College Affordability
A growing issue in our society today is the amount of debt our student and families now have. The problem is caused by rising college tuition cost. Until there is a real solution to College Affordability, what should families like yours do to make sure that their financial future is not jeopardized?You need to take control of getting your student the education they need at the price that your family can afford.
In our “4 Steps to College Affordability” video series, I explain how to accomplish that by:
- Finding the college that fits the student and the education need
- Explaining what you need to know about financial aid
- Sharing with you the different tax aid
- Touching on what you can do to improve your ability to pay for college
Enjoy the information!
Playlist
Ready to get started?
Need more information?
Our webinars/workshops continue to elaborate on each of the 4 steps. We only welcome 5 families at a time to give our attendees a chance to ask questions. As part of the presentation, we offer a workbook which includes important documents you will need to get familiar with, as you are helping your student to plan for college. You will also get our College Planning Checklist. The Checklist gives you a timeline on on everything you might need to work on.
Don’t wait! Space is limited!
Here’s our 4 Steps to College Affordability webinars/workshops calendar.
Webinars
- Oct 2nd 3PM
- Oct 10th 7PM
- Oct 16th 3PM
- Oct 26th 11AM
Workshops
- Oct 4th 11AM
- Oct 9th 6PM
- Oct 18th 11AM
- Oct 23th 6PM
Video Transcripts
College Fit
Hey Patrick here.Today’s young adults could be facing a tough uphill battle if they do not take their college education decision seriously. The cost of getting a college education is high and is also growing much faster than regular inflation. However, there are things that a student and his or her family can do to get the education for a price they can afford.
This video is the first in a series called 4 Steps to College Affordability that offers planning steps to help your family prepare for financing college. The first video is about College Fit. Do you know how many years it takes the average college student to graduate from a 4-year degree? The National Center for Education Statistics found that the average student takes 5.5 years to graduate. 40% of students graduates in 4 years and about 60% of students graduates within 6 years! (Source: National Center for Education Statistics) With these figures, no wonder the average student leaves college with $40,000 in student loans! (Source: Student Loan Hero).
Outside of the rising cost of tuition, the amount of time a student is in college, is the biggest factor to rising student debt. Some of the reasons students stay longer in school are because many decide to change majors or transfer to another school. What can a student do to avoid making these types of decision? It is about preparation. It is about finding the right College Fit for the student.
When trying to find the right College Fit, the first thing a student can do is to take a personality indicator test. Most teenagers will have the ability to take a test in high school but it might be worth the investment to get a more detailed sense of the student cognitive style and what type of profession is right for him. Especially if your student is not sure of what they want to do when they grow up.
The second thing the student needs to elaborate on is the type of school they would like to attend? Is the student energized by a city environment, within a large school with plenty of opportunities. Or, is he/she better fitted into a smaller college in a rural setting with smaller classes? The issue is that with over 5000 colleges in the US, how are you supposed to find the best college fit for your student?
The goods news is that many websites offer great resources. The College Board website offers a large information database on all of the colleges and is a great place to start. However, as a parent of a Senior in High School myself, I recommend hiring the expertise of a College Admission specialist to help you build a list of colleges that matches the student personality, education need and of course the family budget.
Finding the right College Fit is the first step to College Affordability. Using the information from this video, you should be able to start the process of helping your student find the right major and the right school so that he or she can graduate on time. The next step in our video series, we will visit the concepts within Financial Aid. Look for that and others in our library on our MoneyCoach website!
As a CERTIFIED FINANCIAL PLANNER™, I help my clients in finding efficiencies to help them maximize their money. Most of my clients have teenagers at home and will probably have a need to plan for college. For those reasons, I have associated with the National College Advocacy Group that bring together Financial Professionals like me with Admission Specialists. As a group, we are able to give holistic advice towards your College Planning needs.
For more information, feel free to contact me.
I look forward to helping you.
