Okay, here we are; college is fully back in session. Tailgating, overnight exam cramming, campus events, and, of course, house parties are all happening in full swing. College is at the top of mind for those just beginning their journeys and for those deciding which type of school makes the most sense financially. 

Planning for college is daunting, especially when you’re uninformed about where to begin. Is it simply a matter of putting money away in a 529 plan or another college savings account? Should kids be concerned about the long-term debt they will face based on their annual tuition? Is the risk of a niche major always worth the reward? 

Most people need to be more educated on how to begin planning for college. It seems ridiculous to me that kids sign up for what could be the biggest financial decision they’ll have in their lives before they ever move out of their parent’s house; there’s a clear and present need for college-bound youngsters to get informed. 

Planning for College – A 17yr Old’s Understanding of Commitment

Let’s take a step back. Imagine, at 17 or 18, you’re asked to commit to a mortgage-sized debt — often without any real idea of your earning potential after college, what the job market will look like in your field, or how much you’ll need to repay each month; this is essentially what many young people are doing when they agree to student loans. 

We were all 17 or 18 once, and we can all agree that concepts of commitment and the ability to see the forest through the trees are not the most developed. Student loan debt isn’t “good debt” in the sense of an investment that yields immediate, clear returns, like a home loan. We know that the payoff of a college degree can be highly variable depending on the field, the school, and even the economic climate when the student graduates. 

I feel there’s a huge opportunity to educate teens and their families about what signing up for college means and how to weigh the risks vs. rewards. Shouldn’t this be a required learning for a junior in high school? While I am on my soapbox, I’ve always said kids should learn how to do a basic 1040!

My College Story  

Now, I’ve written about my college experiences more than once, but I think it’s one of the decisions that helped define my career path and, ultimately, my financial well-being. As I was finishing up my high school days, my parents gave me an option regarding the money they had put aside for my higher education: 

“This money can either go directly to a private institution of your choice, or you can choose an in-state school and use the leftover money to set yourself up with a jeep and downpayment on a condo somewhere.” 

I chose to attend UCONN at less than $10k per year and never looked back. I got a great education, had a great time, and graduated with no debt. I even bought a black Jeep Wrangler and purchased my first condo within a year of graduation, a jump start in my homeownership journey/evolution. 

Sure, watching the Longhorns in the stadium on Saturdays would have been awesome. Still, the projected $60k in debt and no Jeep or condo would have made living as a poor, first-year advisor a much bigger hurdle and perhaps not financially possible.

I realize I’m fortunate to have had the opportunity, foresight, and economic environment to help me realize my goals as I entered and left college and that there are more challenges to be faced today by many college-bound students. But here is where I see the opportunity. Family financial planners like myself can help students understand what they’re committing to and what challenges they face and be better prepared than simply hoping their parents put enough aside for them. 

Planning for College and Paying for the Future

Some Perspectives in Interest

When I first speak with college-bound teens, I try to understand how much they comprehend the reality of the debt they’ll owe, depending on the size of their loans and the school they attend. 

As of 2024, the federal student loan interest rate is around 6.5%. In Massachusetts, the average annual cost of a four-year private college for an undergraduate degree is $71,563. If the student does a 10-year repayment plan, the total cost of the education, including interest, would be about $390,040, meaning the student would owe an additional $103,788 in interest. Believe me, these numbers will get a teen’s attention. 

Learning With Inheritance

If a teen receives any type of inheritance, it can be used as a financial learning tool, not just a deposit for later in life. Parents can teach financial balancing by involving students in budgeting and expense prioritization. When these kids get an idea of living costs and other school-related expenses across different college options, it teaches students how to make thoughtful financial decisions and weigh the trade-offs between choosing an expensive school versus a more affordable one. If the child has a dream school, they can choose not to skip attending the private university if it’s ultimately what they want, but at least give them the experience of making an informed decision.

Also, inheritance can introduce students to concepts like opportunity costs. They can learn how preserving some of their inheritance for the future or investing it to grow over time can give them more flexibility later in life. While teens may be stubborn with some things, they’re all ears when investing in greater future flexibility. 

Speaking With a Well-Versed Professional About Their Future

With family financial planning, I always seek opportunities to work within a family tree and learn each generation’s goals and aspirations. Undoubtedly, college is brought up at some point by parents or future alumni. I jump on these opportunities to get teens involved in their financial future and start helping them plan. If the parents are looking for insights on college savings, I usually ask that I speak with their college-bound kid(s) to help them understand what they’re signing up for. For a nominal fee, families, including student borrowers, can be educated on what their future financial commitments look like, and that often helps them narrow down their decision when picking a school. 

Let’s Get Planning! 

If you know a high schooler in the early stages of college exploration, I’d be happy to discuss what financial options may best suit their needs now and in the future. 

I have great, free college funding tools and embrace the chance to give back to my community, so I want to help would-be students plan how to finance their college journey. 

If you know a college-bound kid who could use some assistance in understanding their higher-ed financial options, please send them my way. I’d be happy to share my insights/advice with them.

Click to Start The College Planning Journey

Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax-free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.