THE BLOG

How to Determine the Cost of Sending Your Child to College

05/27/2014 05:03 pm 17:03:51 | Updated Jul 27, 2014

Right about now parents of high school seniors could be experiencing a sense of panic setting in. Their child has been accepted at a great college or university, and will be embarking on the next phase of his or her life in the fall. They are feeling mighty proud of their child's achievement, but also a little uneasy as they receive a notice from the college that the first tuition payment is due. Before starting to think, "Oh, no, what have we gotten ourselves into," parents should take some time to get themselves comfortable with the cost and benefit of sending a child to college.

The Cost of a College Education

The actual college expenses should be pretty clear -- tuition, room and board, books and fees. Then you will have to estimate travel, living expenses and out-of-pocket costs for the year. You will probably find this information in the admissions packet the college has provided for your student or at the online website using the net price calculator. Find out if most students at this college graduate in four or five years. Project a slight increase in each amount and you should be able to get a pretty good handle on the total cost for your child's education.

Don't get distressed by this initial calculation, though, as it is only the beginning. Then you can go on to deduct the financial aid package your child will receive in the form of grants, scholarships, and work-study programs. Be on the look-out for these opportunities every year as they can help reduce your out-of-pocket costs. Have a serious discussion with your child regarding how much you will expect him or her to work to be able to contribute to these expenses.

There may still be a difference between the cost of attendance and available financial aid. This amount could come from grandparents, 529 savings plan or your personal savings. Any remaining costs can be covered by borrowing money through federal and private student loan resources. You will need to get a good understanding of the interest rates and payment terms for any student loans that are acquired so that you will be able to calculate how much money will have to be repaid after graduation.

The Benefits of a College Education

Although it may seem a bit scary, it is helpful to keep your eye on the prize -- a college education for your child. Time and again, it has been shown that a college education is the key to earning more money. Ask the school to provide figures regarding how much money their graduates typically earn, or look for information regarding anticipated salaries in your child's field of study. This degree could be the pathway to providing a life of comfort for your child's family. You want your children to be happy and capable of surviving on their own, and a college education is still one of the best ways of providing the skills necessary to help them achieve that goal.

There are many other intangible benefits from a college education as well -- learning to live on their own, meeting new people who could become lifetime friends, and getting a chance to explore the world. College isn't just a financial decision; it is an emotional one as well. Try to focus on how proud you are going to be when your child transforms into an adult receiving a college diploma and going out confidently into the world, and that will make the financial costs seem worthwhile.