
Seitz recommends starting here:
- Which schools are you interested in, and why?
- Are you open to state schools and/or community colleges, where you could later transfer to another school?
- Do you have a career path in mind that might influence where or how long you go to school?
- What are your expectations around working during college — are you open to part-time jobs or work-study?
- Have you researched scholarships that you may be eligible for, or submitted any applications?
- What do you know about student loans?
“Start simple,” says Seitz. “Explain the difference between federal and private loans, and emphasize that student loans are borrowed money with interest and fees, not free money.”
Then, break it down in real terms, suggests Alev, like how much a monthly payment might be on a given loan amount: “You can even use tools like Credit Karma’s student loan calculator to visualize repayment timelines and total costs over time. The more they understand now, the better equipped they’ll be to make smart borrowing decisions. Both parents and students alike should be well-informed on what’s available to them, along with the implications, before making a commitment.”
Seitz says another way to reinforce the real-life ramifications is to walk your teen through a sample repayment plan based on their major or desired career. “It can be eye-opening to see how long repayment might take on a teacher’s salary vs. an engineering role, for example,” says Seitz. “If they can see the impact in real dollars, it helps them determine if the cost equates to value for their future.”
Honesty Is the Best Policy
When it comes to sharing what you can and cannot pay for, both pros recommend sheer, unbridled honesty, as well as ways you can help, such as having them live at home to save costs. This could also include “choosing a more affordable school, applying for scholarships, or exploring work-study options,” notes Alev. “Reassure them that needing help and making compromises is normal, and that many students take a patchwork approach to funding their education.”
She adds, “It’s actually a great way to show kids how to set financial boundaries.”
Having discussions early and often can also help make the process less intimidating for all parties involved, say the pros. “Involve your teen early,” says Seitz. “Let them take the lead on researching scholarships, tracking deadlines, and building a simple college budget. It builds a sense of ownership and reduces surprises. It’d also increase the accuracy of your budget to revisit the plan each semester. Costs, aid, and priorities shift — make it a living conversation, not a one-time talk.”
Don’t be afraid to ask lots of questions, either, and just take it one step at a time, Alev encourages. “Filing the FAFSA as soon as it opens each year is a must, even if you think you won’t qualify for aid. It’s also beneficial to explore financial aid options at the schools on your list, even before applying, to understand what types of assistance are available and avoid any surprises when acceptance letters arrive,” says Alev.
“Break it down into phases,” suggests Seitz. “Start with researching schools to get a better sense of the realistic cost before digging into where the money can come from. Then, discuss funding and sources — FAFSA, scholarships, gifts from families, and student loans. Lastly, compare your options to make a balanced, well-informed decision for your family.”
The Sobering Reality of Student Loan Debt
Unfortunately, even small amounts of student loan debt are nothing to sneeze at, and it’s something that borrowers often carry with them for years beyond receiving their cap and gown. “According to Credit Karma data from September 2024, 60% of student loan borrowers say their loans are preventing them from reaching their savings goals, or from paying off debt,” says Alev. “Additionally, 69% of borrowers who had not been making consistent on-time payments toward their student loans say they will not be able to afford to pay down the interest they’ve accrued from missing their student loan payments. That’s why it’s so important to have open conversations early and discuss the potential impacts and consequences of taking out loans.”