Financial Aid
Hey Patrick here.These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
This video is the second in a series that offers college planning steps to help your family prepare for financing college. The first video was about College Fit. This video is about Financial Aid. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
An important concept to understand when planning for a higher education is Yield in College Admission. The yield is the percentage of students who choose to enroll in a college after being offered admission. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
For example, let’s also take a look at Clemson. For their 2017-18 academic year, the school received more than 26,000 applications to fill 3,650 spots. To fill these spots, the Clemson admission department needed to figure out how many acceptance letters they would need to send to get the students they need. The percentage of those acceptance letters that results in new students is the Yield. Over 12,000 acceptance letters were sent to students which means that the yield was 29%. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
This is a very difficult process for the admission department of most schools. Their goal is to improve their Yield over time so that they can plan better. When you only get a third of your acceptance letters or less to become attendees, it is hard to plan. For that reason, colleges create incentive packages for students they feel would be a great fit for their school. They come in a combination of merit and need aid. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
Let’s discuss merit aid first. Merit aid is the amount of money a school offers to a student for her aptitudes. Highly selective schools like Harvard or Yale normally do not offer merit aid. They are able to select from the best and brightest already. Many quality institutions with little name recognition might however be more aggressive when targeting a student for admission. The key is to find schools where the student ranks in the top 25% of the Freshman class. The College Board website offers the information you need to find where your student fits. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
Take Furman for example. It’s last Freshman class had a SAT Mid-range test score of 1190-1380. Therefore, if your student has a SAT of 1400 or higher, the probability that your student will receive merit aid is high. If his score is lower, it might a good idea to add another school with lower average scores to the college list. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
Another recommendation would be to get SAT and ACT tutoring. With proper preparation, the student might be able to improve by as much as 50-60 points in the SAT and 2-3 points on the ACT. These points could mean thousands of dollars in Merit Aid. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
How about Need Aid? Unfortunately, it becomes more complicated from here. Need Aid comes in different flavors: Grants, Work-Study and Student Loans. The type that everyone wants of course is the Grant money, because it is free. You or your student will not have to work for it or pay it back! These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
Your first step in figuring out how much Need-Based Aid you could get from a school, is to calculate your Expected Family Contribution. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
The College Board’s website also offers a tool to help you approximate that amount. The calculation is based on Net Worth and Income information for both you and your student. That amount is what Colleges and the Government deem as the amount the family is expected to contribute to the cost of College. If the amount is larger than the Cost of Attendance, no Need-Based Aid will be offered by the school. The student would then rely on Merit-Based AId for any help in paying for College. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
Once you have your Expected Family Contribution amount, you can then visit the College’s website and enter your financial information in the Net Price Calculator for that school. The results are approximate but give a good idea of where you stand. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
Let’s take a look at an example: A family found out that they have an Expected Family Contribution of $13,500. They are interested in sending their teen to Savannah’s College of Art & Design. SCAD has a Cost of attendance of about $57,012. Using the Net Price Calculator found on the College’s website and by adding information about the student’s SAT/ACT scores and the family’s EFC amount, they find out that the student should receive about $4000 in Merit-aid. $5500 would be offered as Low-Cost Student Loans, probably a combination of Subsidized and Unsubsidized Stafford Loans. The $47,512 left would also be the family’s responsibility. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
What you need to understand is that the Merit Aid is all free money but the Need-Based Aid could largely comprise of Loans which need to be paid back. The result of how the Need-Based Aid is structured will not be known until you receive the award letter from the school during the spring of a student’s High School Senior year. Therefore, it is important to apply at a number of schools to help find the best award package available. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
Now since we are discussing student loans, let’s talk about the difference within them. There are 3 main types of student loans. Subsidized Stafford Loans are subsidized which means that you do not have to make a payment until 6 months after graduation and interest is not accruing against them while the student is in school. These days, it is imperative to help our students not only find a great college to get the education needed for a rewarding career, but also to look at the affordability of the education. A recent Gallup survey found that more than half of graduates would have chosen differently if they could do their college planning again. More than 50%! These decisions end up costing the family and the students tens of thousands of dollars.
With Unsubsidized Stafford loans, you do not need to make payments until 6 months after graduation but interest accrues on them as soon as the money is credited to the student.
And then you have the PLUS loans, which are short for Parents Loans for Undergraduate Students. The first payment is also due 6 months after graduation and interest also accrues as the student goes to college.
Now let’s take a look at the 2018 rates and fees.
Stafford Loans
The maximum amount of Stafford loans are set by the government and in 2018 are $5500 for Freshmen, $6500 for Sophomores, $7500 for Juniors and Seniors.
Only $3500, $4500 and $5500 can be subsidized depending on the year the student is in.
Their loan establishment fees are 1.062% and the interest rate is 5.05% for the life of the loan, which is not a bad deal.
The college will let you know in the award letter the loan types and amounts they are offering you.
PLUS Loans
Many schools will fill the remaining need of the family with PLUS loans.
PLUS loans have the worst rates.
They are 4.248% for the establishment of the loan and 7.6% interest per year.
Not such a great deal.
Now that you have basic information about Financial Aid for your Rising College Student, you can understand picking a school that will offer to cover more of your financial aid with “free money” is important. The major surprise many parents get is finally understanding that a large part of their Need-based aid awarded to them was actually loans with unfavorable terms.
