As parents, we walk a fine line when talking to our kids about finances. When they are little, talking about a $10 allowance or a $3 hot dog at a ball game makes sense. So too does helping your teen understand deductions taken out of his or her first real paycheck. But we typically treat larger financial topics, like the cost of college, as a “no-fly zone,” and that’s creating some big problems for our kids.

Teens have a disconnect about borrowing for college. Nitro recently completed a study of college students’ views about managing student loan debt,which revealed a surprising fact: 20% of college students surveyed that have taken out student loans believe they will graduate debt-free in 5 years. This is startling since the average 2016 college grad has more than $37,000 in student loan debt with an average monthly payment of $351 which will take 25 years to pay off. Where’s the disconnect? 

The problem lies with our inability as parents to talk candidly to our teens about money. It’s not that the students we surveyed are kidding themselves, it’s that they truly do not know how much they are borrowing, how much they will owe at graduation and how long it will take to repay that debt.

So before the college application process starts, before you do any college visits, before career planning kicks in, parents can help make their teens smart borrowers by following these simple steps:

Step 1: Understand the cost of college today.
You may or may not have gone to college. Either way, chances are you will have some sticker shock when you look at the cost of college today. The College Board reports the moderate cost for one year at an in-state college in 2016 averages $24,610, while the moderate cost for one year at a private college averages $49,320. Get smart. Go online and learn what goes into these costs, including: tuition, room and board, fees, books and supplies, and transportation.

Step 2: Know how much money you can put toward a college education.
It’s not your job to fully pay for your teen’s college education. It is your job to talk about what you can put toward his or her college costs. Know what you can comfortably provide toward your teen’s college costs each year. Work together to look at schools and their costs. Help your teen determine how much he or she will need to pay every year after your contribution.

Step 3: Plan together for ways to pay for college without borrowing.
Once you know the tuition cost gaps between what you can contribute and the annual cost for college at schools your teen is interested in, start working together to define ways to fill that gap.

• Grants and scholarships should be top of mind. To successfully get these awards, you and your teen will need an organized plan for application.
• Come up with a reasonable expectation of what your teen can save through a part-time job, which can go toward college costs.
• Investigate work-study programs at the colleges your teen is interested in.

Download Nitro’s ebook “10 Ways to Solve Last-Minute Tuition Gaps” to learn more strategies for paying for college.

Step 4: Help your teen understand the cost of borrowing.
A good rule of thumb is that every $10,000 in student loans equals about $100 in a monthly payment. Help your son or daughter understand that he or she should plan to borrow the very least amount possible to cover any gaps in college costs. Then brainstorm together to come up with ways to do that. Could a year at community college before transferring to a “dream” school mean less debt? Could living at home instead of away mean fewer student loans? Could he or she take some AP classes while in high school to lower college tuition costs?

Step 5: Get a realistic view of the borrowing picture.
Online student loan calculators (like this one from The New York Times) are free, easy to use and provide a clear picture of your teen’s future debt obligation. By inputting the amount he or she wants to borrow, your teen can see the expected size of his or her monthly loan payments once he or she graduates and the annual salary he or she will need to manage that debt. Armed with that information, you can both start making those college visits to schools that fit your teen’s budget and career aspirations.

No matter where you begin with you child, the important thing is to start having these conversations. For their own good, be open about the cost of higher education and the importance of managing large finances like college tuition.

Mike Brown, Nitro Knowledge Director Mike is responsible for the editorial and marketing direction of Nitro. He has a history of helping people thru his educational background – first as a teacher at the Pennsylvania State University and then through 15 years of development and marketing of education programs.