Billions in Unclaimed Financial Aid


Due to the “Pandemic of 2020,” and the drastic market downturn, furloughed workers, and record numbers of unemployed Americans, a high percentage of families lack confidence in their ability to cover their portion of the annual cost-of-attendance at their schools of choice.

According to a poll of 6,500-plus high school seniors and their families, almost 70% of families say “…Covid-19 has impacted their ability to pay for school.”

According to another report by LendingTree, almost “…40% of families have tapped their child’s education fund to help cover expenses due to the economic fallout…”

A highly surprising statistic – – fewer families applied for financial aid.

Many family’s typically fail to file the Free Application for Federal Student Aid (FAFSA) because they feel they won’t qualify.  They already count themselves out of the running.  Failing to file can be a huge mistake.

Yet, costs continue to rise.  Across the country, the average annual cost at a four-year private institution was slightly less than $50,000, while the average at four-year in-state institutions was slightly less than $22,000.

Scholarships, grants, and awards tied to the FAFSA filing likely will be needed by a large number of families.  If you haven’t filed the FAFSA, do so immediately.  If you have already filed, but have experienced a financial shock, contact your desired school to discuss your circumstances and request more aid.

With schools contemplating offering online classes only, many students are reconsidering their options, especially accepting the offer of admission, but deferring enrollment until they can expect the true college experience. 

They may be desperate to hit enrollment numbers and may be very open to negotiations.

You may need assistance with a number of aspects of your college planning campaign.  Our professional college planners are here to help.

We await your call…

The Parent Portion of the College Education Expense

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The expense of a college education rivals, and often surpasses, that of a residential mortgage, especially if the cost involves more than one child.  Yes, costs are steep, and with 43% or more of the cost covered by the family (according to Sallie Mae), parents tend to be the principal source of college funds.

According to a February 11, 2019, article in Credible, the average annual: in-state cost-of-attendance on campus at a public university was $25,980; on campus at an out-of-state public university was $41,950; and, on campus at a private non-profit college was $52,500.  Thus, the average 4-year cost-of-attendance for one child, assuming no increases (yeah, right!), ranged from $103,920 to $210,000.

Conventional thinking suggests parents have several options available to them.  Technically, they do.  But, none of the options actually benefit the family.  Four conventional means of savings include the following:

Start a savings account early. 

While it’s never too late to start a savings account, the earlier the better.  Suggested accounts include those at a bank or credit union, as they are insured and safe.  However, the return on your money is negligible.  Even were you to begin an account at conception, the likelihood of having the money needed to cover your portion of the expense is low.

Another suggested option is the 529 College “Savings” Plan.  The drawback that most parents and grandparents overlook is that these are investment accounts, not savings accounts.  Even though there may be some tax benefits, the money can be lost, it’s outside your control, and subject to access and use restrictions.  And, if used for non-qualified expenses, taxes and penalties are imposed.

Complete the Free Application for Federal Student Aid (FAFSA).

A critical step with respect to federal student aid, it provides access to “free” money (i.e., grants, scholarships, and awards) and qualifies the student for federal student loans.  Be sure to submit the FAFSA, as it may make available aid of which you were unaware.

Take Out a Parent Loan.

Both Parent PLUS loans and private student loans typically are available to parents.  Parent PLUS loans come with one of the highest rates for federal loans, as well as an origination fee exceeding 4%.  Repayment begins within 60 days following distribution of the loan and, as you must apply for a new loan each academic year, you may have four or more loan payment for the better part of a decade.

Take Out a Private Student Loan.

Private student loans for parents are in the student’s name, but cosigned by a parent.  Typically, they have lower interest rates than the Parent PLUS loans and multiple repayment plans.  And, they can assist in establishing good credit for your child.

Do not withdraw retirement funds from your retirement savings account(s).  Likewise, do not take out a Home Equity Line of Credit or refinance your residence for the cash.  Doing either can have a variety of negative impacts, not only on your retirement plans, but on the amount of financial aid for which your child may qualify.

While many of our clients do utilize one or more of the above options, not one of those options address the financial vehicle we recommend for college savings purposes.  The vehicle we recommend: leaves you with access to and control of your money; is protected from market downturns; has a guaranteed return, compounded annually; and, will not have a negative impact of eligibility for financial aid.

If you’re interested in learning more about the vehicle we recommend, please contact us to schedule your no-obligation evaluation.  We are here to help!

