College List Considerations

What do you want in a school? How far from home will you look? How big is too big? What field(s) of study interest you? Are you a student-athlete wanting to compete at a higher level?

You’ll find a number of appealing schools based on your desires in a school. But, that list will change as you discover more about the schools – and yourself.

Academic goals should be your first priority. Focus on schools with your chosen field of study, as you should know where your strengths and weaknesses lie (assessment methods are available through our packages). Likely, you’ll find a variety of schools meeting your academic goals.

Following your academic goals, identify additional needs in a school in order of importance – location, size, culture, sports, cost (though, if you’ve followed our blog, you know that you should not focus on “sticker price.”).

If you have no strong preferences, pick three features that attract you. As you research schools, certain features and difference may become quite important.

The goal for your first list is to identify 20 potential schools to research further. If needed, broaden your search.

Focus on the next highest priority in a school to increase the number of potential schools. Then, identify the schools most closely meeting your academic requirements.

Continue narrowing the list, concentrate on learning more about those schools most attractive to you, and you’ll identify the schools making your application list.

Regardless of results, do not be afraid to modify your search as you change your mind about what you find most appealing in a school.

For assistance in identifying the best schools for your child offering the greatest amount of free money, contact our Professional College Planners to schedule your appointment.

Private Colleges & Tuition Discounts

When considering the affordability of a 4-year college education, parents and students focus rather intensely on “sticker price.” And, although those “sticker prices” are horrendously frightening, leading families to eliminate private schools that appear to be financially unavailable, the price is merely one facet of the equation on which a family should focus.

Eliminating private schools based on price alone can be a rather HUGE mistake!

According to a recent report issued by the National Association of College and University Business Officers (Yes…there seems to be an organization for everyone…), with respect to private schools:

“The share of tuition and fee revenues these schools are devoting to grants rose to its highest level ever in the 2016 to 2017academic year – 44.2% for all undergraduates and 49.1% for first-time, full-time freshmen.”

Private schools acknowledge that their published cost-of-attendance terrifies families, leading them to eliminate what may be the best school for their children from their list of possibilities.

Unfortunately, those families typically fail to understand that almost no family winds up actually paying the published price.

Private schools offer widespread discounts. This discounting means that almost all freshmen receive some kind of deal. Private schools offer discounts for a variety of reasons:

  1. Due to the Great Recession, and stagnant wages, many, many families find the published prices of private schools unaffordable.
  2. Based on demographics, private schools are competing for a declining pool of qualified candidates.
  3. The need to attract certain categories of students (i.e., very qualified and/or very wealthy).

A private school will do what it can to make the education it provides more affordable. If a private school truly wants a student, it will do everything it can to attract the student and make the price work for the family.

Do you know what private schools to approach? Do you have a plan in place that addresses how to handle your family’s Expected Family Contribution (EFC)?

How to properly fund a college education may be one of your family’s most important financial decisions. Contact our Professional College Planners to begin your college planning campaign.

Home Protection: The Government & Student Loans

With a properly-designed, family-specific college planning campaign that you’ve implemented and followed, neither you, nor your student has reason to fear school loans. The loan repayment strategy built into your campaign allays those fears.

But, if you haven’t started your campaign, if you haven’t contacted us for assistance in developing that campaign, then you may have every reason to fear school loans. Especially, if you don’t have a repayment strategy and you end up defaulting on the loans. And, when you default…

The government is gonna get ya!

Every day, roughly 3,000 people default on their federal student loans, resulting in an unpaid bill of $137 Billion. For years, the government has hired debt collection agencies to call and send letters.

The government has long been able to garnish wages, divert income tax returns, and redirect both Social Security and disability benefits. Now, however, the government is implementing a new strategy.

During the past few years, the government has sued defaulting student loan borrowers. In nearly every suit, the government wins.

What does Uncle Sam win? A lien on borrower’s assets. The debt is now attached to the borrower’s most valuable belongings – most likely, a home.

Once a lien is in place, the government can force the sale of a home. Though exceedingly rare, it sometimes happens.

Realistically, due to the ever-increasing cost of a college education, the need for both student and parent school loans is a fact. Students and parents will take the loans. However, those loans should be taken with proper planning for repayment in place.

Protect your wages, income tax returns, protect your Social Security benefits, and, most importantly, protect your home with a properly-designed student loan repayment strategy.

