There are many, many families each year that put themselves in the situation of overspending on college. Why are parents entering blindly into what could be a $200K+ purchase? What assumptions bring them to this precarious place?
Let’s acknowledge that every parent wants the best for their child, and choosing a “good” college is a significant event. Their child works hard in high school, gets good grades, does well on standardized tests, is involved in sports and clubs, etc. They have earned their choice of college— or so most parents believe. Generally, these parents have gone to college themselves, albeit many years ago, and believe they understand the college landscape today. “My kid is smarter than me!” they say. “Why wouldn’t my alma mater accept them?”
This scenario has played out again and again because parents don’t realize—until they are too far into the process—just how expensive and competitive college has become. In the past 25 years, the cost of college has increased more than 110% at large state universities, and over 180% for private colleges. To complicate this, acceptance rates have continued to go down, resulting in more “brand name” colleges whose acceptances are in the single digit range.
This leaves a large disconnect between what the ambitious, hardworking student has “earned” in the eyes of their parents and where they will actually be accepted. When you complicate this with how expensive college has become, parents end up with huge amounts of debt in order to “make it work,” or they deal with a very disappointed student.
There is no one magic formula, but we do recommend a set of steps to consider:
Start thinking about costs early and update your annual college budget every year.
Consult with a college funding planner or ask your CFP if they understand this area to see how to use more than 529s and savings.
Encourage your student to do their best and create a desirable application profile.
Set proper expectations, and set them early. Evaluate your expectations of where your child will be accepted and what it will cost.
Engage with a College Advisor that considers the total cost of college as well as your student’s accomplishments and their desired subject of study.
How do you know where your student will stand with the colleges of interest to them? We have the answers! We offer a variety of advising options to work with every budget, but we always start with a free consultation to determine your unique circumstances.
I always offer a free initial consultation. Book a meeting now!