Know When to Turn Down a College.

It’s getting close to the pins and needles moments for families with college-bound high school seniors. Acceptance notices will soon be mailed out. I know it will be a relief for your entire family to have the news, and hopefully, some great choices to make.

But I want to be clear. The best college for your child is not simply the school they say is their favorite. As a family it is important that you all choose the school that makes the most financial sense for your child, and for you.

And that comes down to affordability.

Yet schools do a pretty lousy job helping families understand affordability. They just tell you to borrow, borrow, borrow, without providing any guidance on how to make sure you borrow only a sum that your family can truly afford.

Here’s what I want you and your child to consider:

• A financial aid package will likely include federal Stafford loans that will be the responsibility of your child. You must sit down with them and explain that this is not a scholarship or grant. It is a loan. That must be repaid. And they will need to start repaying within six months of leaving school or graduating. 

• They should aim to pay back their Stafford loans within 10 years. Yes, there are other loan repayment options that stretch out repayment. Those should only be used as a last resort—for people who didn’t have good advice before they started school. That’s not your family’s situation. Limiting a student’s borrowing to what can be paid back in 10 years is how you set up your child to succeed as an adult. Studies show that students who can’t repay their loans within 10 years end up having to delay all sorts of life events: family, home buying, saving for retirement. The choice they make at 18 is going to have a profound impact on their future.

• Mom and Dad are not to borrow a penny if it means slowing down on the retirement savings.

• Parents who can juggle borrowing with continuing to save for retirement are to use the federal PLUS loan program. And you are only to borrow an amount you can pay back within 10 years or before retirement, whichever occurs first.

• Your family must avoid all private loans. No ifs, ands, or buts. Private loans are a sign you are considering too expensive a school.