Contact our Professional College Planners to schedule your appointment today!

Investing in v. Saving for Your Child’s Future…

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If you’ve been reading our blogs (emails), you know tuition rates continue their meteoric rise. You also know that students, and their parents (mostly parents), incur ever-increasing amounts of school debt.The burden often falls on parents or guardians.

As with any other financial goal, the key to proper preparation is early planning. But, when do you start?

No joke – as soon as the baby arrives!

If you haven’t started at birth, then begin as soon as possible. While there are many options available to you, be wary of investments.

Be wary of placing your money in any vehicle subject to market fluctuations (i.e., where you can lose your money).

Be wary of placing your money in any vehicle that restricts when you can use your money.

Be wary of placing your money in any vehicle that restricts how you can use your money.

Be wary of placing your money in any vehicle that governs for whom you can use your money.

Place your money where you can save it and protect it. Be absolutely sure you place your money in a vehicle that:

  • Is not subject to loss;
  • Does not restrict when you can use your money;
  • Does not restrict how you can use your money; and,
  • Does not govern for whom you can use your money.

Learn where and how to save your money. Contact our Professional College Planners to schedule your appointment today!

College Grads & Starting Salaries

Congrats to newly-minted college graduates! The party is just getting started!

 

According to an article by Brad Tuttle in the May 12, 2017 Money section of Time.com, average starting pay for new college grads has never been higher than it is right now.

The average starting salary for this year’s grads is a smidge under $50,000. Adjusting for inflation, starting salary is 14% higher than it was ten years ago.

Ok… so “never been higher” may be an historical exaggeration. Nevertheless, the average starting salary is higher than it was before the recent ‘Great Recession’ decimated earnings for a wide variety of workers.

The data analyzed by researchers – entry-level salaries for 145,000 positions from 700 U.S. companies and organizations – represented a “snapshot report of 25 jobs.” Jobs in the fields of Science, Technology, Engineering, and Math have starting salaries well above average ($59,000 – $65,000), while customer service representatives and assistants salaries remain considerably lower ($35,000). In either instance, even if federal student debt held at graduation maxed out at $31,000 (for a 4-year degree), annual starting salaries exceeds total student debt held – the goal for each of our family-specific college planning campaigns.

Is a college degree important?

ABSOLUTELY!

We know through a plethora of studies that college grads earn roughly a million dollars more during their working career than do mere high school graduates. Assuming a college graduate earns a steady $40,000 annually for 40 years, total earnings would be $1.6 Million. Accordingly, a mere high school grad would earn only $600,000 during those 40 years, or $15,000 annually.

Be sure your children receive a college education from the best schools with the most favorable financial aid formulas and the least amount of student debt possible.

Contact our Professional College Planners to begin your college planning campaign.

Men v. Women: The Impact of Student Debt

It’s not a secret – the effect of school debt can weigh on graduates for years.

By now, you know total school debt is near $1.4 Trillion. Exceeding short-term debt (e.g., credit card, car loan), its impact on Americans’ financial obligations will continue for quite some time.

A recent study by Lend.edu (https://lendedu.com/news/race-gender-paying-for-college/) found that, on average, students graduating with a 4-year degree find themselves nearly $40,000 in debt. Further, the study found the debt load made it tough for them both to stay current on daily expenses, and also to save for retirement.

Not surprisingly, the study found that men graduate with higher debt levels than women. This happens for a variety of reasons.

And, although men reported having an easier time than women in keeping up with day-to-day living expenses, 50%-60% of both genders feel that school debt made doing so much more burdensome. In fact, roughly the same percentage of both genders say their debt has negatively impacted their lives, with nearly two-thirds saying that the balance of their school debt has made it harder to save for retirement.

Should we shed a tear for them?

 

Absolutely not!

More than likely, they need assistance in learning how to manage their finances.And, delaying gratification should be an option.

Currently, from federal sources, a student can assume debt in an amount not exceeding $27,000 over 4 years. If the student has graduated with a degree (or degrees) in a field leading to a position with an annual income exceeding that debt, handling that debt load shouldn’t be difficult.

Our tears should be reserved for the parents, many of whom assume PLUS Loans and co-sign private loans to help their children cover the cost-of-attendance. Depending on the number of children that will attend a college or university, absent any need-based or merit-based financial aid, parents assume huge amounts of debt.

