College,  Kids and Money,  Planning

How To Talk About Student Loan Debt With Your Teen

student loan debt

Feeling overwhelmed about the high cost of college? You’re not alone. A 2016 study Citizens Financial Group survey said that 57% of millennials wished they hadn’t borrowed so much money to attend college. This statistic leaves parents in a difficult position. Selecting a college tends to be a highly individualized and stressful situation for the student (and their family). We want to support our children’s choices, but we also want to make sure our children’s choices are as informed as possible.

Talking to our kids about their choice of college can become even more confounding when you consider this tidbit from a 2014 study by Citizens Financial Group: 46% of students recalled a “brief conversation” with their parents about student loan debt. In that same study parents recalled an “in depth conversation.”

Parents and teens just aren’t connecting on college costs and what student loan debt really means.

What is a concerned parent supposed to do? How can parents have a meaningful conversation with their soon-to-be college student about student loan debt? In this post we will walk through an interactive way to engage as a family and really understand the true costs of student loan debt in a realistic and non-judgmental fashion.

Step 1: Ground Rules

Approach this exercise with an open mind. This isn’t about finding a “right” or “wrong” answer, but rather getting a realistic appreciation for what life looks like after college. Try to ask open-ended questions. Instead of “Don’t you think that student loan payment looks really high?” try  “what do you think of that student loan payment?”

Now, this is not to say you won’t ultimately have to be the voice of reason; only that our goal is to provide the information to make an educated decision. Even if it takes some time for the right decision to be made.

Pro-tip 1: Ideally this conversation happens before school visits occur to help remove some of the emotion from the conversation. It will be a lot harder for your teen to come to grips with a school being financially out of reach if they have already had an incredible visit.

Pro-tip 2: Have your student hand write this exercise. Studies show that people learn material better when they write it down vs. taking notes on a computer. Judging from the discrepancy between the student’s opinion and the parents’ opinion on the college debt conversation as shown in the 2014 Citizen’s Financial Group study  we are going to need all of the help we can get connecting!

Step 2: Select a few colleges and universities

Let’s face it, “fit” is important. One of the best ways of keeping college costs down is to make sure your kid graduates in four years instead of five….or more. Help your teen think about where they will be most successful. Perhaps your teen already has a few schools in mind. Select a few to explore.

If you are really struggling on the fit issue there are private college advisors who can take your teen through a battery of assessments and conversations to help assess fit at specific schools. (If you live in the Richmond, VA I can connect you with one.)

Step 3: Tally up the total costs for each school

Don’t just look at tuition plus room & board. Include travel expenses, spending money, fees, books, technology, lab fees, study abroad - you get the picture. Add all of that up for four years. Try not to pass out.

Every college has to post on their website an expected "cost of attendance" number. Seek it out.

Step 4: Figure out what you can contribute

How much do you have saved? What can you pay out of current income? Can your student (realistically) contribute? If you’re stuck on this part a Fee-Only financial planner can help you.

Step 5: Estimate what your teen would need to borrow

For a rough estimate just use this simple formula:

Total estimated cost of attendance - what you can contribute = how much you need to borrow

Pro-Tip: Don’t forget to include inflation in your estimated cost of attendance. (Higher education inflation has been trending at a higher rate vs. overall core inflation.)

Pro-Tip: Be sure to write the amount down for each school.

Step 6: Predict the future

What will your kid make after graduation? This question may seem impossible to answer but stick with me. There are a couple of ways to get an idea of what your kid might earn after graduation.

One resource I like comes from the Hamilton Project. It’s useful because it allows you to get salary information based on major. On top of that, it’s convenient because you only need to input a (potential) student loan balance and it pre-fills the other loan information for you. After inputting your information, simply scroll down to get an idea of how the potential student loan payment compares to your child’s future income upon graduation.

Pro- Tip: Don’t make yourself and your teen crazy. Pick three potential majors and use the same ones for each school.

Alternative Method

For parents with an extremely focused student who has a more specific idea of their future career path you might try this useful calculator from New York State. Based on what you borrow, it tells you the minimum salary you will need to support that loan payment. You can find general salary information on websites such as

Step 7: Complete the puzzle

This step is crucial because it really helps bring home the reality of debt payments. Help your student mock up a rough spending plan for their post-college life. Not sure how to get started? I have some simple ideas to help you quickly and easily create a spending plan in my post How to Easily Create a Spending Plan.

This doesn’t need to be an incredibly detailed budget. Just include the big items such as rent, transportation, saving for retirement, debt repayment, food, utilities, entertainment, etc.

The Key To This Conversation

Ready for what may be the hardest part of this conversation? Positioning yourself as a friendly resource or coach and not just the ultimate decision-maker. How can you play that role best? By tapping into your empathy, asking open-ended questions, and avoiding words/phrases that have implicit judgement in them (i.e. should, don’t you think, in the real world, when you’re older, etc.). By following this model, you will hopefully open the door to a meaningful conversation with your child.

Don’t be afraid to take a break. This is an important process but it can also be overwhelming to your teen if they had their heart set on one school but now realize that it won’t work out. Give them space to grieve and re-group.

Remember, to get the most out of this exercise it’s important to use good old-fashioned paper and pencil. By writing down your student’s college choices, calculating the estimated future debt load, and using tools like the one we shared above from the Hamilton Project to get an idea of what your teen may earn after graduation the reality of the situation will more fully sink in. Handwriting this is key to a deeper understanding and internalization of this information.

One last point - if this conversation seems a little fraught, it may be helpful to bring in a third party, such as your Fee-Only financial planner. Best of luck to you and your family as you embark on this exciting path to higher education and beyond!

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