In our last blog, we talked about FAFSA season and presented a handy guide to a few key steps in the college planning process. There are many factors involved in college planning, of course, but this week, we’re diving into one of the biggest: how to pay for the education that leads to that coveted diploma. As your family gathers the financial information needed for FAFSA purposes, it’s also a great time to talk about funding expectations with your son or daughter.

Here are three essential money conversations to have as the college decision nears.

1. How much will it cost and how much will you pay?

Parents today rely on their income and savings to cover 45% of college costs, according to an annual study by Sallie Mae. But when looking at available options — such as a 529 college savings plan — there’s an opportunity for families to get on the same page about the true college price tag, the study found. For example, fewer than half (47%) of parents and students even discuss what all years of college will cost.

Commit to having a frank discussion using these tips to launch your conversation:

Get an early read on the affordability of colleges of interest to your child. There’s a difference between a college’s sticker price and its net price — and you’ll want to focus on the latter. Net price is an estimate of the actual annual cost your family will pay, minus any grants, scholarships or other gift aid that your student might receive. You can search for colleges’ net price calculators here (or go to the college websites directly),  which drill down into what students like yours paid to attend in the last academic year.

Create "what if" scenarios based on family resources and anticipated expenses — and then compare the differences together.

Be honest about how much has been saved for college, and how much you anticipate being able to afford to pay each year.

2. How much will your student contribute?

Instead of parents bearing the full responsibility, paying for college is increasingly a joint venture. In fact, your child may be more attuned to the money factor than you think: 4 in 10 high school students now rate cost as most important when choosing where and how to pursue higher education, according to a new study by Fidelity Investments.

Here are some things you can talk about together to engage your student to be a part of the cost equation:

Earmark earnings from your teen’s jobs and gifts from relatives for savings that can be tapped for campus living expenses, spending money or extracurricular fees. A great place for these important deposits is Spectrum CU’s no-fee MySavings Youth account for members age 21 or younger, which offers much higher-than-average interest rates.

Talk about the value that part-time work may mean to keeping college cash flow going, and discuss any expectations about earning during school and over summers.

Consider and agree on certain expenses you might ask them to pick up or contribute to, such as dorm furnishings, entertainment extras, meals away from campus, gas for their car or travel home.

3. How will you work together to fill the gap?

The reality is that most families don’t pay the full sticker price to attend college. Instead, they more often map out a three-pronged strategy of savings and income, grants and scholarships, and financial aid and student loans to help shrink the cost and manage college bills.

To help fill the gap between what you and your student may be able to afford and the anticipated total cost, share what you’ve learned about other sources of money (in addition to the need-based aid estimates derived from the FAFSA) that can reduce the overall price tag.

Here are three areas to focus on together:

Hunt for “free money” in the form of grants and scholarships. Grants can come from the federal government, your state grant agency, your college or technical school or a private or nonprofit organization. And anytime is a good time to research scholarships that students may qualify for, make a list and start applying. Some scholarships are awarded based on academics alone, while others may be based on a student’s area of study, athletic skills, community service or a parent’s military service. Many employers offer scholarships to employees’ children as well. Each spring, Chevron FCU awards a David P. Smay scholarship to multiple students to use toward their college education.

Explore work-study opportunities that guarantee convenient part-time, on- or off-campus work. This is federal financial aid awarded to qualifying students based on need (from your FAFSA), giving them the chance to earn a paycheck to help cover day-to-day college expenses. Some participating colleges help match students to meaningful jobs — sometimes in their fields of study when possible.

Evaluate the need for student loans and your family’s decision on borrowing. Each situation will be unique, but a common recommendation is to aim to borrow no more than your student’s anticipated starting salary once they graduate. Federal student loans are a good first choice because the government subsidizes them, defers repayment until after graduation and provides low, fixed interest rates. Parents can also borrow with federal Direct PLUS loans. And student loans from private lenders may also be a secondary borrowing option, albeit at typically higher cost.

Talking early and often

Money conversations are especially important to have as the prospect of college nears because they can help all of you address, share expectations and plan for the college investment as a family. While college needs to be the right academic and social fit, it needs to be the right financial fit as well.