What Should You Ask Your Parents About Saving For College?

Talking to your parents about saving for college is an important thing. Open communication with them about saving money will most likely be an essential part of getting your life started.

savings

Saving for College

Your parents or guardians are the people who care for you and make sure that everything you need is paid for. When considering colleges to attend, one of the top questions you'll have is how much tuition will cost. We assume our parents are willing to help us with that expense - but we could be wrong. That's why you need to sit down with your parents and ask these tough questions.

Have You Saved Any Money?

Speak with your parents about any accounts or savings plans they may have begun for your education. Many parents want to put money away for their children, but life gets in the way. Maybe they never got around to putting money in an account, maybe they never had extra money to save or maybe they began to save but had to pull the money out when things got tough.

In any case, find out if and how much your parents have saved. Discuss what accounts they have the money in. Is it in a high-yield savings account or a 529 plan? Or are they using a savings program like Gerber Life College Plan or UPromise? Is the money in an IRA or a CD that you won't be able to access for a few more years? Don't be ashamed to ask your parents, because if they haven't saved, you should start.

How Much of My Tuition Will I Be Responsible for?

Every parent is different: some support you as long as you live with them, while others cut you off after high school. By now you likely know what type of parents you have, but either way, it's a good idea to ask. Will your parents help with tuition costs or do they expect you to find your own way through college? This can really impact your financial aid package, so it's best to find out soon.

Should I Be Saving?

If your parents haven't saved, you've probably already thought that you should. Talk with your parents to decide which savings plan is for you. If you've been saving all of your birthday money in a piggy bank, you won't be making money with interest. Discussing financial options with your parents will help you decide whether you should put your money into a CD or a high yield savings account. After all, your parents have dealt with finances much longer than you and are likely to understand these options. If not, ask them if they'll go to the bank with you. They'll likely know what questions to ask.

Will You Take Out a Loan?

Parents can help students pay for college by taking out parent loans. These loans are available through private lending institutions (banks and credit unions) and through the government. The government loans are called Direct PLUS loans and you must be enrolled at least part-time for parents to be eligible for them. They can take out a loan that covers the remaining balance of your tuition, and no more.

Some parents are hesitant to take out a parent loan for a few reasons. For one, they'll be paying off your student debt for years after you've graduated. Also, PLUS loans have an interest rate of 6.84% - likely higher than their mortgage rates. It's important for you to speak with parents about this matter before filling out your FAFSA.

Did You Take Out a Prepaid College Tuition Plan?

Your parents may have locked in tuition costs from when you were born with a prepaid college tuition plan. These 529 plans are different for each state, but there are limitations. For instance, you may need to attend an in-state public university. This could affect the college you choose, but this plan will save you big in the long run. If your parents never took one of these out and you have a few years left before graduation, ask if they'll take one out now. It'll still save you money.

Now that you've gotten all of your questions answered, find out what costs colleges are hiding.

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