When you think about teenagers today, "forethought" and "practicality" probably aren't the first words that come to mind.
But if recent research is any indication, adolescents may be a lot more prudent than we've been giving them credit for — especially when it comes to saving for college.
In fact, the 2014 Teen College Savings Barometer study found that as many as 93 percent of teens said stashing away cash for school was a priority for them — and 91 percent expected to cover at least some of their own higher-education costs.
Needless to say, the numbers piqued our interest. But we couldn't help but wonder: How exactly do teens expect to pay their own way?
To find out, we asked three recent high school graduates and two current seniors to tell us how they're going to swing the tuition and fees — and then tapped their parents to weigh in on their plans, as well. We also consulted David Blaylock, CFP®, a senior financial planner at LearnVest Planning Services, for his input on how prepared — or not — these future university students really might be.
The future pharmacist: Natalie, 18, a senior at Lexington High School in Mansfield, Ohio
Her top picks: Ohio Northern, University of Toledo, Miami University, Mount Union, Wittenberg University, and University of Dayton
What they currently cost: Toledo — at around $18,000 a year for tuition, fees, and room and board — is probably the least expensive. Ohio Northern will cost at least $40,000 a year.
Her college payment plan: My parents and I started doing college research last year. Right now I am leaning toward majoring in pharmacology, and Ohio Northern and the University of Toledo have really good programs for that. I can also become a physician's assistant or get a degree in chemistry or biochemistry.
To make money, I've been babysitting part-time, making $60 a day. I intend to work full-time or at multiple part-time jobs to make as much money as I can during the summer too. Working during college depends on how intense the curriculum will be, and the potential of work-study. Grades come first.
My parents will help me out, but I'm also planning to apply for scholarships — primarily ones that schools award based on ACT scores, G.P.A. and musical talent — and financial aid.
If a college is willing to give me aid, that will be very important when it comes to making my decision. A state school has a lower starting cost, but several of the private schools I'm applying to have expressed interest in offering competitive financial packages.
Dad's take: My wife and I will cover as much as possible, but it's important for Natalie to invest some of her own money into her education. I was responsible for my own college loans, and it will mean something to Natalie to do the same.
We see paying for school as a three-pronged approach: scholarships, our contribution, and then whatever the gap is — which will have to come from her. We're hoping to minimize the loans as much as possible, but we're not going to co-sign for them because it's important for Natalie to know she is responsible for this debt.
We've seen firsthand the devastating effects of parents saddled with their kids' debt after the child defaults. We can help out with payments in the future, but it's Natalie's debt. That will also help establish her credit rating early.
What the CFP says: Since her options vary widely in price, my advice to Natalie is to really ask herself: Can I accomplish my objectives at a lower-cost university? I would advise talking to current students to get a better perspective on whether a more expensive school is really worthwhile.
At the same time, Natalie is smart to acknowledge that more expensive private colleges are likely to provide a larger amount of money to help bring the cost down. She's wise not to rule out schools solely based on their initial ticket price and to dive deeper into aid packages before making a decision.
In terms of comparing financial packages, there's a tool Natalie may find really helpful from the new Consumer Financial Protection Bureau. You can enter all the information from multiple schools — loans, grants, scholarships — and run a side-by-side comparison to show you which offer is the best bet financially. If Natalie ends up getting accepted into multiple schools, it could serve her well in making a decision.
The aspiring Ivy Leaguer: Smythe, 17, a senior — and current valedictorian — at O'Connell College Preparatory School in Galveston, Texas
His top picks: Brown University, Princeton University, the University of Pennsylvania, Stevens Institute of Technology, and Embry-Riddle Aeronautical University
What they currently cost: Around $60,000 per year at Brown, for example — but Princeton is an example of a "no-loan Ivy." So whatever your family can't pay, the schools will typically cover.
His college payment plan: I entered high school knowing that if I wanted to go to an Ivy League school, I would have to work hard academically — and financially — to get there. So I'm applying for scholarships — between 100 and 200. Some are academic, but most aren't. Some require you to read a book and submit an essay; others are based on how much community service you've performed or your financial need.
One scholarship I've received so far is the "Young Texan/Texanne." It's offered through the local Optimist Club in Galveston, and it's based on a combo of good grades, community service, and leadership. I won $600, which isn't much, but it can go a long way if you get a bunch of scholarships.
Making the effort to apply for scholarships is worth it to me: A little hard work for one year will hopefully equate to four years of where I really want to go. I think it's a great investment of my time.
Mom's take: Smythe's father and I have calculated what we can contribute for college — about $2,000 to $3,000 per month — and have had some real hard-knock conversations in the process.
It's a hard decision because if Smythe stays in state, he could get free tuition his freshman year — all Texas valedictorians are awarded a full ride for their first year — and then in-state scholarships would probably pay for the rest of it. That's not what he wants. And he's aware of the expense of going to the schools on his list, so he's working on what he needs to do to get there.
What the CFP says: Ivy League schools are in a class of their own. The reality is that most people are not going to be able to attend an Ivy — but for those who can, Ivies can be worth the large investment for a variety of reasons. There are a lot of networking opportunities that may not present themselves at a state school.
But before he makes a final decision, he should think about what he's looking to achieve after school. If Smythe, for example, has a good program in a field that he's interested in, he might consider it just as valuable as an Ivy League — if not more because of the lower price tag.
The private school–bound softball player: Ashleigh, 18, a recent graduate from Wheeling, West Virginia
Where she'll attend: Ohio Valley University, a private school in West Virginia
What it currently costs: About $26,000 per year
Her college payment plan: I only started thinking about how I'd pay for college near the end of high school. I never expected to attend a private school — I just wanted to continue playing softball in college, and Ohio Valley recruited me.
