How to Teach Your Kids to Fund Their Own College Costs

“Taboo To Talking” is all about sharing stories. Some come from a place of celebration, some come from a struggle. No matter their origin, the wisdom and strength gained from talking about your experiences will always “pay it forward.” When you invite others to hear the lessons you’ve learned, you also create a community.?

May in the U.S. has two important days- Mother’s Day and, for most High School Seniors, college decision day. So, what better time of the year to highlight a story about a single mother who successfully raised two daughters on her own and helped them find smart ways to pay for college?

The 2023 U.S. Census Bureau Current Population Survey (CPS) estimates there were 9.8 million one-parent households (7.3 million mother only and 2.5 million father only) and the 2022 Annie E. Casey Foundation Kids Count Data Center estimates of the more than 23 million children who live in a single-parent family, 14.3 million live in mother-only households. Most concerning- nearly 30% of single-parent families lived below the federal poverty level compared to just just 6% of married-couple families.

Now consider the cost of college. According to the Education Data Initiative, the average cost of U.S. college tuition & fees at public 4-year institutions has risen 179.2% over the last 20 years (an average annual increase of 9.0%) and U.S. student loan debt totals $1.727 trillion. Not surprisingly, the “100k a year” tuition era is upon us- Vanderbilt University recently made the news with an annual tuition of $98,426 and many other institutions are falling in this range, too.

While many colleges and universities help defray these costs for students whose families have lower incomes, families that earn over these limits often pay the full headline rate. So, after exhausting scholarships, grants, and Federal loans, students and their families must either use personal savings and/or take out personal loans. For a single mother with high earnings, her question becomes: “Can I help fund my children’s college costs and take care of myself financially (e.g., adequately fund my retirement)?” The cost to raise a child in the U.S. is approximately 300k+. When you add anpother 100k to 300k+ in college tuition, the answer to her question is probably “no,” unless she gets creative…

Meet Charlotte.* She has two daughters in college- a Freshman and a Junior- and supports them with $500 a month each. They are responsible for the rest of their expenses. The good news? Almost all of their fees have been covered- without loans. As you might expect, it did not happen by luck, it took planning.?

Here are some of her top tips to help other parents navigate the college funding maze and make sure their own financial savings needs are met:

1. Research what your state offers for prepaid college savings plans (e.g., 529). After they were born, she took advantage of her state’s program (Florida) that locked in the future cost of tuition and most fees. These account savings can be used in-state or out-of -state schools, work with scholarships and financial aid, and can be canceled anytime for a full refund.
2. Find out what scholarships are available. For example- Florida has a program called Bright Futures that can offer qualifying students attending an in-state school up to $213.55 per credit hour ($2 per credit hour less than standard tuition and fees). Knowing these requirements helped her daughters stay focused on their academics as well as get involved in their community.
3. Teach them financial literacy skills. Being a single mother, she was always very open with her daughters about money and encouraged them to find ways to earn their own with summer and after-school jobs. She taught them how to save and invest as well as understand the impact of financial decisions. Tip- read this great WSJ article to help your kids understand the cost benefit analysis of college debt.?
4. Have the conversation on what you can and cannot pay for when it comes to education costs before the applications (and acceptances). Without her knowledge, another family member (not offering financial support) encouraged her oldest daughter to apply to a number of 80k a year private schools.The good news- her daughter was accepted to the schools. The bad news- she road an emotional rollercoaster deciding if she wanted to take on 320k+ of debt. Her strong financial skills won out in the end. No way did she want to take on debt if she did not have to! Thankfully, she was accepted at a great in-state school. Tip- have your kids read Frank Bruni’s book, “Where You Go Is Not Who You’ll Be, An Anecdote To The College Admissions Mania,” or watch his video.
5. Explore Early College/Dual Enrollment. These programs allow students to earn college credits while they are still in High School and serve two important purposes- they help students acclimate to the college learning environment AND complete enough credits to earn an AA degree. Her younger daughter chose to do this and graduated High School with half of her college credits completed. She is now in a great position to pursue her masters and finish in the same amount of time (and money) it would have taken her to complete her undergraduate degree.
6. Support a pivot when necessary. Her youngest daughter’s first semester was challenging. She quickly realized that the engineering track was not for her, so she switched back to a major she knew and loved- Micro-Biology. This pivot saved her thousands of wasted study hours and additional costs if she stuck with engineering and jeopardized her scholarship money with poor grades.?

There are so many twists and turns when it comes to college, but the financial aspect doesn't need to be one of them. Proper planning and open communication with your children can teach them valuable financial skills to prevent the crushing burden of higher education costs- either on the parent or the student.?

*Name changed at the request of the storyteller.