IF NOT… IT COULD COST YOU THOUSANDS OF DOLLARS!
Each year, we’re amazed at the number of hours some families put into planning for college, particularly the amount of time spent on financing. It’s almost like driving across the country for vacation without a detailed map or Waze. If you look at the stats, most other families spend more time planning for that week of summer vacation than sitting down and hammering out their college plan.
A lot of this really comes to light when we interview students and ask them these simple questions:
- Why do you want to go to college?
- Where do you want to go, and why?
- What career interests you, and why?
- Do you know how much it will cost?
- Who is paying for it?
We get answers like: “I don’t know,” or “Because that’s where my friends are going,” or “I’ll figure it out once I get in school.” Answers like this not only show a huge missed opportunity when it comes to planning but could cost families a minimum of $15,000 to $30,000 down the road.
Additionally, it’s tough because most families have not been given the right tools or advice. It is not your fault because:
- As much as they truly want to be able to dedicate hours to every student, some public high school guidance counselors just don’t have enough hours in the day to help every student and family
- Most mass affluent clients (folks that do not qualify for need-based financial aid) simply can’t afford $75,000 a year for college
- The majority of financial advisors don’t have the expertise to help families save ON the costs of college. They just show you how to save for college…if you are lucky.
- Independent educational consultants are great with college admissions planning but have no idea on how the financial side of college works, with exception to the few that have financial aid knowledge.
Does it surprise you that student loan debt is 1.6 TRILLION dollars and 7 of 10 families use it to fund college?
With deficits in the billions, most states have little money to subsidize their state universities. As a result, the cost is now over $25,000 per year, per student.
Ten years ago, you could pay for college expenses with a few low-cost loans. Today, Stafford (student) loan interest rates are 5.2%, and it’s not uncommon for students to graduate from college with $25,000 to $40,000 of debt.
The cost of college is now so high that parents must shell out a considerable chunk of their income and savings, and yet they still need to borrow as much as $100,000, or more, for education.
Today, building a game plan to pay for college is a MUST! Here are just a few things both students and parents should consider when creating that plan:
Student College To-Do List
Career Assessment: this could help you avoid the 5-6 year degree due to a mid-stream change in major.
College Selection: rework your choices to 6-8 colleges to create maximum competition among colleges and increase your potential tuition discounts.
ACT/SAT prep: a minimum increase in your scores could boost your chance for merit scholarships.
Campus Visits: conduct face-to-face visits with admissions and financial aid officers, so you know exactly where you stand.
Extracurricular Activities: maximize your resume of achievement. Make sure your student’s profile is aligned with their career pathway
Grade Transcript and Essay Preparation: have these ready to go for early applications and acceptance.
Parent College To-Do List
EFC Planning: estimate your financial aid eligibility so you know the dollar amount of scholarships and loans the student can receive.
Loan Planning: understand exactly how much education debt you can incur without jeopardizing your current budget, or your retirement funding.
Tax Planning: review your 1040 tax schedules to discover potential tax savings that can help to fund college costs.
Cash Flow Planning: review your investments, health costs, insurance costs, mortgage costs, and current living expenses to discover potential areas of cash flow improvement.
Investment Planning: review all your investments to discover the “real rate of return.” Many hidden costs can be converted to cash flow and used for college.
If you have a high school student that plans to go to college in the next four years, and you have no idea how to develop a college game plan, then please schedule a free 20-minute strategy call to see what you might be missing or register for one of our college planning workshop event.
With summer here, let’s plan for that vacation, as well as for the cost of college.