Category: Spotlight

For many families, hiring financial professionals is a routine part of their lives. People hire CPAs or accountants to do their taxes, attorneys to draft wills and legal documents, insurance agents to protect their property and lives, and investment counselors to help manage their money. However, it is only very recently that families have considered hiring a financial professional to help with their kids’ college.

With the dramatic increase in the cost of college over the past couple of decades, paired with the extreme highs and lows of the market and the economy, many families simply can’t afford to attempt this important and expensive process on their own.

Hence a new discipline in the world of financial professionals has come to light, the financial college planner. These individuals work with families to provide a structured approach designed to save time, money, and frustration. They provide a logical approach to the process with identifiable deliverables.

There are many areas where a college planner can provide value. A thorough review of the family’s finances will identify financial aid opportunities, tax savings strategies, cash flow improvements, and most importantly, identify the amount of income and assets that a family can afford to pledge to help pay for college.

Interviewing the student is another key part of the process. Involving the student in all aspects of college planning, specifically the financial components, is a key to success. It is important that the student understands that college selection, from a financial perspective, is also a critical part of a successful plan. This message is often times taken much better when not coming from Mom and/or Dad.

College selection should involve the whole family and should be looked at from a variety of angles: cost, likelihood of employment, average length of time to degree and “fit” for student academically as well as socially. There are a lot of moving pieces here and this cannot be taken lightly. Running head to head comparisons of schools’ finances is very helpful; properly visiting and “scoring” each visit can be very useful; and knowing how to properly read a school offer when comparing to other offers are all things that a college planner will help a family navigate their way through.

The list of items that a college planner could help a family with could go on and on. The number of ways that hiring someone who does college planning for a living can help a family (that may go through the process only once or twice) is endless. If it’s not helping your family avoid the costly transferring of schools or majors, or the dreaded 5th or 6th year of school, it might be as simple as getting through the process with little stress and the confidence in knowing that you have completed the task like an experienced veteran.

College planners all charge differently and each has their own process. Finding someone who has a logical process with clear deliverables is key. Successful college planners will be able to articulate their fee to you and more importantly, share with you the value you will receive from paying that fee and working with them.

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

Not so long ago college was not only a place to continue a youth’s education, it was a time for growth, maturity and to simply experience and enjoy life with a little more freedom. The rising costs of college, coupled with the challenging economic times, has for most, completely changed the emphasis on what is most important about sending a child to college.

Job security and economic independence are what families are now looking for from their tuition dollars. Mom and Dad are simply hoping that their kids can obtain education and/or training that will allow them to obtain a job that will provide them an income and standard of living that justifies the expense of college.

Because of these changes the college selection process needs to change also, and so does the approach that Mom and Dad take to pay for college.  It boils down to an investment decision. In other words, the school and major selection are components of the “return” that one will receive on their tuition dollars.

School selection should take into account the percentage of students that graduate, the percentage of students that graduate within 4 years, the placement ratio of graduates into jobs of their field, and the net cost of college after factoring in financial aid and scholarships. Certainly, a proper fit for the student based on size, distance from home and geographical location are all also very important non-financial components that should be included.

Career or major selection should  be a good fit for the student’s “hard wiring” or said another way, what suits his/her personality. Future job outlook and earning potential for a prospective career should also be taken into account.  Considering these factors will increase the likelihood of providing the student a future that they are looking for.

School costs should be weighed against income potential from the desired education from that institution. Furthermore, consideration should be given as to whether or not the prestige of the school that one may be paying a premium for is justified based on the income potential. For example, a private school that has an annual cost of $50,000 per year that will likely provide a student a similar job opportunity from a public school that costs $25,000 might not be a wise financial decision.

Mom and Dad need to also determine how much of their income and how many of their assets they can pledge toward college before it impacts their own financial future. Once that determination has been made, the residual costs of college will likely be financed by the student through loans.   Parents should make sure that their student completely understands the financial impact of taking on student loans. Based on the horrendous state of the student loan industry it is quite clear that individuals are obligating themselves to debts that they will have no ability to pay back without serious impact on their future.

College is big business and should be approached that way. All parents want their students to enjoy their college years; however, the emphasis needs to be on preparing for economic success after college.

Of all the options a family has for setting money aside for college, the companies offering 529 plans have, by far, done the best job of marketing their option as the best option available for families interested in getting an early start on preparing for the daunting cost of college. This will explore the merits and drawbacks of a 529 plan.

It is important in this evaluation to understand the key benefit(s) of a 529 plan. For most, it is the idea of being able to take out investment earnings for qualified educational expenses without incurring any income tax on the growth.  With time and substantial earnings, this most certainly can result in some significant savings.  An additional benefit may be that state taxes can be avoided as well when using the 529 plan from the state in which you reside.  Furthermore, investing in your state’s 529 plan will provide those assets protection from bankruptcy and lawsuits.

