Category: Spotlight

January is the month that millions of families disclose their financial data to the Department of Education through the Free Application for Federal Student Aid (FAFSA). Specifically, more than 20 million FASFA applications are submitted each year.  Depending on the statistic you prefer to use, anywhere from 70—90% are submitted with errors.   An error-filled FASFA will likely reduce the amount of aid you might receive.  Given that the FAFSA has been called the gateway to financial aid, and with the ever increasing costs associated with college, it is imperative to minimize mistakes in completing it.  Here are ten ways to reduce the likelihood of your FAFSA containing errors.

1) Failure to Submit Because of Income (high or low)     Many times families will not submit a FAFSA believing they make too much money to qualify or they make less and think they will get everything covered because of income. Income is one of seven factors to determine aid eligibility…you should always complete the FAFSA regardless of income.

2) Waiting to Submit     A misconception of many is to wait until they have all of their financial documents in place and taxes done before submitting their FAFSA. Since some money is on a first-come, first-served basis, it is imperative to submit as early in January as possible with estimates of your finances which is fully expected.

3) Divorce Situations     In this situation, whose financial information is used? It is the income and assets of the household (including step-parent info) in which the student spends the majority of their time and receives a majority of their support.

4) Understating Income     If you contribute to a 401K, 403B, etc. or any other pre-tax retirement account, you must add back any contributions in the previous year to your income for FAFSA purposes. This in effect produces a higher FAFSA income than what might be shown on your tax return.

5) Overstating Assets     Many families mistakenly include retirement assets as part of their investments or net worth when in fact retirement assets should not be included here.

6) Real Estate     Another common way families overstate their assets is by including the equity they have in their primary residence. For FAFSA purposes, primary residence home equity is not included.  However, equity in rental property and vacation homes can be included.

7) Misplaced Information     Always remember the FAFSA is written from a student perspective as if they are the one completing it. When the FAFSA refers to “you” and “yours”, it is in fact referring to the student.

8) Not Submitting Electronically     Online submission provides built-in edits to help prevent errors, is timelier, provides an online help feature, and allows for a much simpler renewal process.

9) Taking Your Time When Answering Questions     Give yourself time to think through the questions and what they are asking. Answering questions a certain way can preclude you from receiving aid or valuable information.  The following two questions highlight this fact.  When asked if you are interested in work study, always answer “yes”.  It does not mean you will get it nor does it mean you have to take it.  But what if the award is a great offer for the hours expected?  When it asks for the student’s email address, always put your email address.  This ensures all information communicated to you or your student comes to you to review.

10) Failing to Save as You Go     Every couple of pages, be sure to save your file as you go. You don’t want to get halfway through and find your computer or the government’s server has locked up.

And last but not least, we want to include the one mistake you definitely do not want to make. Please be sure to complete the correct FAFSA application.  Remember to complete the FAFSA for the year your student will be in college for the upcoming fall school year, NOT the school year you are currently in.  This is a huge but common mistake.  Make this one and your student will receive no aid for the following school year.  Your CPR advisor can help you minimize mistakes with your FAFSA submission so that you maximize your potential aid award.

We are in the business of helping families through the major life transition of sending their children to college. For many, it will be the most expensive time of their lives and, if not handled properly, could cost them their retirement. If you or someone you know needs the help and guidance of a trained financial professional, don’t hesitate to contact your local College Planning Relief® Licensee. Remember, you shouldn’t have to choose between your child’s college and your retirement.

“The education of our children is an investment in our future.”

“Educating the next generation is an investment we cannot afford to forego.”

“A college education is an investment that will provide our children the opportunity to have a better life than the previous generations.”

These are all quotes and phrases that we have heard spouted from political leaders for decades. The reality is that a college education is an investment and one that should be seriously considered. However, it should also be looked at from a slightly different perspective – the return on that investment.