As a CERTIFIED FINANCIAL PLANNER™, I help my clients find efficiencies to help them maximize their money. Most of my clients have teenagers at home and will probably have a need to plan for college. For those reasons, I have associated with the National College Advocacy Group that bring together Financial Professionals like me with Admission Specialists. As a group, we are able to give holistic advice towards your College Planning needs.
For more information, feel free to contact me.
I look forward to helping you.
Tax Aid
Hey Patrick here.As a parent with a student getting ready for college, you probably want all the help you can get to pay for their education. This video is the third one of a series to discuss college affordability. The first one was about finding the right College Fit for your Student. The second was to discuss Financial Aid. This third video is about Tax Aid.
The government offers opportunities for families to get some of the expenses paid for qualified education expenses be reimbursement through a tax credit. The most important one is the American Opportunity Tax Credit. The maximum amount you can get from it is $2500.
There is also The Lifetime Learning Credit that can cover up to $2000 in qualified cost.Both of these credits are paid back to the taxpayer when filing taxes.
Some families might not be able to get the credits as their income is too high to qualify. However, high earning business owners might be able to distribute some of their income to their child for the work that he/she is doing in the family business. The student should enjoy a lower tax bracket which would save you tax money. That income could then be used to help pay for college.
As always, depending on your circumstances, you should consult with your tax accountant to make sure that you are planning accordingly to minimize your tax burden and get every credit owed to you.
As a CERTIFIED FINANCIAL PLANNER™, I help my clients find efficiencies to help them maximize their money. Many of my clients have teenagers at home and will probably have a need to plan for college. For those reasons, I have associated with the National College Advocacy Group that bring together Financial Professionals like me with Admission Specialists.
As a group, we are able to give holistic advice towards your College Planning needs.
For more information, feel free to contact me.
College Funding
Hey Patrick here.College funding is a real issue for many American families. We want our kids to have the best shot at success in life and a college education is often a step in helping them get there. The question is, how as parents, can you fund such a large expense while being able to continue saving for your own goals?
This video is the 4th of a series to give you the basic information you need to get your College Affordability plan started. In the first 3 videos, I shared information on finding the right College Fit. I also talked about Financial Aid and Tax Aid. During this video, I will share with you steps that you can take to plan financially for college.
First, you need to understand how the Expected Family Contribution is calculated. A larger portion of every dollar earned by the student is labeled to be used to pay for college than if that dollar was earned by the parents. Which means that you may not want to shift income to the student if your EFC will be lower than the Cost of Attending the school. For example, many grandparents want to help and gift money to the student. Under some circumstances, this can actually be detrimental to the student.
Also, certain type of assets are not counted in the Financial Aid application. Retirement accounts, Cash Value life insurance and annuity values are not used in determining the EFC. Using these types of contracts or accounts, will also reduce your income by deferring taxes on capital gains and dividends.
Once your financial picture is optimized, you should start to earmark savings you will be using to pay for college. You might have some 529 plan funds dedicated for that goal. You might also have other savings you can use. Your goal should be to minimize the use of PLUS loans. These student loans have large set-up fees and high interest rates, which I discussed during the Financial Aid video. Once you have put together a list of the assets you will be using for college funding, you should take a look at your current cash flow.
The reality is that at the minimum, as your student leave for college, some of the expenses you currently pay are now part of the cost of the education. Therefore, you should be able to use the savings.
It is also the perfect time to optimize your income, and take a detailed look at expenses you can minimize. Many families these days, move away from cable companies. Changes like these can help you save hundreds of dollars of month.
Also review your insurance policies. Increasing your deductible on your home insurance policy for example can lower your premiums. Again, your goal should be to avoid, if possible, using PLUS loans to pay for college.
Once you’ve optimized your income and accessed how your assets are owned, the amount left is called your College Funding Gap. You need to find out the best way to finance this amount. As I said a few times now, PLUS loans are probably not your best bet. A good rule of thumb is that collateralized debt normally offers the best terms. Using a collateral against debt means that you are guaranteeing payment of the debt by using an asset against it. Assets you could use are your home, a cash value life insurance policy if you have one or a brokerage account.
I hope my College Affordability video series helped you gain insight on how to get started planning for college. As a CERTIFIED FINANCIAL PLANNER™, I help my clients find efficiencies to help them maximize their money. Most of my clients have teenagers at home and will probably have a need to plan for college. For those reasons, I have associated with the National College Advocacy Group that bring together Financial Professionals like me with Admission Specialists.
As a group, we are able to give holistic advice towards your College Planning needs.
If you would like a complimentary consultation on how we can help you and your family, feel free to contact me.
I look forward to helping you.