College Planning: The Importance of Establishing Your Negotiating Position

When my oldest son turned 9 a few years ago, I said to him:

  •  “Congratulations!  It’s your half-way birthday!”
  • “What’s my half-way birthday?”
  • “It means you’re half-way to becoming an adult and getting kicked out of this house!”

Just kidding!  I would never kick my kids out on their can just because they turned 18, and we are no longer legally responsible for them.  However, I did say that with a specific point:  I’ve established a starting position for college/life planning.

Believe it or not, every college planning discussion is part of a series of negotiations within a family.  Just wait until your children become teenagers.  At that point, doing homework can become a series of negotiations if you let it.

Look at the following questions that many parents ask themselves:

  • “How much will I pay for my child’s education?”
  • “How much do I expect my child to take out in student loans?”
  • “What kind of education do I expect my child to get?”

From the moment you tell your child what resources you have set aside (such as college savings, GI Bill transferability), you’ve established your beginning negotiating position.

College Planning:  A Tale of Two College Students

I’m going to contrast two stories:  My story, and a story that I’ve heard many times.

Story 1:  My short story is this:  My grandmother sat down with me one day, told me how much money she had set aside for my college, and told me anything else would have to come out of my own pocket.  The Navy paid for my college, and she gave me all the money she had set aside.  She didn’t have to, but she felt that I’d earned it by getting my degree on my own.

You can read the entire story, which I wrote as an article here:

College:  What I Learned From My Grandmother About a Real Education

Story 2:  This is a very common story.  Parents offered to pay for a ‘full ride’ to any college the student could get into.  Student gets into a fairly expensive, private school.  Parents encounter unexpected financial stress (layoffs), and have to take out more in student loans than expected.  College grants don’t come through.  Student graduates with a lot of debt.  Sound familiar?

It all comes back to establishing your starting negotiating position.

Worst Case Scenario-Your Child’s Starting Negotiating Position

What’s the worst case scenario for your child?  Short of turning to a life of crime, or getting into really bad things, the worst case scenario would probably be something like:  “My adult son is 25 years old and spends all day on the couch!  He won’t get a job, he’s not in school, and he doesn’t have any plans to earn his keep!”

Imagine that’s your child’s starting negotiating position.  Let the negotiations begin!

Ideal College Planning

Let’s imagine that your starting position is on one extreme (you’re out of the house by 18, and paying for everything).  Your child’s starting position is at the other extreme (I’m staying on the couch until I feel like moving out).  There is a whole world of possibilities in the middle.

Ideal College Planning: You want to have your college planning conversations up front, early and often. By having frank college planning discussions, you can move away from negotiations towards discussing win-win scenarios.

Art of the Possible:  This is the range of opportunities that you and your children can explore to ensure that you’re getting the best value (read:  quality at a fair price).  Some of these opportunities include:

  • Offering to set aside some money, or your GI Bill.
  • Discussing college choices, and the difference between in-state & out-of-state tuition.
  • You can discuss how community college might be a cost-effective means to take care of lower-level credits.
  • Thinking about what your child can do in high school.
  • Your child can take out student loans or get a job.
  • Your child can also apply for grants or scholarships.

In short, you and your child can discuss a whole world of win-win possibilities, talk about what type of career he/she wants to have.  There’s a whole lot that you and your child can discuss so they’re in charge of a decision, but understand that they’re responsible for it as well.  More importantly, a good conversation will help set your child up for life after college.

Not Ideal College Planning

More often than not, I hear parents say things like:

  • I don’t want my children to be overwhelmed by student loans.
  • I need to save as much as I can for my children so they can go to college
  • I’m not able to contribute as much as I need to my retirement accounts because I need to set money aside for college (cringe!)

There are plenty of reasons why you should not put your children’s college education above saving for retirement.  However, we’re not going to debate that today.  Instead, we’re going to look at what your beginning negotiating position looks like when you set those expectations:

Not Ideal College Planning: When you don't have those college planning conversations up front, then you start narrowing down your flexibility. The 'Art of the Possible' becomes smaller, and you become more constrained by your college planning assumptions.

Notice how the ‘Art of the Possible’ kind of shrinks.  This is what happens when you set the expectation that you’re responsible for your child’s college education.  When you start the conversation by telling your child all the things you’re doing for them, it becomes easier for your child to expect you to be in charge of addressing any issues.

Quite frankly, if I was a teenager, and my parents told me all the things they were doing to pay for my school, I’d be confused.  After all, this is one of the biggest financial obligations that someone will incur during their lifetime.  Shouldn’t the prospective college student have a bit more responsibility to find the best value?

5 Ways to Develop a Win-Win Approach for College Planning

So far, this article has treated the prospect of college education as a zero-sum game.  We all know that’s not the truth..we’re talking about our children.  Ultimately, we don’t want to negotiate in a zero-sum environment.  We want to negotiate ‘win-win’ scenarios.

In order to think outside the box, you must first establish that there is a box.

It’s always easier to develop a collaborative relationship after you’ve set realistic expectations.  Here are 5 things you can do to foster that collaboration:

  1. Start early. I mentioned that I discussed college with my (then) 9-year old son.  The earlier you start saving (if you’re going to), or start discussing college with your children, the more informed questions you’ll have down the line.
  2. Tell your children what you’re going to do. Isn’t that what I wasn’t a big fan of?    However, you’re also going to tell your children that they’re responsible for the rest.  Notice that I didn’t say to tell your children what to do.  For example, if they need $5,000 per semester (above and beyond what you have available), they should decide what they want to borrow, what they want to work for, etc.  Your children can research a lot on their own, but they won’t start until you’re very clear on what you WON’T do for them.
  3. Think ‘win-win.’ This sounds so cliché.  However, college planning is full of win-win scenarios, if you’re willing to look for them.  For example, college credits in high school..if your child gets to take some of the entry-level courses while they’re still in high school, it frees up a lot of time, money, and flexibility to do cool stuff when they’re college seniors.  Things like research grants, study abroad, internships…they all become more possible when you get the mundane stuff out of the way.
  4. Ask your children what they plan to do. Every time you tell your child something that you’d like to do (like share your GI Bill), you should be able to reasonably expect them to tell you how that supports their plan.  It is their plan, but having this conversation allows you to ask informed questions.  Doing this allows you to identify pitfalls and obstacles so that you can address them before they become major issues.
  5. Give them an incentive. Whatever is left over after our children graduate from college will go to them.  I’ve made that clear up front.  If you’ve got nothing better to do with that college money, then it can help your budding student buy a car, get a lease on an apartment, or start their own savings plan.  By offering this up front, you get away from scarcity thinking, and enable those ‘win-win’ conversations that everyone wants to have.


No one wants to be the bad guy with their children, especially when it comes to college planning.  However, if you don’t set expectations up front, you run the risk of having to come in with bad news at the 11th hour when the plan starts to fall apart.  Even if it doesn’t fall apart, college planning isn’t worth sacrificing your retirement for.  Instead, start early, engage often, and start those win-win conversations that allow everyone to get what they want.

Would you like to share your college planning experience?  Please feel free to post a note in the comments section below.  Also, if there’s anything I can help you with, feel free to email me or join the Military In Transition Facebook Group!

About Forrest Baumhover

Forrest Baumhover is a Certified Financial Planner™ and tax professional. His firm, Westchase Financial Planning, focuses on the unique financial planning needs of servicemembers and families looking to separate or retire from active duty.

If you’d like to learn more about Forrest or his services, please check out the About Forrest page at the top of this article.

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