Here's a wake-up call that many teenagers need to hear: Yes, you'll probably have to borrow for college.
Despite the fact that student loan debt has ballooned to $1.4 trillion and that the average 2016 college graduate is shouldering $37,172 in loans, only four in 10 high school seniors believe they'll be borrowing in the name of higher education, according to new research from Navient.
The student loan servicer polled 22,000 high school students between Aug.15 and Dec. 31 of last year.
High school juniors are even further removed from the reality of student loan debt: 34 percent of those students predicted they would finance their college years.
Reality tends to set in once these students have matriculated: 61 percent of college freshmen expect to borrow, and six in 10 who graduate will likely have a loan.
"It reflects that families aren't having the conversation early enough," said Julie Wilson, head of research at Navient. "They might be waiting for acceptance letters before saying, 'How will we pay for this?'"
The clock is ticking to have this chat with your children: May 1 is the enrollment deadline for many colleges, so students will need to decide where they'll land.
Student loans were just a piece of the financial aid puzzle for high school upperclassmen. Only 4 percent of these juniors and seniors expected to fund their educations on debt alone.
Many expected to foot the bill through a combination of work, scholarships or grants, in addition to the loans. Also, 66 percent of the prospective borrowers said that they would work during the summer, while 72 percent said they would take on a job while in school.
Another 64 percent of the borrowers said they would get some help from their parents or other family members.
To help high schoolers come to grips with the real cost of college — and the likelihood of borrowing — Wilson suggests having the funding conversation early in the college selection process.
Students and their families had some additional time to weigh their financial aid packages for the 2017-to-2018 college year. Last fall, students were able to submit the Free Application for Federal Student Aid (FAFSA) starting Oct. 1 — three months earlier than the original date of Jan. 1.
This document, which you fill out using your tax return, determines how much financial aid your child is eligible to receive from loans and grants.
"Now that the FAFSA can be filed earlier, that might push the conversations a little earlier," Wilson said.
It's easy for families to get caught up in the financial aid letters they receive from schools, so the best practice is to go through line-by-line to understand how much of the offer is based on loans — which need to be repaid — and how much comes from grants, which are free.
"When my daughter was considering her options, we spoke about the four-year net cost," said Wilson. In other words, does one college offer richer sources of grants or scholarships over another?
"She had scholarship offers from one school but not the other, and that helped her make a decision to go with the option that would allow her to graduate without student loans," Wilson said.
Families should also take into account their children's earning potential under certain majors and consider how much of their income will go toward repayment after graduation.
Does your high school junior or senior understand that she or he may have a tough time getting by if close to 40 percent of future income is going toward paying student loans? That reality might make your child rethink the school or major chosen.
"Think about matching your debt," said Mike Brown, managing director of NitroScore, a student-loan affordability calculator. "You don't want to get into a situation where you're not able to manage that."