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3 Questions to Build a Better College Fund

Building the best college fund is a huge topic of concern for families. At least once a day David, Teresa, or I are asked, “How should I pay for college?” Even before I formulate a response, parents will say, “with a 529 account?”. 

Now, as someone who has witnessed the evolution of the 529 account, I cannot support it’s use in 100% of cases.   Like any financial product, there are benefits and limitations to its use.  It is not a perfect tool for everyone

Most people view the 529 account as a college funding strategy, but it is simply a financial product with benefits and limitations. I’ve seen the first hand impacts of said limitations in the form of higher costs for tuition.

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How much does college cost?

Many people ask me: “How much does college cost?”

Before providing a number, I am reminded of the families who have saved thousand using the college success plan and those whom called years later wishing they had followed the path outlines.   Now, how I answer that question will impact the colleges they select and potentially the happiness of their child for the rest of their lives.

See, if I tell them the average private school cost of attendance (COA) is $42,000+ annually, they might dismiss all private schools as too expensive or the average out of state public school cost is $32,500 on average, they might think “I can only afford to stay in Georgia.”

What they need to ask is: “how do I save save and have a successful outcome?” (more…)

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Free Money for College

moneyIn 2016, I had the opportunity to speak to more than 200 families on college financial aid at the AtlantaCares STEM event at Georgia Tech.

The last person scheduled, I had to follow a speaker that literally was a mix of Tony Robbins, Steve Harvey and Tyler Perry – he even had interactive props!  What can be learned is this…great information needs no props.  Our topic:  Free Money for College.

Understanding the three-legged stool of college planning can help your family save time, save money and most importantly be successful.  The core of the college success plan centers around helping you find the best college fit.  Following this recipe, your student should receive plenty of free money. (more…)

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Decode Your College Award Letter

It’s time again, families with Senior students should start receiving acceptance letters–congrats and no worries if you student didn’t get into their dream school! Research suggests that 82% of all students that did not get into their first choice felt they were in the right place by the end of their 1st year.

Now with those letters in, your family will have a better idea of where your child could be attending college and just how much it will cost.  With your acceptance letter, you should also receive your financial award letter.  These letters will be comprised of merit offers, scholarships, loans and works study.  Unfortunately, there is no uniformity to the letters and they can be very confusing.  To quote a colleague, “Obfuscation is an effective way to keep parents off balance” thus making them feel they have a better award than they do.

Not fully understanding your awards and the potential to appeal them costs families millions of dollars a year.  In this 2 part series, we will decode the financial aid award letter and give you the top 5 strategies to be successful with this part of the college planning process.  If you want to see our Financial Award Analysis presentation, please button below and we will send you the link and password to the video recording.

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Tips for Choosing a College Planner

Before you can identify a solution, you must realize you have a problem. The same is true when aiming to fulfill your child’s college dreams. A lot of families in the college application process are not aware of the opportunities they are missing academically and socially for their student, as well as financially for the family. You must have a unified team to collectively pull the oars and reach your family’s college goals. This is where choosing the right college planner for your family is critical. Do you know what your child needs in an advisor?  (more…)

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College Applications: Early Action vs. Early Decision

College applications can be a frenzied process. Parents are worried about their student’s future. Students are worried about hearing back from that dream school. Those of you with a student who is already set on a particular school may have come across the terms ‘early action’ or ‘early decision’. These terms are deceivingly similar. But, there is a huge difference in each. It is very important that families know what kind of contract they are signing when considering these application tactics. This will literally define your student’s future.

To compound this confusing problem, many families forget to ask their college planner about the benefits and limitations of these application tools. In this post, we cover two core components of the Early Action (EA) and Early Decision (ED) process. Understanding these two terms is critical for your planning strategies. Specifically, utilizing financial positioning and a college’s acceptance rates.