If you were contemplating investing some of your hard earned money into an investment program, OR you were considering borrowing money to invest in something (this is exactly what is happening when families take out loans for college), you would take a number of things into consideration.

For example, what is the return on my money going to likely be? How long will it be before I can expect a return on my money? What are the risks associated with this investment? Is there any chance I could lose my investment (AKA drop out of school)?

A wise investor would also consider a number of different investments before settling on one. He or she would compare those investments head to head based on the answers to the questions above. The wise investor, oftentimes, would then consult with a financial professional or somebody better trained in making such important decisions before they wrote the check to the investment company.

You see, college IS an investment.  In fact, for many families, it is the single greatest amount of money that they will invest in anything and yet very few families look at it this way. This is a mistake. An investor blindly throwing hundreds of thousands of dollars into an investment they knew nothing about would be considered reckless and not likely someone who others would pattern themselves after. However, this is far too often the approach that is taken for college. 

Paying for college requires a strategy.  Arm yourself with the proper tools to make an informed and educated decision.  This involves diligently doing your homework and seeking help from a financial professional knowledgeable in the college funding process.

We are in the business of helping families through the major life transition of sending their children to college. For many, it will be the most expensive time of their lives and, if not handled properly, could cost them their retirement. If you or someone you know needs the help and guidance of a trained financial professional, don’t hesitate to contact your local College Planning Relief® Licensee. Remember, you shouldn’t have to choose between your child’s college and your retirement.

For most parents, there are few things that rival the anxiety associated with wondering how they are going to pay for their children’s education without completely eliminating their hopes for retirement.

Two common causes of college planning stress are 1) little to no comprehension of what a college education will cost and 2) procrastinating on when to start saving. Ask any mom or dad of a high school senior and they will most certainly tell you that the time went by “oh so fast!”

Here are some steps that can be taken to greatly reduce this stressful time:

1. Get an accurate evaluation of your personal financial situation and clearly spell out your financial goals. Before building a paying-for-college plan, it is imperative to know all the resources you have at your disposal.
2. Calculate the actual projected costs of college for all of your children. Most families need this reality check because they greatly underestimate the current cost, the rate of inflation, as well as the number of years that it will actually take their kids to receive a degree.
3. Draft a paying-for-college plan. Financial market volatility and escalating college costs have translated into the need for a much more formalized plan to accomplish the important objective of successfully sending kids to college. Understand that there are many pieces to a successful college plan and educate yourself about your options. College selection, financial aid, merit-based aid, modest student loans, athletic aid and parental contributions are all possible components of your paying-for-college plan. Getting a plan in writing is key, then it can be tweaked and modified as needed.
4. Start saving! Doing the math, in order to have college costs covered when the time comes, you should be saving $200 per month for a newborn, $350 per month for a first grader, $450 per month for a fifth grader, and it goes up from there. If you wait for high school, you’re probably looking at $1,000 per month.

Paying for college does not have to be so stressful. Planning NOW is the remedy.

We are in the business of helping families through the major life transition of sending their children to college. For many, it will be the most expensive time of their lives and, if not handled properly, could cost them their retirement. If you or someone you know needs the help and guidance of a trained financial professional, don’t hesitate to contact your local College Planning Relief® Licensee.

Remember, you shouldn’t have to choose between your child’s college and your retirement.

Scholarship applications can be extremely complex and confusing. Not only does every different scholarship body want something different, but none of them seem to set the deadline dates for the same week, which no doubt would confuse you even more! When you are applying for college, it can seem like you are going round in an endless circle, trying to finish tasks that you have already started but seemingly getting nowhere. It can be a chore just to finish one application to a college, let alone fill in several for scholarships as well. However, help is at hand and you can make life easier for yourself with these basic tips:

Read every application carefully.

Every scholarship requires something different because no two are the same, so you cannot just fill out one for them all and hope that you will get a measure of success. There will always be something different expected of you, whether there is a word limit on your personal statement or fewer letters of recommendation. If you do not read it and comply with the guidelines, then your application will be discarded straight away.

