Budgeting Financial Planning Relationships & Money Teaching Kids & Teens About Money Helping Your Teen Understand the Costs of College What your teen should know about paying for college By Christy Rakoczy Updated on September 29, 2022 Reviewed by Margaret James Reviewed by Margaret James Twitter Peggy James is an expert in accounting, corporate finance, and personal finance. She is a certified public accountant who owns her own accounting firm, where she serves small businesses, nonprofits, solopreneurs, freelancers, and individuals. learn about our financial review board Fact checked by Mrinalini Krishna In This Article View All In This Article Different Ways to Pay for College Qualifying for Financial Aid Costs Once on Campus Costs of Student Loans Frequently Asked Questions (FAQs) Photo: MoMo Productions/Getty Images College is expensive, with the average cost of tuition, room and board coming in at $29,033 per year, per student at four-year institutions (public and private) for the 2020-21 school year in the U.S. So it shouldn't come as a surprise that Americans collectively owe $1.59 trillion in student loan debt as of the second quarter of 2022. Many borrowers struggle to pay back what they've borrowed for school, with close to 5% of aggregate student loan debt either in default or 90-days delinquent. As a parent or guardian, talking about college costs with your teen is crucial to help reduce the likelihood your children will get in over their heads when it comes to student-loan debt. Here are some tips for talking to teens about college costs. Key Takeaways Discuss different options for paying for college, such as scholarships, grants, federal loans, and private loans.Help students understand total school costs, including tuition, room and board, and fees.Help students assess borrowing costs, including how interest and the amount borrowed affect their repayment cost. Different Ways to Pay for College Parents and guardians should help teens understand the options they have for securing funds for school. These options include: Scholarships and grants: These should be investigated first, as they do not have to be repaid. Scholarships are often based on merit, while grants are often awarded based on financial need. There are many resources to search for scholarships and grants, including college financial aid offices and many online tools. Federal student loans: Students who must borrow should exhaust federal student loans first, before taking on other kinds of debt. These are issued by the Department of Education and come with important borrower benefits, including subsidized interest on some loans; affordable fixed interest rates; flexible repayment plans including income-driven options; and loan forgiveness for public service workers. Family contributions: Adults can share with their children the amount, if any, they are able to contribute toward college. Parents or guardians can sometimes be entitled to tax breaks if they help with school costs. Private student loans: If other options have been exhausted, students can borrow from private lenders. These loans are not subsidized or issued by the government and may have fixed or variable interest rates. By discussing these different options for paying for kids' college, adults can guide their teens to choosing the funding sources that are most affordable. Qualifying for Financial Aid Students who want to qualify for financial aid need to complete the Free Application for Federal Student Aid (FAFSA). This online form asks for information about student and parent/guardian finances. This information is sent to colleges that students choose, and individual colleges use FAFSA details to put together financial aid packages. Each financial aid offer explains the student's expected cost, as well as the amount of financial aid the college offers. Students can compare different offers from different schools. Parents and guardians can help students complete the FAFSA, as well as evaluate offers from different schools to see which makes the most financial sense. Note Individual colleges set their own deadlines for completing the FAFSA—and many schools set the deadline long before the start of the academic year. Students should complete the FAFSA as soon as it is practical. Students applying to multiple schools should make sure it is submitted before the earliest deadline set by any of the institutions. Costs Once on Campus Young people who have never lived on their own may not be familiar with all the costs they could incur beyond tuition. When talking to teens about college costs, it's helpful for adults to review tuition along with additional costs students may face once they go to school. Tuition Tuition is usually due before or near the start of the quarter or the start of the semester. This means students may face several separate tuition bills throughout the year. For example, students attending school for two semesters may need to pay fall and spring tuition separately. Tuition costs vary depending on the type of school students attend. For example, in the 2020-2021 school year, here were average tuition costs for different kinds of schools: Public four-year university: $9,375Private nonprofit four-year university: $35,852 Parents and guardians can help students decide whether paying more for an out-of-state school or private school is worth the added expense. Room and Board Room and board refers to basic living expenses such as rent or dorm fees as well as food. The costs can vary depending on whether a student lives on or off campus. Here are the average costs for on-campus housing: Four-year public schools: $5,189Private four-year schools dormitory costs (both for-profit and non-profit schools): $5,907 The decision