A typical parent will assume approximately $50,000 or more in debt for a child to attend a state university and graduate in 4 years; if the child attends a private university, the debt assumed would be 50%-100% more (i.e., $75,000-$100,000). And, if there is more than one child…

How does a typical parent satisfy that debt?

If they’re lucky, they work much longer than expected, raiding their retirement to cover the cost. If not so lucky, they cover it through their retirement income while they adjust to an uncomfortable retirement? If they’re really unlucky, the government is garnishing their Social Security income in order to satisfy the debt and they’re suffering a horrible retirement.

Don’t be a typical family! Don’t let your family be one of the 80% or more that overpay for a 4-year education! Don’t be a parent living a very uncomfortable retirement!

Meet with one of our Professional College Planners. Be unique and start your college planning campaign today!

Choosing a Major: When & Why

Naturally, you’ll want your child to have a major in mind when beginning a 4-year undergraduate career. Steps can and should be taken to identify a course of study prior to choosing a school (by May 1st of senior year in high school).

Why choose a course of study before attending school? What if your child has no idea what to study? What if your child is interested in a variety of fields?

Currently, a student spends 5.5 – 6 years earning an undergraduate education. Perhaps the greatest reason why this occurs is the failure to identify the best field(s) of study to pursue until sometime during the second year in college.

A change in majors; an additional year or two added to the schedule. Tons more money invested. Perhaps even a transfer from one school to another, if the current school doesn’t offer the coursework needed.

Typically, determining a course of study to pursue will require soul-searching, solid research, and a willingness to test it out once school begins.

And, typically, if the initial choice really isn’t a major your child should pursue based on talents, skills, abilities, desires, and more, then you’re back on the 5.5 – 6 year path.

The standard method of identifying a major course of study may not be the best approach.

Perhaps the best approach would be discussing the matter with a member of the National Association of Certified Admissions Counselors (NACAC). Following such a discussion, combined with reviewing questionnaires and/or other documentation completed by your child at the counselor’s request, your child (and you) will have a much clearer understanding of the path(s) to pursue. That knowledge will serve to reduce the national average of time spent in school from 5 – 6 years to 4 – 4.5 years

And, best of all, that knowledge should save you money!

Each of our fee-based packages includes a private interview with an NACAC-certified counselor…and much, much more!

To schedule a meeting to discuss your family’s college planning campaign and for assistance in identifying the best field(s) of study to pursue, contact our Professional College Planners.

The Top 3 Financial Aid Mistakes…

Whether you’re the parent of a soon-to-be-graduating college-bound high school senior, a recent new born, or a somewhere-in-the-middle son or daughter, you may have experienced some sleepless nights…

When you stop to consider the expenses you have faced, may be facing, or will face at some future time, one (okay, maybe two) question will keep you burning the midnight oil…

How in the world are you going to pay for college??? How can you possibly afford such an outrageous expense???

In my experience, like just about every parent out there, you want the best for your children – I wish I could say all parents, but that’s just not the case. A college education likely sits at the top of that list.

And, in my experience, being smart about the financial decisions surrounding that education is where many, many, many parents fail. It’s probably where you’ll fail too.

There are a variety of pitfalls you and your college-bound children will face. Here are a few:

Mistake #1

Not knowing the true cost-of-attendance of the schools being considered.

Mistake #2

Not knowing your family’s financial aid eligibility.

Mistake #3

Overestimating your ability to pay off debt which, in turn, will affect your ability to retire or live comfortably in post-retirement life.

Developing and following a properly designed college planning campaign can and will save you money, help reduce and/or eliminate school debt, and safeguard and/or improve your retirement plans.

Avoid these very costly mistakes!

Contact our Professional College Planners to schedule the first appointment in your family’s college planning campaign.

Home Equity & Paying Off Student Loans*

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There are many ways to satisfy student loan debt. Typically, it’s through 10 years of month-to-month-to-month payments.

The current marketplace, however, provides other options. Those options include a line of credit, a variety of cash-out programs, and home equity loans.

Taking advantage of the marketplace, a new Fannie Mae program encourages homeowners to refinance their homes, to pull out their home equity as cash, and to use the cash to pay off the student loans. Doing so arguably leaves homeowners with a larger mortgage at a potentially lower interest rate.