Prepare in advance.

Before you even begin to research scholarships in depth, you should practice your personal statement. Style is extremely important, so you should write it out the summer before you plan to apply to ensure you get it completely right. If a personal statement reflects you, then it is perfect for your applications. Keep the copy of the draft you wrote and then use that as a foundation on which to build your actual personal statements when it comes to applying for real.

Work with the space you have.

Try not to use continuation sheets on scholarship applications because the likelihood is that representatives or assessors will get bored halfway through. Try to keep all of the information to a minimum but include as many activities as you can in your list. You could even add a few into your personal statement if you run out of space. However, if you do not have enough space then leave out the ones that are not important.

Look at what they want.

You should always look at what the provider of the scholarship is asking for and give them what they want. Never lie on an application form but tailor your own personality traits to your advantage. If they are looking for someone with character, then communicate that in your writing style. If they are looking for integrity, then mention an example of it. Always back up what you have to say by just tailoring what you know about yourself to what they are looking for in you!

Always give your reasons why you want to study a certain subject.

Many individuals fall down at this step because they do not justify their reasons for wanting to take a certain subject. There must be a reason behind your choice but failing to communicate it or failing to put your reasons across in a logical and well-reasoned way can ultimately ensure that you fall at the last hurdle!

Read it through.

Never send an application form for a scholarship without reading it through first. Make sure that you have said everything that you want to say in a clear and concise but logical way so it is easy to read. If it passes your critical eye then it should pass theirs!

College is a wonderful time for young adults. It’s a time where they have new freedoms, new friends, and an exposure to new ideas and career paths. They are also exposed to many decisions that have consequences.

In addition to receiving an abundance of credit card offers, they also have to determine how to support themselves and pay for college. It can be a difficult and stressful time. You can help alleviate the stress and help them make better decisions by teaching your child about financial responsibility.

The Decisions

There are many decisions a child has to make, including where to go to school, how to help pay for their school and how to manage their money. It requires several conversations. The first conversation should be when they’re applying to schools.

Discuss the benefits of choosing a school that is less expensive. It can be tempting to attend a big name school or a private school because they carry a brand name that is alluring. However, at the end of it all, those big name schools offer little additional value when it comes to building a career and a life. Studies have shown that the job prospects are essentially the same. But the debt is more with a pricey school.

Other decisions include if they’re going to work while they’re in school and how to best manage their income and expenses. Credit card companies love college students and it’s easy for children to graduate from college with both student loan debt and credit card debt. It’s important to talk to your child about these issues before they are on their own. Work out a budget with them and discuss the pitfalls of credit card debt.

Things to Consider

Help your child open a bank account where they’ll be going to school. Many universities offer credit unions which can offer low-fee banking and good interest rates. Additionally, help them create an emergency fund that they can use for unexpected events. This emergency fund helps prevent them from turning to credit.

Finally, guide them to identify and utilize campus and financial resources. While it’s important to help educate your child about financial responsibility, it’s just as important to teach them to fend for themselves. Help them locate the best tools and financial learning resources. This helps them learn more about financial responsibility as well as teaches them to become more independent.

High school seniors all over the country are finalizing decisions on which university to attend. For some, it will be where they spend the next four years of their lives obtaining a degree that will grant them opportunities to work in a field or occupation that they love. For far too many, this choice will be where they spend the next year realizing that it was the wrong institution for them and will find themselves starting over the following year. For others, it will be where they spend five or six years obtaining a four year degree only to realize they don’t truly like the career path they are heading down. It doesn’t have to be this way.

One university. One major. Four years. Those should be the goals for every family sending their kids off to college. Failure to achieve these will cost you significantly more money to educate your child. A simple three step process will greatly increase your likelihood of success in the college selection process.