In today’s uncertain market and economy, I believe families need to determine their risk tolerance and decide if they want to SAVE or INVEST for college as there is a significant difference.  Investing for college means that you are willing to take risk with your money.  When you invest, it is possible that you will lose some or all of your money.  The only reason someone should choose to invest for college is if they believe that they have sufficient time to recover any losses before they will use the money, and they should also believe that the rate of return will be substantially higher for taking this risk.

Saving for college is more about protecting your principal first and your rate of return is secondary. Because you are not taking much, if any, risk the rate of return is going to be predictable but with less upside potential that comes with investing.  Given the turbulence in the market this past decade, many people are simply less willing to take significant risk.

529 plans are investment plans.  Each plan, sponsored by a state, is managed by an investment firm or firms.  You have a variety of mutual funds and mutual fund portfolios to choose from; however, the overwhelming majority of choices involve risk.  Furthermore, there are costs associated with each plan that must be overcome before you earn anything on your investment.  These costs are incurred each year, even if your 529 investment doesn’t earn anything.

While the tax free benefit is very enticing, a 529 plan without any growth really has no benefit. Consequently a family with little time before college may have little opportunity to earn any money; therefore, there may be little or even no benefit to them to invest in a 529 plan.

While most expenses such as tuition, room, board, and books qualify as qualified education expenses, you can’t use expenses paid with a 529 distribution as a basis for calculating the American Opportunity Tax Credit.  Since the IRS ordering rules say that credits are calculated first, you may lose some of the tax-free benefit that the 529 account provides because you can’t use the same expenses for more than one education tax benefit.  Furthermore, paying back student loans with 529 money is not considered a qualified expense.

A handful of states still offer prepaid tuition plans under the 529 umbrella, which provides you the opportunity to purchase future college credits at today’s cost. It is important to read the fine print on these plans as you may be limiting the choices that your kids may have in their college selection with such plans.

Each state’s 529 plan offers slightly different features and each has its own nuances.  It is very important that you understand what you are getting into as well as the risks that you are taking.  Only after you know these things are you able to determine if the risk is worth the reward.

Despite media hype surrounding the sky-rocketing costs of college, the truth remains it is more doable than ever before.

Though some schools serve as outliers, the average tuition cost for a four-year public school in 2010-2011 was just over $7,000. Additionally, tens of thousands of dollars are readily available from governmental assistance programs—not to mention many private lending options.

College, as with everything, requires some sort of plan and intentionality—even if it’s the eleventh hour and the last minute, approach paying for college with a plan. Consider the following:

1. Seek help

Though many use libraries and the Internet as a starting point to begin their research efforts, certified college funding professionals will ultimately save you both time and money—providing you with intangible knowledge and resources that simply won’t be confined to the pages of a book.

2. Strength in numbers

After carefully weigh the pros and cons of each as well as the various financing packages offered, apply to multiple institutes—both private and public colleges alike.

3. Consider the facts

Calculate the total cost of attending college—not forgetting the obvious expenses: tuition and books as well as the easily forgotten fees of: housing, utilities, food and transportation, cell phone and computer, entertainment, car repairs, possible medical bills, Spring Break, and expected time for graduation (i.e. 3, 4, 5+ years, etc.) Compose a legitimate estimate.

4. Paint your best financial picture

Just as you would get everything ready to get your portrait taken, so too should you get your financial portrait just right before applying to colleges. Recognize that placing money and sometimes shifting your portfolio around, can save you thousands off your college tuition bill.

For more tips concerning college funding, CLICK HERE to register for a FREE workshop.

Welcome to the proverbial rat race of life: “Keeping up with the Joneses.” We all know, recognize, and some seek to emulate the Joneses. They’re the ones with the high paying jobs who constantly take exotic vacations, buy lavish gifts, and always eat at five-star restaurants. They’re the ones with kids in private school, new cars in the drive away, all the new toys you could imagine and seemingly a limitless budget. They’ve got it all, and they NEVER apply for financial aid. Or so it seems…

Enter the reality of statistics. Most college students receive some sort of financial assistance. According to FinAid.org, two-thirds of all four-year undergraduates leave college with an average of $25,000 in student loan debt. And the total student debt load nationwide is a staggering $1 Trillion dollars!

Now, as a large proponent of higher education, I’ve always realized that good jobs usually require great education. However, I like many, assumed that financial aid was limited for a lower income bracket—I couldn’t have been more wrong. The wealthy, the middle-class, and the lower class alike understand that you don’t have to forfeit your present well being for future rewards; you don’t have to go 10 steps backward financially just to move 2 steps forward. Therefore, in a unified manner—all across America—all income types are applying and qualifying for financial assistance.

I want you to get the most out of life—and that oft requires a college education. So how do you accomplish this task with the annual average expenses nearing $20,000? How do you cash flow college and keep your lifestyle? Well there is hope; I’ll let you in on a few secrets:

1. Financial aid filing isn’t limited to a certain tax bracket or exclusively to only the lower income: The rich, the middle-class, and the poor alike are all seeking financial assistance.