Those with a lot of home equity can often get mortgage rates that are substantially lower that the rate on their student loans. In fact, even though refinancing rates have edged up in recent months, they remain historically low. Especially when compared to current student loan rates.

Rates for Parent PLUS loans are at a relatively low level – 6.31%. Additionally, private lenders are offering student loans at rates ranging from 3.9% – 12.8% based on borrower’s credit and whether there is a co-signer.

Combining a low interest rate with a higher mortgage interest deduction AND having the student loan debt paid off…

If you have the home equity available, it SOUNDS like a great idea!

Yes, it certainly sounds great. But, is it really a smart use of your home equity?

If you have a decent amount of home equity built up as your child graduates from college, it’s also likely you had a decent amount of equity built up when and/or before your child began his/her undergraduate education.

Why would you let the equity sit there unused, subject to market forces, rather than use it to your benefit? Why wouldn’t you pull the equity earlier, then place it where it would safely and securely grow from 5%-11% on an annual basis, depending on the market (not an investment vehicle; but, rather, a savings vehicle)?

If a parent in this situation had made their home equity work for them, it’s entirely possible the funds would be available to pay off most and, perhaps, all of the Parent PLUS loans when the loans became due.

If you’re interested in learning how to make the equity in your home work for you during your college planning campaign, contact our Professional College Planners to schedule your first college funding meeting.

* Adapted from an April 27, 2017 Washington Post article by Danielle Douglas-Gabriel

 

Paying for College without a Scholarship…

According to Katie Lobosco in an April 25, 2017 CNN Money Op-Ed, even if the acceptance letter fails to mention any kind of scholarship, the good news is that most students receive some financial assistance that reduces the school’s“ sticker price.” Moreover:

“Even without a scholarship, there are plenty of other forms of aid that can help you tackle the cost. The financial aid system can be confusing…There are scholarships and grants (which you don’t have to pay back) and loans (which you do).Some of what you receive is based on income and some can be based on academic merit.”

According to Ms. Lobosco, here are a few other ways to help pay for college:

  1. Grants. Colleges, states, and the federal government hand out grants, which need not be repaid. However, most are based on financial need and are determined by the income reported on the FAFSA. Schools take into consideration how much they think your family can afford, then try to fill the gap with a grant. Some pledge to fill in more of a gap then others (these are the schools you should consider).
  2. Ask schools for more money. Though school say they don’t negotiate, many of them have procedures for appealing the initial financial aid award. There are strategies to this method; it’s not like negotiating an auto purchase. Moreover, the appeal must include reasons why the school should consider an increase in aid; typically, those reasons reflect on changes in the family’s financial circumstances. Again, it’s based on financial need.
  3. Work-study jobs. Schools participating in the federal work-study program tend to include work-study as part of the aid awarded. However, these jobs also are based on financial need.
  4. Apply for private scholarships. While there are thousands of private scholarships available, there are tens of thousands of applicants. The odds of winning are slim, though winning certainly is possible. Private scholarships represent just over 3% of the billions in available aid. Use an internet-based service such as www.fastweb.com or a smartphone app such as Scholly. (Find and apply for scholarships specific to your talents, skills, and abilities; don’t waste time on a shotgun approach. Focus on other strategies.)
  5. Take out loans. These should be your last resort, but they’re often inevitable. The reality is that loans will taken to cover a portion of the cost-of-attendance. Picking the right loan(s) at the right price(s) is a required element of a viable college planning campaign.
  6. Claim a $2,500 tax credit. If eligible, the American Opportunity Tax Credit provides for a reduction in taxes after paying for tuition, fees, books, and room and board – up to $2,500 per child. Contact your accountant for more information.

Each of the above options represent a facet of a well-designed college planning campaign, yet almost everyone recommends each of the above as if those are the only options available. If your gross family income is $80,000 or more annually, schools may project that your family has some amount of financial need.

Each of the above may help cover some percentage of that need. More likely, however, you’ll be expected to shoulder a much greater portion of the cost-of-attendance than your current financial situation realistically permits.

It’s all rather depressing…

If you’re interested in an option not typically recommended, an option professional college planners include as a standard element of every college planning campaign, an option strategically addressing student and parent debt while helping to preserve retirement plans, contact us to schedule the first meeting of your family’s college planning campaign.