Step one is the “Head”. This is a logical approach to selection of a college and a major. Before selecting a major, have your child complete a career assessment to determine the career path(s) that suits who they are. Also, have your student go on job shadows and career interest interviews so that they have a real world idea of the actual jobs they are considering. Once this is done, search for schools with academic strengths in the area that your child is interested. Be sure the institution has a history of graduating students in four years.

Step two is the “Heart”. You are going to spend a huge amount of money on each child’s college education; shouldn’t they love it? Actually they have to love it! Before selection, they need to experience and be excited about the classrooms, the campus, the dorms, the football team or whatever it is that is important to them. Get them on the campuses and experience what life would be like before you start paying for it. This cannot be duplicated by perusing a brochure or searching the internet. There is no substitution for the real thing.

Step three is the “Hand”. Financially you have to know what these schools are prepared to offer you and what they are going to take from you. Your college selection process should include evaluation of the percentage of students that graduate in four years and the amount of free need and merit-based aid they are likely to provide your family. You need to know before you select the school how much it is going to cost you.

In the end you should evaluate dozens of schools regardless of the sticker price. A closed mind will cost you money. By applying this process to each school, you will be able to narrow your choices down to five or six possibilities. Return your applications to all five or six schools and then allow all offers to come in before making any decisions.

Career planning is one of the most important steps students can do early in their high school years to receive the best outcomes, as well as the best financial benefit to their parents. Unfortunately, career planning is often overlooked during the college planning process because students and parents have prioritized other criteria for college selection such as prestige, sports, image, influence of peers, teachers, etc.  A major factor behind college transfer and dropout rates is a lack of career planning and a failure to make college decisions based on career goals that are compatible with one’s interests, talents, and career-relevant personal attributes. Most families do not start the college planning process until the senior year of high school.

Academic planning is the process of setting educational goals and determining the best path to meet them.  It is critical that the student play an active role in this process and follow it from start to finish.  An academic plan allows students to map out short, medium, and long term plans that are designed to meet an overall academic goal.  Learn to think beyond the minimum requirements and think how you will be able to impact the community.

When kids head off to college many people ask them what they are going to major in and what their career goals are. The truth is that most students do not know and if they say they do, there is a good chance they will change their minds. So, how can you plan when you are unsure about so many things? But that is exactly why a plan is so important.

If families started their planning earlier in high school, the results would be dramatically different. Research suggests that the magnitude of NOT setting up a career plan dramatically increases the risk that the student will either transfer to another college or drop out altogether. To give you an idea of the size of the transfer rate, every year one of three freshman leave after their first year.  Transferring to another college can also lead to more expenses for the family.

Creating a plan allows for the student to:

Continuously set goals
Continuously evaluate career goals
Reassess the plan throughout the year
The best thing a student can do for themselves is to learn to set appropriate goals and then to be able to evaluate the outcomes effectively:

Did you meet your goal?
Were you satisfied with the outcome? Why or why not?
Do you need to change or adjust your plan?
After a family’s home, a college education for their children is the largest expense.  Make sure you take the time to explore the options.  Getting help is the best way to avoid the pitfalls of the process to ensure your child is making the right choice for the right reasons.

Taxpayers can deduct up to $2,500 per year of interest paid on qualified education loans, which means loans taken out solely to pay for education expenses including tuition, fees, room and board, books, equipment and transportation.

Here are two important restrictions that you need to know:

1)        Student loan interest is only deductible by the taxpayer with the legal obligation to repay the loan. This means that Stafford Loan interest can’t ever be deducted by the parents, even if they make interest payments on their child’s behalf while he/she is in school. (Note that Mom and Dad can deduct PLUS Loan interest, since they have primary obligation to repay such a loan.)

2)        This deduction is not available to a taxpayer who is claimed as a dependent on     another taxpayer’s return. This means that even if a student has income and files their own tax return, as long as Mom & Dad are claiming their dependency exemption (probably as long as they are in school) the student can’t claim the Student Loan Interest deduction, even if they paid interest in that year.

