Preparing to send your child to college is a milestone, but it's not just about picking the right school. You also have to plan for the financial commitment. As tuition and living costs rise, it's crucial to sit down with your teen and have open, honest discussions about college costs. These conversations can help set realistic expectations and give your child a better understanding of their financial role in the process.

Before they head off to campus, here are three important money conversations to have with your college-bound kid.

How much can you afford to pay as a family?

College is a significant financial investment, and it's essential to have an open discussion about what your family can realistically afford. The average cost of college in the U.S. is $38,270 per student per year, including tuition, books, and daily living expenses. But not all soon-to-be college students really understand what it costs — and what your family can afford.

Discuss your family’s budget and how much you can contribute. Are there savings set aside for their education? Will you rely on income, financial aid, or loans? As you explore different colleges, compare their costs and evaluate which schools fit within your financial boundaries. This conversation can help ensure your child understands the importance of selecting a college that meets their academic needs without exceeding your family’s financial limits.

What can your teen contribute?

It's also important for students to understand how they can contribute to their education. Beyond tuition and textbooks, students need to consider housing, food, transportation, and personal expenses. Will your child get a job to help cover some of these costs? Are there opportunities for them to save before leaving for college?

Encouraging your teen to work part-time or during the summers can help them build responsibility while contributing to their expenses. Additionally, sitting down to create a realistic budget with them can be a valuable learning experience, helping them manage their money wisely when heading to school.

What financial aid is available?

The good news is that most families don’t pay the full sticker price of college. Instead, many families employ a mix of savings, grants, scholarships, and financial aid to manage college expenses. Explore different funding options to help bridge the gap between what your family can afford and the total cost.

Here are three areas to focus on:

1. Hunt for “free money” – Grants and scholarships can reduce the cost of college without the need to repay them. Grants may come from the federal government, state agencies, schools, or private organizations. Scholarships are available for academic achievement, community service, athletics, or even specific areas of study. Encourage your child to research and apply for scholarships as early as possible, as many opportunities are available year-round. For example, Spectrum Federal Credit Union awards the David P. Smay Scholarship each spring.
2. Explore work-study opportunities – Work-study programs provide students with part-time jobs, often on or near campus, allowing them to earn money to cover daily expenses. Work-study is awarded based on financial need (from FAFSA), and some schools even match students with jobs related to their field of study. This can be a great way for your child to gain work experience while earning money for school.
3. Evaluate student loan options – While student loans may be necessary, discussing how much debt your family is comfortable with is important. A common rule of thumb is to borrow no more than your student’s anticipated starting salary after graduation. Federal student loans are typically the best first option, as they offer low, fixed interest rates and defer repayment until after graduation. Parents can also consider borrowing through federal Direct PLUS loans.

Taking the time to explore financial aid options together can help your family make informed decisions and reduce the financial stress of college.

Spectrum Credit Union is here to help your student get prepped for college. First credit card? Spending money access? We've got you covered. Browse our college planning resources to learn more.