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It’s college application season, the time of year when parents of high school seniors have to quickly learn about things like the Common Application, FAFSA, SATs and student loans. The sheer volume of information about the application process and the different colleges your child can choose can make your head spin.

What you want most is for your kid to succeed and get into the most prestigious college possible, right? But what if that would actually mean a lifetime of debt and pain for you and your child? With some college degrees now costing roughly the price of a Bentley, it’s important to take a step back during the process and think rationally instead of emotionally.

In my five years as an applications consultant, I have seen many parents get caught up in the excitement and make choices that have ended up costing their kids and themselves dearly. With the average student racking up $33,000 in student debt, it’s time students and parents start approaching their choice of college primarily as a financial decision.

If they don’t, they could be sentencing their kids or themselves to decades of debt. Here are the 10 things that all parents should know to send their kids off to college financially prepared.

1. Set a Budget

Be upfront with your child about how much money you can contribute to their education and have them decide ahead of time how much debt they’re willing to go into over the course of their degree. To help them arrive at this number, have them look at the entry-level salaries in the job(s) that they’ll be qualified for after they graduate and compare that to the monthly student loan payment that they can expect to owe. Help them to consider the longer-range effect student loans could have on their finances over their lifetime (and they can calculate their lifetime cost of debt here) as well as their credit (which, once they’ve established a credit history, they can use a free tool like this one on Credit.com to see their credit scores).

Don’t get carried away and choose a college that will stretch or completely blow that budget. You don’t go car shopping looking for an economical compact and go home with a sports car. Choosing a college shouldn’t be any different.

2. Ignore the Sticker Price & Look at the Actual Cost

Nowadays, the listed tuition price is almost never what you actually pay to attend a school. In fact, the majority of students at most schools pay far less. It’s important when choosing a school not just to look at the tuition price but also to look at the average financial aid package. This will give you a better idea of what your child will actually have to pay to go to that school. A school that might seem very expensive might actually be cheaper to attend than a school that seems cheap.

In fact, if your family makes less than $65,000 you’re not expected to make a family contribution at many top Ivy League schools, including Harvard and Yale. The sticker price for both schools often dissuades students from low-income families from applying. Since these schools may, in some circumstances, help graduates make more money over the course of their careers, qualified students who don’t apply could be missing out.

Of course, it’s important to do your research and compare your options because…

3. The School Doesn’t Necessarily Matter As Much As You Think

We’re often told that the prestige of a school plays a huge role in getting a job and furthering a career, but that’s not entirely true. While the top 20 schools provide students with opportunities that they wouldn’t have had otherwise, the difference between the earning potential of a student from many other four-year universities is often pretty marginal. In fact, a study by the Department of Education found in 2000 that the quality of a college decided 2-3% of the earnings among men and 4-6% among women. But the difference in price can often be considerable. Choose a cheap school that offers a great education and has a good reputation.

4. Debt Could Sidetrack Your Kid’s Life

Everyone says that the path to success is to get a great education. But what happens when that great education costs more than you can afford? That’s where student loans come in. With the mounting costs of getting a college degree, students have taken on increasingly higher student loan debts. Add into the mix the fact that young people are experiencing higher than usual unemployment and underemployment upon graduation and you have a recipe for trouble.

These significant debts appear to be keeping some young people from taking important life steps such as moving out on their own, getting married, going to graduate school, buying a home and having kids. Therefore, it’s a good idea to find a way to keep debt low by choosing a cheaper college, encouraging your child to work or do co-operative placements while in school, and to live frugally.

5. Think Twice Before Taking Out a Loan

You may still think of them as your little girl or little boy, so it’s no surprise that when it comes to college, you’d want to help them as much as you can. The problem is that not every parent is in the financial position to do so. For parents who don’t have ready cash to help out, there are loans like the federal Parent Plus loan or bank loans. There is also the option of co-signing bank loans for your kids. But should you be taking out or co-signing a loan to finance your child’s education?

Probably not. If you don’t have the money to give to your child it’s probably because you can’t afford to help. A monthly loan payment to finance your child’s education could put your budget into a tailspin and compromise your retirement. You might also put your house at risk. Look for student loans without co-signers. If you must co-sign a loan, make sure the company has a co-signer release program. Many companies offer to release co-signers after 12 or 24 on-time payments.

6. You Shouldn’t Compromise Your Retirement

Even if you don’t have to take out loans to help your kid pay for school, you need to be careful how much you do give them. If you haven’t been saving for your retirement, or if you have debt that you need to pay off, then putting your money toward your child’s schooling isn’t the best choice.

It’s like when you’re on a plane and you’re told to put your air mask on first. Take care of your own financial situation before you consider helping out. You can’t take out a loan to pay for your retirement.

7. Living at Home Is the Best Advice

I have good news for those who are dreading the moment when their little birds fly the nest. Living at home is the smartest financial choice for students. According to College Board, the average cost of room and board in 2013-2014 was $9,498 a year for a public four-year school and $10,823 a year for a private non-profit four year school. Multiply that by four and that adds up to a lot of money.

If there is a good school close enough to home, then you should seriously consider it as an option. Even if they want to graduate from another institution, getting some first- and second-year credits at a local university or community college is going to be a lot cheaper than going away for the full four years.

8. You Need to Have a Money Talk

At one point or another, every parent has the ‘sex talk’ with their kids. But what about the ‘money talk’? This talk is equally as important to have, but often forgotten. When I first went off to college, I knew nothing about budgets or how to live frugally. I had to learn that on my own and made some costly mistakes.

The best way for kids to learn is to talk to them about how you budget and manage money. Teach them about debt and credit cards and tell them why it’s important to build a good credit rating. I know some parents who even stopped buying things for their kids and instead gave them a weekly allowance to cover their necessities in order to teach them how to manage their own money. Everyone needs to make a few money mistakes before learning how to be responsible. It’s better that they do it with a small allowance than with thousands of dollars in student loans.

9. You Need to Teach Them Life Skills

If you’ve been doing everything for your child since they exited the womb, they’re going to have a hard time adjusting to life without you if they go away for school. Teach them to cook, do laundry, take public transit or change a flat tire, grocery shop and bank themselves.

Consider giving them the responsibility to buy food on a limited budget and cook for the family one night a week. This will teach them how to find deals and make great meals. Encourage them to try new recipes each time so that they expand their cooking repertoire. Get them to practice making their own lunches as well. It is typically far cheaper to cook a meal than to buy one.

10. Scholarships Make a Huge Difference

As someone who has helped average students win thousands of dollars in scholarship money, I want to debunk one pesky myth. It’s not just the top students who win scholarships. All students should be applying for scholarships, as they are an important source of extra money for your schooling. Have your child check out sites like Fastweb.com and search through their database. Check to see if there are any scholarships for students in your town, or if your employer or union offer scholarships for the kids of employees or members. Every little bit helps.

More on Student Loans:

Image: Todd Warnock

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