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Open communication important for college financial planning

6:16 AM, Mar 21, 2014   |    comments
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(NEWS CENTER) -- March and April are college acceptance season and finances often play a large role in the decision process.  

"It's only fair before the child enrolls in college for them to know what the family can afford," said Sarah Halpin, Certified Financial Planner professional of The Danforth Group of Wells Fargo Advisors in Portland.

Halpin said there are three steps toward making a decision and planning for the future.

1. Be Prepared. Get organized and prepare a summary of the family's financial situation to determine what the family can realistically afford. Calculate the amount of discretionary monthly income available after all normal living expenses and parents' retirement savings to determine how much the family can pay toward tuition payments or student loan payments. Halpin said be realistic and don't compromise retirement savings.

2. Look at Family Finances Together. Schedule a meeting time, the student to review college costs and the family finances. Have he student be accountable for gathering college financial information such as, any awards and student aid if they have been already accepted and filed the FAFSA, along with a notebook and calculator. After explaining what the parental contribution, subtract that along with any scholarships and grants from what each college would cost per year.

3. Make a Game Plan. Work together as a team to come up with options that won't adversely affect the family's finances. Check out the student loan calculators at sites such as FinAid.org and CollegeBoard.org to see detailed monthly payment calculations. Make sure that the student understands the impact of student loan payments and how after graduation these payments will need to fit in with their new budget and expenses such as rent, food, utilities and cell phones. It's important to carefully evaluate the pros and cons of applying for more financial aid or starting out at a lower cost school.

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