Because of these two restrictions, the best option for getting the maximum tax benefit is for the student to begin paying their Stafford Loan after graduation, at which time they will (hopefully!) no longer be a dependent of their parents. If parents make payments on their child’s loan after graduation and treat the payments as gifts to the child, the child can deduct the interest on his/her tax return, even though Mom and Dad actually paid it.

The Student Loan Interest deduction is an “above the line” deduction, meaning even taxpayers who don’t itemize deductions can still claim this deduction, in addition to the standard deduction. Eligible educational institutions include colleges and vocational schools, and other post-secondary institutions that are eligible to participate in US Dept. of Education student aid programs. Students must be enrolled at least half time in a degree or certificate program. This benefit is phased out when AGI is between $120,000 and $150,000 for MFJ. ($60,000 – $75,000 for Single and HOH) This benefit is not available to married taxpayers filing separately.

We are in the business of helping families through the major life transition of sending their children to college. For many, it will be the most expensive time of their lives and, if not handled properly, could cost them their retirement. If you or someone you know needs the help and guidance of a trained financial professional, don’t hesitate to contact your local College Planning Relief® Licensee. Remember, you shouldn’t have to choose between your child’s college and your retirement.

It’s a new year and while most seniors have made their college decisions, the process is just beginning to heat up for juniors. Even sophomores begin the transition from acclimation to high school to their ultimate post high school plans.  If you have kids of any age, you’ve probably figured out by now that college planning is a much longer, more stressful, and more complicated family process than what any of us who graduated from college a couple/few decades ago ever dreamt it would be.

Here are a few things to think about as we enter this new year, wherever you may be in the college process:

1. Engage your kids in college conversations. I’m not talking about where they want to go to school or even what they want to major in, but rather why do they want to go to college in the first place? What’s important to them in choosing a school? What do they think they might like to do as a job/profession after college? For most, college is merely a four or five year step that helps guide them for the next 40 years, so it only makes sense to have dialogue that helps make this connection for your kids.

2. Plan some road trips. Many kids today, even younger ones, have ideas of where they want to go to college. However these thoughts may be based on things such as favorite college sports teams, where friends or family have gone, or other similar reasons that may not be the best reasons to select a college. Nothing can beat setting foot on the campuses themselves. In my opinion you cannot start this process too early.  It’s the feel, the smell, the look that goes with the class sizes, placement rates, quality of programs etc. that you want to consider. Doing this early and often will help your son or daughter really begin to help them define what it is that they are looking for in a college.

3.  Find out your EFC.  January is the month for seniors to complete the Free Application for Federal Student Aid (FAFSA), which is the form that every family must complete in order to qualify for federal and state financial aid. One of the factors that determines aid is the Expected Family Contribution (EFC), which is the amount of money that a family must pay each year before qualifying for any financial assistance. So that you are not caught off guard by this number and so that you have ample time to possibly improve your family’s EFC, you should get an estimate of your number as early as possible in this process. Many online sites will provide you an easy opportunity to do so.

4. Begin to assemble your team.  This one may have you scratching your head, but if you stop to think about it, it just makes sense. College is a major expense, six figures in many cases, and if done properly, helps define what your children will do to make a living – really important and really expensive stuff! Why on earth wouldn’t you hire experts to help? Your team can and should consist of a financial professional, a tax professional, a guidance counselor, a college planner, and a college test prep expert. Some families will have all of these people while others maybe just a couple. It begins by talking with each to see if they can provide you with knowledge and expertise that will help you through this process.  There are many steps to the college journey; these are just a few to get you started. The sooner you start, the better off you will be. What better time than the start of the New Year!

We are in the business of helping families through the major life transition of sending their children to college. For many, it will be the most expensive time of their lives and, if not handled properly, could cost them their retirement. If you or someone you know needs the help and guidance of a trained financial professional, don’t hesitate to contact your local College Planning Relief® Licensee. Remember, you shouldn’t have to choose between your child’s college and your retirement.