10 Things to Do to Prepare for College Costs When Your Child Enters High School

The journey from middle school to high school can be both exciting and anxiety-inducing – and it’s likely brought up a new topic of conversation at family dinner: your child’s college education.

As a parent, it falls to you to guide your child and ensure they are well-prepared to apply, attend and finance their eventual college years. The secret ingredient to success? Planning early.

Today, we're walking through the 10 crucial steps to take during your child's high school years to set them up for success in college – let’s dive in.

10 Things to Do to Prepare Your Child for College When They Enter High School

1. Teach your child how to manage money

One of the most important skills your child can acquire is learning how to manage money. Of course, this isn’t a “one and done” lesson – it’s an ongoing conversation over the years through a combination of discussion, modeling and real-life application.

Model the financial behavior you want for them. Did you get a bonus this year? How will you divide that money into spending and savings – and how could your child take that approach to their own monetary gifts around the holidays?

Bring them into family money conversations so they can see a real-life budget in effect. For example, let them help plan your next vacation within a budget, choosing activities based on the funds available.

2. Start talking about your child’s career interests

Keep the conversations low-pressure. Even though there’s a good chance your kid won’t end up going into the field of work they chose at 16 years old, it’s a great way to learn more about their general career interests (which can be a great indicator of what kind of college they’ll eventually attend).

Leave room to grow in these conversations – a future career is a lot to think about and changes often at this age.

Is a specific career grabbing their attention? Look for internships or shadowing opportunities in that chosen field to give them a taste of what that job looks like in action. Building U’s directory of high school internships is a good starting place.

3. Explore where might they want to go to school

Some kids know exactly what college they’ve always wanted to attend, while others may be overwhelmed at the sheer volume of options out there. Remind your child that their ideal career should be one of the most important factors.

As you begin the college search, consider:

The programs the college offers: Do they offer the major your child would need?
Costs: Does the ideal career’s salary justify the cost of the college? What financial assistance programs are available?
Public vs. private schools: Private schools tend to be more costly, but also may offer more niche programs and smaller student/professor ratios. Which best fits your child’s needs?

How does your family fit into the equation? For example, does your child wish to stay within driving distance of home? Do you have a legacy school your family has attended for generations? These can all be deciding factors.

4. Determine your financial contributions

Parents often make the mistake of sacrificing their own retirement to pay for their children to go to college. If you don’t have a secure retirement plan in place, that should be step one before you commit to helping your children pay for college. You don't want to be a ‘boomerang’ parent in need of support from your kids.

If you do choose to contribute money towards your child’s college costs, it’s important to think through how and where you’ll pull that money from, as well as how you’ll distribute it.

While there are annual contribution limits for IRAs and 401(k)s, there’s technically no limit on 529 contributions. That being said, the IRS treats 529 contributions as gifts, which means you are generally subject to the gift limit ($17,000 per individual) each year.

We recommend a combination of 529 and other earmarked savings accounts to provide increased optionality and flexibility.

Furthermore, the way you fund college costs can impact the cost and availability of student loans and financial aid.

5. Talk about student loans

Often children don’t understand the long-term burden of student loans – with interest rates high, it’s important that they grasp how interest contributes to overall costs. If you have or have had student loans, share your own story, including how long it takes to make a real dent in that principal amount.

In 2023, the average student loan debt is north of $37,000 – with some reports stating that the average borrower will spend 20 years paying off their student loans.

Of course, costs will also depend on subsidized vs. unsubsidized loans, as well as whether the college is public or private. While subsidized loans don’t start accruing interest until after your child graduates, unsubsidized loans will start growing upon payout.

While subsidized federal student loans tend to have the best interest rates, there is a cap on how much you can take out each year. In 2024, the maximum amount any student can take out in federal subsidized loans is $23,000 – and that’s total, not per year. And if you use all your 529 money in those first semesters, your child’s needs could exceed that cap down the road, forcing them to take unsubsidized loans with higher interest rates.

This is all to say that you need to have a plan for your money to optimize cost in your child’s freshman year of college, as well as those later years. For example, if you know you’ll be taking out loans, spread your 529 out over all four years in a way that prioritizes subsidized loans with a better interest rate, hopefully eliminating the need to take any less favorable loans.

6. Research scholarships

It’s never too early to start searching for scholarships!

CollegeScholarships.org is a great place to start. You can filter scholarships by federal, state or even school-specific opportunities.

It’s also a good idea to look at local scholarships, as many philanthropic organizations will sponsor local students in their journey for further education.

7. Know your timeline

Understanding the timeline for college preparation is essential to avoid missing deadlines. This includes:

College application deadlines
Scholarship application deadlines
FAFSA (Free Application for Federal Student Aid) application deadlines
Knowing when to pull money from your 529 or other college savings accounts

Being organized and staying on top of these dates will ensure that your child doesn't miss out on financial aid opportunities or admission to their preferred colleges.

8. Create a savings plan for your child leading up to college

Paying for college is one of the best ways for your kids to start budgeting for the real world. Create a goal for how much they will contribute to college costs each year, and then help them build a savings plan. That money could come from a job, an allowance, etc.

Even if they just save up $1,000 through their high school years, when your kids help pay part of their way upfront, it can help them get in the right mindset for their education and their money.

9. Build a “freshman year budget”

People often talk about the “freshman 15” in reference to the number of pounds new students put on during their first year of college. Unfortunately, the freshman 15 could also refer to the thousands of dollars of debt new college students take on if they don’t know any better.

Before your child starts packing, sit down together and outline their expected costs: housing, food, textbooks, spending money, etc.

This is also a good time to talk about what to do in case of an emergency. What happens if your young adult is in an accident? Once they turn 18, parents lose the right to help unless the proper legal documents are in place. The following documents are needed when your child turns 18:

HIPAA Authorization Form
Health Care Power of Attorney
Durable Power of Attorney

10. Talk to your financial advisor

People often think financial advisors are just there to help with retirement planning, but at Paradigm, we love helping families with every area of college planning. Whether you’re trying to figure out which colleges you can afford or how much you can contribute without sacrificing your retirement, we’re here to help you find the right solutions for your family.

Preparing for your child's college education is a journey that requires careful planning and thoughtful consideration of financial aspects. By following these 10 steps and seeking professional advice when needed, you can set your child up for success in their college years without compromising your own financial well-being.

Build a Plan for Your Family’s Future

Our team is here to help you navigate life changes with confidence. Whether college is around the corner or you’re looking long-term at retirement, we can help you create a plan and stick with it. Click here to connect with a member of our team and get started today.

Paradigm Advisors is a fee-only financial planning firm based in Dallas, Texas and Fayetteville, Arkansas. Paradigm Advisors provides comprehensive financial planning and investment management services to help clients organize, grow and protect their wealth throughout life’s journey. Paradigm specializes in advising well-established career executives through financial planning and investment management. As a fee-only fiduciary and independent financial advisor, Paradigm never receives commission of any kind. Paradigm is legally bound by certification to provide unbiased and trustworthy financial advice.