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Ways to Pay for College, Part 1

For seniors in high school families are nearing the final months before college starts. In our last post, we discussed getting award letters and figuring out how to decode what each school is actually offering your student. This blog is the next step in your process—figuring out the best way(s) to pay for the next four years of higher education. It can seem daunting at first, but our team has started you off by cutting up the information. In our first segment you will find short definitions of popular loans. We’re also going to break down the positives and negatives of each option. So don’t worry—we’re here to help!

Keep checking into the blog for our part 2– savings accounts!

For families, there can be a lot of ways to pay for college floating around.

Direct Federal Loans (Stafford Loans) (1)

The Breakdown

  • Subsidized and unsubsidized, depending on household income
  • Colleges determine the amount you can borrow
  • Subsidized Stafford Loans are given based on need
    • Government pays interest while student is in school, in deferment, and during grace period before repayment
  • Unsubsidized Stafford Loans are not based on income and not all students are eligible for the maximum loan amount
    • Eligibility determined by student’s year in school, other financial awards, and cost of attendance
    • Students responsible for all interest that accumulates while in school, in deferment, and during grace period
  • Students can take out both subsidized and unsubsidized if they do not exceed yearly borrowing limits

The Positives

When comparing the two options, subsidized have a little more going for them. As stated above, the government will pay interest rates for a time. This can continue through the first 6 months after a student graduates and through a deferment of payment on the loan. An unsubsidized loan will not offer these perks. But anyone is eligible for an unsubsidized loan. The interest rates for these two loan options are typically the same. There is a 6-month grace period before paying either loan, which can be a great help to a new graduate. (2)

The Negatives

Subsidized loans will have a limit on how much you can take out per year. They are also only eligible for those who require financial aid. There are other associate fees that come with both loans. The rate is relative to the amount your loan covers, but make sure you are aware of all hidden fees before making a commitment. (2)

 

Parent Loan for Undergraduate Students (PLUS)

The Breakdown

  • For parents of dependent students. Parents are responsible for repaying back the loan
  • Affordable, low interest rates, & insured by federal government
  • Borrower cannot have an adverse credit history
  • Interest rate of 7.0%
  • Borrowing Limits: Maximum amount borrowed cannot exceed total cost of attendance minus financial aid received

The Positives

Since this loan is specifically for parents, your student will not be strapped down with loans when they graduate. This is a very real struggle for today’s generation. Loans can not only be used for tuition and COA, but any extra money will be passed back to families to use towards other school supplies. Families have the option to defer payments, but must be aware of their specific situation. (3)

The Negatives

The interest rate and loan fee are significantly higher than Stafford loans. Families must be aware of when their payments on the loans will start. While deferment is allowed, you will most likely need to request this option, otherwise payments will be required as soon as the loan is used. Since this loan is specifically for parents, payments cannot be passed off to students. (3)

Schedule a 30 minute call 

Direct Loan interest rates for the 2017-2018 academic year.  These rates are for federal student and parent loans disbursed after June 30 2017 and before July 1, 2018.

Loan Type Borrower Type Fixed

Interest

Rate

 
 
Direct
Subsidized
Loans Undergraduate
Students 4.45%  
Direct
Unsubsidized
Loans Undergraduate
Students 4.45%  
Direct
Unsubsidized
Loans Graduate/Professional
Students 6.00%  
Direct PLUS
Loans Parents of Dependent
Undergraduate
Students and
Graduate/Professional
Students 7.00%  

Schedule a 30 minute call

 

Citations:

(1) https://www.scholarships.com/financial-aid/student-loans/

(2) https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#subsidized-vs-unsubsidized

(3) https://studentaid.ed.gov/sa/types/loans/plus

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3 College Deadlines You Should Know

A huge mistake people make in the college application process is missing deadlines. With this in mind, it is important that families understand their student’s timelines. Students need time to craft essays, study for exams, get good grades, volunteer, and–let’s face it–do a whole ton of other stuff. If a students waits until their Senior year to plan, they will be stressed and unprepared for the entire process.

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