Stressed about School Debt?

, ,

Admittance to the first-choice school is no longer the biggest stressor for students and their parents.

Rather, their biggest concern is how to afford a college education, combined with the debt burden that may be incurred in earning the degree.

While tuition historically has risen around 6 percent per year, the recent recession led to declining in public funds and skyrocketing tuition.

At private four-year schools, average tuition and fees rose 54 percent in the past 10 years. Tuition and fees at four-year public schools, which were harder hit, jumped 71 percent over the time period. This increase caused the average outstanding loan balance to exceed $34,000 – a 62 percent increase over the past 10 years.

If school debt were the only issue, the ability to afford a college education wouldn’t be as stressful. However, when you factor in the amount of debt an average family is servicing, students and their parents may find the situation they face to be hopeless.

We’re here to tell you that all hope is not lost. With a properly designed and implemented college planning campaign, we can help families eliminate the financial stressors in a very short period of time.

Risking Your Family’s Financial Security

, ,

We at College Planning Strategies are 100% pro-college!

Surprised, right?!?

If a college education helps your son or daughter achieve his or her goals, then he or she should earn that college degree. And, you should help foot that bill!

Well, not necessarily…

If footing that bill will place your retirement in jeopardy, you should probably rethink your plan.

Being able to pay for, or assist in paying for, your child’s education is not a requirement found in the “Good Parenting” manual; rather, it’s a luxury.

There is no point in saving (or paying) for a college education if doing so forces you further into debt or may result in a precarious financial future. Your priority should be covering basic expenses, reducing your debt load, and saving for retirement.

How you address those priorities can make a world of difference…

We know that you have no desire for your child to face crippling debt right out of school or, really, at any time during his or her lifetime. And we don’t want your child to face the unexpected – funding their own lifestyle.

Proper planning can reduce, even quickly eliminate, the debt incurred, while improving your financial security and setting your child up for financial freedom.

Contact us for assistance in developing and implementing a properly designed college planning campaign.

Financial Aid Award Letters – What You Need to Know

, ,

Between now and mid-April, high school seniors and their parents eagerly await the arrival of the financial aid award letter. Once opened, they may appear to be straightforward. But, they may be anything but…

Surprising to most families, “financial aid” includes both free money (e.g., grants and scholarships that need not be repaid) and loans (i.e., money that must be repaid). So, even though the family may have qualified for financial aid, be absolutely sure you understand what aid has been awarded.

Merit aid, based on good grades, high test scores, artistic success, and/or star athletic performance, is free money. Schools use it to increase attendance. It may not automatically be renewed; you may need to maintain a specific GPA or meet some other requirement(s). And, what happens if it takes more than 4 years to graduate?

Need-based aid can be deceptive. A family must understand the Cost of Attendance (COA) and Expected Family Contribution (EFC), both of which are used to determine financial need. Each school determines its annual COA; the EFC is calculated pursuant to a legally-defined formula. Typically, the EFC is the minimum a family will be expected to pay; in fact, a family may be expected to pay much more.

If the student has applied to, and been accepted by, more than a single school (6-8 applications seems to be the “sweet spot”), it falls on the family to compare and contrast financial aid awards. Be sure you understand how to compare those awards effectively.

What happens if the school front-loads the award? Almost half of all schools provide more generous awards for freshman year than they do for sophomore through senior years. Yes, it’s a bait-and-switch. Unfair? Certainly. But, it is the school’s money. Do you know how to identify if a school is front-loading?

What happens should the student win a private scholarship? Legally, you are required to report any outside scholarships to the school. The school then decides how to revise the award. Some schools reduce the amount of loans included in the award letter, while others reduce the amount of free money awarded.

Don’t rely on an athletic scholarship. While approximately 4% of all high school athletes will compete in a sport at the collegiate level, only about 2% of high school athletes are offered an athletic scholarship. Moreover, the vast majority of scholarships are not full-rides. And, if you are one of the lucky few, the scholarship must be renewed each year by the coach.