Paying for College: The Conversation to Have First
Written to be read by a parent and a teenager together. The borrowing decision gets made in April under time pressure, and almost everything that makes it go badly is decided before then by not talking about it.
Have the Number Conversation Early
The most damaging version of this goes: nobody says what the family can contribute, the student applies where they like, an offer arrives in spring, and a large loan gets signed in a week because the alternative feels like taking something away.
The fix is unglamorous. Say the number out loud, in the year before applications, even if the number is zero. A teenager who knows the figure can build a list around it. A teenager who finds out in April cannot.
Saying "we can contribute x per year, and here is what that means" is not letting anyone down. Vagueness feels kinder and produces the worse outcome, because it removes the years in which the list could have been shaped and scholarships applied for.
The Test Worth Applying
One rule covers most of the decision: compare total borrowing across the whole degree against realistic first-year earnings in the field. Borrowing roughly a year's starting salary in total is usually manageable. Borrowing two or three times it is where repayment starts shaping the decade after graduation.
Note "total" and "realistic". Total means all four years, not the first. Realistic means what that field actually pays in the region where the student is likely to work, not the best case.
Understand the Offer Letter, Because It Is Designed to Be Read Wrong
Financial aid letters routinely list grants, scholarships and loans together under one heading, so a large number can look like help when part of it is debt.
Split every offer into two columns before comparing anything:
- Money you keep: grants and scholarships. This is the number that should drive the comparison.
- Money you repay: every loan, federal or private.
Then check whether the cost shown is tuition only or includes housing, food, books and travel. And ask whether the scholarship renews every year or applies only to the first, because a one-year award against a four-year cost is a very different offer.
Federal Before Private, Nearly Always
This distinction is worth more than any other detail here.
Federal loans carry protections private loans generally do not: income-driven repayment that can fall to very low payments if earnings are low, deferment and forbearance options, and discharge in certain circumstances. Subsidised federal loans do not accrue interest while the student is enrolled.
Private loans are ordinary credit. They usually require a co-signer, which for a teenager means a parent becomes legally responsible, and they lack the income-driven safety net. They have their place after federal options are exhausted, not before.
Everything starts with the FAFSA, including access to federal loans and most institutional aid. File it, even if you assume you will not qualify for need-based help, because the assumption is frequently wrong and it costs nothing to be told no.
A co-signed private loan appears on the co-signer's credit report, counts against their borrowing capacity, and makes them liable if payments stop. Release clauses exist and are often harder to use than they sound. Read that clause specifically, before signing rather than after.
Options Worth Considering Without Embarrassment
- Community college for the first two years, then transferring. Check the transfer agreement first so credits actually carry.
- In-state public. The price difference against out-of-state is frequently larger than any difference in outcome.
- Trades and apprenticeships. Shorter, cheaper, and in many fields paying better than the assumption suggests.
- Working part time during study. Modest hours are associated with fine outcomes; very heavy hours are not.
- Employer tuition assistance, which more employers offer than people check.
- Appealing the aid offer. This is a normal process, not a favour. If circumstances changed or another school offered more, say so in writing.
For the Student, Specifically
You are being asked to make a large financial decision with almost no financial experience, and the pressure to decide quickly is real. Three things worth holding onto.
A loan is not free money that appears later. It is a fixed monthly payment starting roughly six months after you leave, whether or not the job arrived.
Ask what the monthly payment would be on the total you are considering. Nobody is going to volunteer that number, and it is the number that matters.
Choosing the cheaper option is not settling. The amount you borrow is far more predictive of how the decade after graduation feels than which name is on the certificate, for most fields.
If You Are Starting Earlier
For families with years rather than months, a 529 plan is the usual vehicle and may carry a state tax benefit depending on where you live. Even modest regular contributions started early do meaningful work, and the same principle applies as everywhere else: automatic beats intended.