The College Money Talk: Explaining to Your Child What You Can and Can’t Afford

By Melissa Brock · January 05, 2023 · 8 minute read

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The College Money Talk: Explaining to Your Child What You Can and Can’t Afford

When your high schooler starts thinking about college, one of the best things you can do is to have The College Talk: a frank discussion about education, career, and life goals. The College Money Talk — the dollars and cents of the process — should be a part of the conversation. This will help you and your child stay on the same page during the college search.

We’ve assembled a list of topics you may want to include, such as how much you, as parents, can contribute toward college. We’ll also guide you through how to structure the conversation, explain financial aid, and more.

Figure Out How Much You Can Afford

First and foremost, parents should look at their finances as a whole: retirement savings, other investment accounts, monthly budget, upcoming large expenses, etc. Also think about the current economy, especially inflation and the bear market.

“Parents need to keep in mind their own financial security first and foremost,” says Brian Walsh, senior manager of financial planning at SoFi. “We don’t want parents to take on too much debt or put themselves in a sticky situation because they helped their kids too much.”

Walsh adds that it’s essential for parents to figure out on their own how much they can contribute before talking to their kids. One way to do that is to see how their retirement savings stack up against suggested amounts:


Amount Saved

30 50% of salary
40 1.5 to 2.5 times salary
50 3 to 5.5 times salary
60 6 to 11 times salary

Recommended: Inflation and Your Retirement Savings

Consider the Timing

You may wonder when, and how often, you should have the college and money talk. Walsh says you can relax during the early high school years.

“Things will heat up junior and senior year,” Walsh says. “That’s when you’re looking at schools the kids are interested in, and determining how realistic it is they’ll get into those schools and secure financial aid. Senior year is when everything comes together — making decisions about where to go and ultimately coming up with a plan for how to pay for college.”

Consider blocking out time to have the conversation freshman year in high school, then intermittently throughout junior and senior year. Use your best judgment in broaching the conversation, and choose a time when your kids seem receptive.

Structure the Conversation

Walsh suggests beginning with a discussion of the paths available to your child after college. This may involve different professions and careers and how to attain them, even jobs that don’t require a college education. Your child may also have no idea about the potential earning power of various professions — a great segue into the cost of college.

According to Walsh, it’s best to have this talk in an environment where everyone feels comfortable. That may be a favorite coffee shop or the living room couch. If you’re not sure, ask your student what they prefer.

If you want to make it a more collaborative process, you can give your child assignments. For example, you may work with your child to search for colleges, look up financial concepts, debate the trade-offs of a big-name school vs. a lesser-known institution, and more.

Your student may also want to research the graduation rates of colleges. Walsh suggests having students identify the schools where students tend to graduate in four years or close to that.

When you start the money conversation, consider bringing up the average “net cost.” That’s a college’s cost of attendance (which factors in tuition, fees, books and supplies, and living expenses) minus any grants and scholarships. According to the College Board, the average net cost for 2022-2023 of a private college was $32,800. The average net cost for public college was $19,250.

Avoid looking at the sticker price, or what school websites say tuition and room and board will cost. Instead, kick off the affordability conversation based on net price.

Explain About Financial Aid

Financial aid can come from various sources: colleges and universities, the government, and private lenders. Financial aid can include grants, scholarships, work-study, and loans:

•   Grant: A type of need-based aid that you don’t have to repay.

•   Scholarship: A financial award based on academics, athletics, other achievements, or diversity and inclusion. It may or may not be based on financial need, and doesn’t have to be repaid.

•   Work-study: An on-campus job that helps cover the cost of school. You must file the Free Application for Federal Student Aid (FAFSA) to qualify for work-study.

•   Federal Student Loan: A loan is money you borrow to pay for college or career school. You must pay back loans with interest. Federal student loans come from the federal government by filing the FAFSA.

•   Private Student Loan: These loans come from a private bank or online lender. Private student loans do not offer the same federal protections that come with federal student loans, such as loan forgiveness and income-driven repayment plans. Consider these factors before you decide to pursue private student loans.

For detailed information on all available financial aid options, reach out to the guidance office or college office at your child’s high school. Online resources, like and SoFi’s FAFSA Guide, are also helpful.

“When you’re down to the final couple of colleges, work with the admissions and financial aid offices at those schools,” Walsh says. “They will be the best resources during senior year and going forward.”

Recommended: Scholarship Search Tool

Talk About Debt (and Debt Repayment)

Many high school students don’t have experience with loans or understand them at all.

“One of the risks of student loan debt is that it can feel like Monopoly money — it’s not real,” Walsh says. In your discussion, try to make student debt more concrete for your child.

Walsh recommends going through a sample budget based on the average starting salary of a career related to your child’s preferred major. (Also check out our guide to ROI by bachelor’s degree.) Calculate the amount your child may earn each month. Estimate what they may pay for rent, utilities, groceries, transportation, student loans, and more. How much will they have left over after those expenses?

Although it may feel awkward, it’s worth talking to your kids about student loans to help them understand how to handle them.

Discuss Parent / Child Contributions

“Be transparent with the student so they know what to expect when they look at different schools,” Walsh says. He urges parents not to overextend themselves or feel guilty if they can’t contribute as much as they’d like. Just 29% of parents say they plan to foot the entire bill for their kids to go to college, down from 43% in 2016.

Look for Ways to Cut Costs

During your college money talk, you may want to explore strategies for cutting expenses. Walk through a sample college budget, and look for ways to save on living arrangements, transportation and travel, Greek life, computers, books and supplies, dining out, and Wi-Fi. Doing all this ahead of time allows you to pick and choose what’s important and plan how parents and kids will spend their money.

You might also suggest that your child begin at a two-year school to save money, then transfer to a four-year institution.

Recommended: Money Management for College Students

The Takeaway

Paying for college often involves an emotional tug-of-war between a student and their parents. Walsh urges families to use The College Money Talk as a teaching moment. “It’s an opportunity for your child to learn valuable lessons on how debt and savings work,” he says. “And that can help them make better financial decisions in the future.” Parents should examine their finances and agree on their family contribution before discussing it with their student. Because high schoolers have little experience with money, parents can make it more concrete by walking through sample budgets: one for their expenses while in college, and another that projects their income and student loan debt after graduation.

SoFi private student loans can help families bridge the gap between financial aid and the cost of college.

SoFi can help you find the right private loan for you.


How do you tell your kid you can’t afford their dream college?

It may come as a surprise to your child when The College Money Conversation takes a turn and you reveal that you cannot pay for their dream school. However, it’s best to answer the question early on in high school while they can still consider other, more affordable colleges.

Do most parents pay for their kids’ college?

About 29% of parents plan to pay the full college costs. However, that doesn’t mean you must follow suit, particularly if it will put a strain on your finances. Consider all aspects of your financial situation before deciding how much you can put toward the cost of college.

How do middle class families pay for college?

Paying for college involves planning and research, and that’s the case for families at any income level. Most families cover the cost of attendance through a combination of personal savings, need-based grants, scholarships, work-study, and student loans. This involves filing the FAFSA to see the amount of need-based financial aid your child may receive. You can also arrange to set up a payment plan, in which you make payments over the course of 10 or 11 months during each school year.

Photo credit: iStock/SDI Productions

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