to live on campus or off campus has financial implications, as well as implications for each student's lifestyle. Books and Other Supplies Students may be surprised at how the costs of books and school supplies add up, so adults can help them prepare for these expenses, too. Here's what these annual costs might look like depending on the school a teen chooses: Four-year public institutions: $1,240Private four-year institutions: $1,240 Fees, Travel, and Miscellaneous Expenses Students may have other extras they have to pay for as well, the costs of which can vary depending on the lifestyle choices they make, such as how often they travel to and from campus as well as whether they take the bus to and from school or own a car. Some other expenses that students may need to budget for include: Commuting to campusPhone serviceClothingTravel to and from home or to events such as spring breakSnacks and dining outSocial activitiesGreek life (sororities and fraternities) Students may want to consider getting an on-campus job to help cover the costs of some of these extra expenses, especially if they plan to join expensive clubs or engage in costly hobbies while attending school. Note The U.S. government’s Federal Student Aid office provides a wealth of information for students and caregivers both, including a collection of checklists for students of every educational level. Costs of Student Loans Students who borrow for school need to understand their repayment obligations once they've left campus. There are several factors adults can help them understand. Interest Rate Interest is the cost to borrow. The higher the interest rate, the more expensive the loan. Most federal student loans have a fixed interest rate, which is determined based on loan type. Credit score and income don't affect the rate. Private loans may offer a fixed or variable rate. Variable rate loan rates can change, which means loan costs may increase. Private loans can be expensive. Students should always choose more affordable federal loans first to reduce borrowing costs, and should shop around and compare the interest rate from different student loan lenders if they must take out private loans. Amount Borrowed It's important to borrow the minimum amount needed to cover the costs of education. The more you borrow, the more you must pay back, and the higher your monthly payments will be after graduation. The Consumer Financial Protection Bureau advises students to limit their borrowing to what they expect their first year’s annual salary to be. Repayment Plan Loans with a longer payoff time have smaller monthly payments, but total costs over time are higher. Borrowers with federal student loans can change their repayment as needed, choosing a standard repayment plan or one that stretches out repayments over a longer period. Those who secure private student loans must stick with the loan term they started with unless they refinance. Note The Department of Education has a loan simulator tool adults and teens can use to understand how their loan amount and chosen repayment plan will affect repayment costs. Credit Score Credit score affects the interest rate students will be offered if they seek private student loans. Students with a lower credit score or no credit history may not be offered loans or may be offered loans at a high rate, which would make them more expensive. Parents or guardians can co-sign private loans to help students qualify for a better rate. Frequently Asked Questions (FAQs) When should I talk to my teenager about college? It's best for students to start planning for college as early as seventh or eighth grade, so parents and guardians should consider talking to their kids in late middle school about how to prepare to earn (and pay for) a college degree. What is the average cost to put a kid through college? The average cost to put a child through college depends on the type of school, where the child lives, and the value of grants and other support received. The average net cost of college (costs after grants and aid) for a student living on campus and paying in-state tuition at a four-year public school is $19,230. The average cost of a four-year private education, after grants and other support, is $32,720. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. National Center for Education Statistics. "Average undergraduate tuition, fees, room, and board rates charged for full-time students in degree-granting postsecondary institutions, by level and control of institution: Selected years, 1963-64 through 2020-21." Federal Reserve Bank of New York. "Total Household Debt Surpasses $16 trillion in Q2 2022; Mortgage, Auto Loan, and Credit Card Balances Increase." Federal Student Aid. "Types of Financial Aid: Loans, Grants, and Work-Study Programs." Federal Student Aid. "How Financial Aid Works." Federal Student Aid. "What are the deadlines for filling out the FAFSA form?" College Board. "Trends in higher Education Series: Trends in College Pricing and Student Aid 2021," Page 11. Federal Student Aid. "College and career school costs can vary significantly from school to school." Federal Student Aid. "When it comes to paying for college, career school, or graduate school, federal student loans can offer several advantages over private student loans." Consumer Financial Protection Bureau. "How much should I borrow in student loans?" Federal Student Aid. "The Standard Repayment Plan is the basic repayment plan for loans from the William D. Ford Federal Direct Loan (Direct Loan) Program and Federal Family Education Loan (FFEL) Program." Federal Student Aid. "Middle-School Checklist." College Board. "Trends in higher Education Series: Trends in College Pricing and Student Aid 2021," Page 18-19.