I have a twin sister, and she's going to a private college that costs about as much as mine. I have only my mom in my life, and I couldn't have her pay so much for two colleges at the same time — so I have taken out several federal loans amounting to $19,500, which should cover all four years.
I was automatically awarded some annual scholarships from my college — $5,000 for softball and $2,500 for academic achievement — which helps offset the costs more.
Paying off loans will be extremely important for me after college, especially since I want to be a teacher. Where I live, a teacher just out of college makes about $35,000 a year — so I don't want that burden for a long time, considering I'll be living on such a small amount of pay.
Mom's take: I'll be helping Ashleigh and her sister with college as much as I can. We got as many loans and grants as possible, but I wish my girls applied for outside scholarships. Since they didn't, I'll be paying what their financial aid doesn't cover.
I'll also do my best to help with loan repayments after they graduate. I just hope they'll be able to find jobs in their fields, so they can work on paying off their debt quickly.
What the CFP says: In general, I believe it's good practice to only spend on what you truly savor. So here's my question for Ashleigh: Is playing softball at this particular private school something you savor? If yes, then I think her college choice is a good one.
Although if she's going to be a teacher with a $35,000 salary, Ashleigh needs to start thinking about what debt repayment options she has before borrowing too much. She should consider one of the federal loan forgiveness programs available for teachers, in which you agree to make payments for 10 years while working in a public-service role — like teaching at a school that serves low-income families. Then whatever debt hasn't been repaid after that time is forgiven, which could be a big deal for her in lessening her loan burden.
It's also worth noting that Ashleigh's mom should make sure to put her own retirement ahead of trying to help her girls pay down their loans after college.
The community college–bound babysitter: Mikaela, 18, a recent graduate from Swedesboro, New Jersey
Where she'll attend: Rowan College at Gloucester County and, after two years, Rowan University in New Jersey
What it currently costs: $3,156 per year at RCGC, and $12,380 per year at Rowan University
Her college payment plan: When I was a junior in high school, my mom told me that I needed to start thinking about which college I wanted to go to — and how much it might cost. She didn't want me to apply for student loans because of how hard they can be to pay off, but I knew I would probably need some form of financial assistance, so that impacted where I applied.
Since I want to save money and stay close to home, my plan is to attend a community college for two years, and then transfer to Rowan University, a four-year university. Both are close enough that I can live at home to further cut down on costs.
I currently babysit for one family, but I was recently asked if I was interested in helping out another family throughout the school year. For now, I'm making about $270 per week. I put $200 in an envelope for college, apply $10 toward long-term savings, and then keep the remainder for myself.
I've actually already paid for my first semester at RCGC with the money I received from babysitting and my graduation party. I was able to pay the entire balance in cash, with $50 to spare — which I set aside for my second semester.
Mom's take: Mikaela will be paying for college — or at least most of it — on her own, although her father and I will help where we can. We can't afford to pay for her college, and we didn't want to take on any more debt to do so. We also didn't want our daughter to have a huge debt load when she graduates either, which is why she chose to start at a community college.
My heart wants to do all I can to help my kids, but I think it means more when you do it yourself — it makes you more responsible and a stronger adult when you have to work for things.
What the CFP says: I love the concept of doing the first two years at a community college and then transferring. We all want the full four-year college experience — and that's totally understandable — but the cost per credit hour is so much less at a community college. Plus, for the first two years of college, you're usually just taking basic courses.
To help with costs once she transfers, Mikaela should be looking for scholarships at the university level — although her success in winning them will depend on her performance at RCGC. If she can maintain a really high G.P.A., it's possible she can get a merit-based scholarship to offset the higher costs.
The stay-at-home musician: Brianna, 18, a recent graduate from Commack, New York
Where she'll attend: Long Island University, Post Campus in Brookville, New York
What it currently costs: About $36,000 per year
Her college payment plan: To keep costs as low as possible, I applied only to in-state schools because I knew it would be a lot more expensive to live on campus instead of at home with my parents. I ultimately chose Long Island University's Post Campus because it offered my major: music education.
I got a lot of money in merit scholarships: $10,000 was awarded automatically based on my G.P.A., plus $3,000 for an alumni scholarship (my mom went to the school) and $5,000 for taking an English class my senior year in high school through LIU.
I also have a work-study that will allow me to earn $2,500 per year for working a part-time job. I'll find out what positions are available at the work-study fair the first week of school. To help cover the remainder of the costs, my parents and I are taking out loans.
Dad's take: My wife and I knew we were going to have to contribute financially to Brianna's college because she's only entitled to $5,500 per year of federal loans — and that leaves about $11,500 per year to cover.
There's a government program we researched called Direct PLUS, in which parents can take out loans at a lower interest rate — plus they're more lenient on how they evaluate borrowers. If Brianna took out a loan with Sallie Mae instead, she'd need a co-signer, so I might as well take out the loan in my own name at half the interest rate. That's what I've done for the 2014–15 school year.
What the CFP says: As a general rule, I believe that parents shouldn't borrow to pay for their kids' college. However, Brianna's dad is right that PLUS loans allow you to borrow money at a lower rate than private loans, which can be very expensive and difficult to pay off.
So, actually, the PLUS loan is a good idea if they are borrowing an amount that they can repay easily. But the parents should assume Brianna is not going to repay the loan — unless they have a conversation with her now.
During that chat, they should ask Brianna what her income is likely to be post-graduation — and how she plans to contribute to the debt they've assumed. Everyone should be on the same page before any loans are applied for.
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