2. There’s no shame or embarrassment in seeking discounts—that’s what the Joneses are doing too! The only shame comes from paying full price and NOT seeking out cost savings.

3. Every year countless scholarships and grants—thousands upon thousands of dollars—are left un-awarded because people didn’t take the time to seek them out or take merely an extra ten minutes to apply.

4. Remember bite size: Every $50, $500 or $5,000 scholarship awarded puts someone that much closer to a college degree—debt free!

So the next time you’re tempted to keep up with the Joneses, get in line—right next to them, apply for the awards, and diligently seek out the savings! For more tips concerning college funding, CLICK HERE to register for a FREE workshop.

Where:

Applying for scholarships should come after you finish the first steps in the College Selection and Affordability Blueprint. You first want to decide on what makes you happy in life and start thinking of career choices, well before you start applying for scholarships.

Receiving money via a scholarship at a school that doesn’t offer a program you are interested in majoring in, only hurts you in the big picture.

Point: only apply to schools that fit your overall college selection “picture”. Your college planner can “pull merit monies” available for you and compile a list of places where you should apply. This is included in your “College Plan” service.

When:

You have to keep in mind that schools had out the money on a first come first serve basis. You definitely want to be at the beginning of the line when applying. Most people think that applying for a scholarship automatically enters and application for them to get into the school. That is simply not the case. You have to apply to both- and keep them separate in your mind.

Most deadlines for scholarships are around October. This is before the college app is due to the school.

How:

After you make a list of schools, apply to each school individually filling out the necessary paperwork (your planner can help you if you need support).

Scholarship money is deducted from tuition in various ways:

1) Financial aid money- scholarship money = money owed
2) Student Loans – scholarship money = money owed
3) EFC – scholarship money = money owed
4) Straight tuition – scholarship money = money owed.

It’s important to run various scenarios because it could save you thousands in the end.

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Have you attended our free Info Hour Workshop? We go over everything you should know about applying for college, the financial aid process and college selection. You can register right here. It’s our most popular workshop!

Oftentimes, families overlook some very easy things that can make the transition to college a lot more affordable. Below are 3 easy things you can do to knock money off that tuition bill.

Financial Aid Strategy

Financial Aid is much easier than you think. When applying for aid, you want to make sure you fill out your FAFSA forms correctly and to the best of your ability to position yourself for as little out-of-pocket as possible, honestly. A College Planner can quickly show you how to do this and it could save you up to $40K off your tuition bill.

Don’t r rule out private schools:
With private schools being sometimes less expensive then public, you should always consider both. College planners have tools available to them that are not available to the open public to match you with potential money available at these schools. Remember, those that never apply for this money, never get access to the free money awarded.

Spend your summers elsewhere. If the school allows transfer credits, consider your child spending a summer or two in class — at a cheaper public school in your home state. Credit hours for an in-state resident can be as low as a few hundred dollars. Complete 15 credit hours and even at $400 per hour, you’ll spend just $6,000. Junior could then graduate early and if you’re a full-paying family, you’ll knock off upwards of $25,000 for a final semester’s tuition and fees. (Make sure the college doesn’t charge an early-completion fee).

Click here to register for a free event that discusses more free tips and tricks!

Start with Career – Not College – in Mind
By Lisa Mader, LEAP 2Success

Approximately 80% of freshmen have not declared a college major. 50% of those who have declared a major will change their major during college. 70% of college students will change their major.
The numbers evidence students not being dialed into who they are before making MAJOR decisions. This is a costly mistake. Most parents who have saved for college plan on their child graduating in 4 years. What is the possibility of graduating from college in 4 years for a student who changes majors over and over or transfers? Simply put, not possible.
Roadmap
The typical student embarks on the college selection journey by choosing the college they love, then a major and finally finding a career the major will feed to. Going against the grain, LEAP suggests students embark on the journey with the end in mind – Career. Instead of focusing on the FOUR YEARS a student will be in college, turn the attention to the 40+ years the student will work.
The roadmap should be focused on the student’s wiring. Answer first, “What am I wired to do?” While there’s not one simple answer to this question, scientifically dialing into personality with the Birkman Method® allows the student to easily identify what they AREN’T wired to do and begin to create buckets of like careers for exploration. These career possibilities would be satisfying as individual NEEDS are met and INTERESTS embraced. The Birkman® assessment identifies 77 personality scores.
Back-Up
Once careers are established, the student should back up to the majors that feed to these careers. Sometimes it’s one major as is the case with teaching or engineering, but often there are several options that would feed to the career. After the appropriate majors are established, students can do their research on what colleges are well respected for their major.
Career needs to be at the forefront of these MAJOR decisions on the college bound journey. As a College Planning Relief Specialist, I offer LEAP 2College 2Career Birkman® based coaching. LEAP 2College 2Career is an Investment in College Savings.