How Many Colleges and Universities Will Close in the Next Decade?


“Now that’s an interesting question,” you’ll say, “coming from a professional college planner.”

It most definitely is an interesting question, but it is one that parents and students should factor into their college planning campaigns.

At one point in the not-too-distant-past, a Harvard Business School Professor, Clayton Christensen, predicted that 50% of colleges and universities would go bankrupt in the next 10-15 years.  In 2013, he and Michael Horn, a writer focusing on education, suggested that, “a host of struggling colleges and universities—the bottom 25 percent of every tier, we predict—will disappear or merge in the next 10 to 15 years.”

In short, an underlying premise supporting the argument – the business model of traditional colleges and universities was broken.

How so?

Annual revenue falls short of covering costs. 

According to the National Association of College and University Business Officers, the average tuition discount rate for first-time, full-time freshmen was 49.9%.  Students were paying roughly one-half of the projected annual cost of an education.

Continuity of business numbers suggest that, for schools dependent upon tuition to cover expenses, a discount rate in excess of 35% places a school in jeopardy.  Multitudes of institutions exceed that percentage.

As of Mr. Horn’s 2018 article, “at least 25% of private colleges are now running deficits” and at public institutions, “even in a good economy, expenses have outpaced revenue the past three years.” (2015-2017)

Demographics have been changing.

The pool of potential students began its decline a few years ago.  The number of college-age students reached its zenith and began trending downward not too long ago. 

Awesome right?  More money for fewer students!  Not so…it’s a disaster in the making…

First, in the competition to attract students, colleges and universities will continue their “arms race.”  For many, that means more faculty, more extravagant facilities, more administrative positions—added expense.  This intensifies their current struggle for revenue (i.e., tuition, government funds, market returns on endowments, and donations).

Second, for those that lose the race and those that experience enrollment declines, their large fixed costs (tenured faculty, debt payments associated with financing their many buildings, and associated building-maintenance costs) are but dead weight pulling them under at rapidly increasing rates.

Disruptive innovation.

Online learning is predicted to wreak further havoc on the traditional business model.

Even before the mass hysteria occasioned by the Covid-19 pandemic, schools had begun utilizing online learning technology.  With the resulting nationwide shutdown of colleges and universities, such learning has become the new norm.

How many colleges and universities will close and over what period of time will this occur?  Will there be outright closures?  Mergers and acquisitions?  Bankruptcies?  Perhaps all three?

There is an old Chinese curse (yes, quite fitting for the time) – May You Live in Interesting Times.  We most certainly do.

Considering the above, it’s likely the 200 most selective schools in the nation are likely to be unaffected.  Many institutions will find clever means of innovation in an effort to ensure their continued existence.

Do you have any idea how your college planning campaign may be affected?  Will the schools in which you’re most interested be able to provide the financial aid for which you qualify?  Will your child be in the best position for purposes of application and admissions?  How will you know if you’ve addressed every facet that could affect your campaign?

We are here to help.  We look forward to hearing from you.

Marriage and Student Debt


What’s the main cause for divorce here in the USA?  Why, marriage, of course!!

All kidding aside, the majority of marriage failure is tied to one factor – finances.  Specifically, the stress tied to a couple’s/family’s financial well-being.  Marriage means learning to handle money as a team.  And, as many men have learned, it means the wife has the reins!

Marriage today likely means addressing how to handle repayment of student debt, as one or both parties to the marriage may have such debt.  The big question – are you responsible for the other’s student debt?

Quick answer – no.  Unless the loan is taken during marriage and the debt is co-signed, whether new or refinanced.  At that point, you’re equally responsible for repayment.  Living in a community property state could also result in liability for the other’s debt.

In fact, there are several ways student loans can affect finances…

  1. Student debt and credit scores.  Upon marriage, credit histories do not merge; your credit history and score is yours.  However, they can be affected if a so-signed debt is involved.
  • Student debt and taxes.  While the marriage tax break can be seen as a positive, a combined income can result in elimination of the student loan interest deduction.
  • Monthly student debt payments.  If either of you are on income-driven repayment plans, marriage could change the amount you pay on the loan, perhaps even the amount you pay in taxes.

Whatever you do, maintain communication.  Discuss your debt regularly, follow the plan, and reduce your stress.

If you might be interested in the best program for handling repayment of student debt, contact us to schedule a no-obligation meeting.  We look forward to assisting you, our spouse, and your family.