Late Stage College PlanningOne of the most finan­cial­ly savvy gifts a par­ent or guardian can give their child is to send them to col­lege. Even with stu­dent debt, the dif­fer­ence in a col­lege graduate’s life­time earn­ings vs that of some­one with only a high school diplo­ma is sub­stan­tial. This wage dif­fer­ence spread over 40+ years in the work force will pro­vide your child with more wealth over the long haul. Accord­ing to the Cen­sus Bureau, fig­ured in today’s dol­lars, those life-time earn­ings might range from $1.8 mil­lion for edu­ca­tion majors to $3.5 mil­lion for engineering.

Unfor­tu­nate­ly, many par­ents or guardians wait until the last minute to begin think­ing about how they are going to pay for their child’s col­lege edu­ca­tion. The real­i­ty is life gets busy. And let’s face it … you’d prob­a­bly have more fun going to the den­tist for a root canal than sit­ting at your din­ner table fill­ing out seem­ing­ly end­less forms and applications.

All too often, many par­ents take the quick and easy way out. They raid their retire­ment accounts at the last minute to pay the bills. They ratio­nal­ize this in a mul­ti­tude of ways:

  • We make too much mon­ey there­fore we won’t qual­i­fy for loans or grants
  • We plan on work­ing until we’re 70 so we have plen­ty of time to make up the difference
  • Who are we to keep our child from going to college?

That sim­ple and easy act of using retire­ment funds to pay for col­lege jeop­ar­dizes a secure and con­fi­dent life in retire­ment and turns it into one of depri­va­tion, fear, and stress.

So, what is one to do? Take a deep breath and get going. Many cen­turies ago, a lit­tle known Chi­nese philoso­pher Laozi coined the well-known phrase “a jour­ney of a thou­sand miles begins with a sin­gle step”. This blog series is designed to enable you to take those first few steps with con­fi­dence. Hav­ing a map and fol­low­ing the plan can help in the process. Future blogs will take a deep­er dive into the spe­cif­ic activ­i­ties that you will need to work through in order to make sure you and your child are finan­cial­ly pre­pared for college.

As an intro­duc­tion to our col­lege plan­ning series, here are the sev­en steps to take to keep your mon­ey and your sanity:

  1. First, under­stand your child’s skills and career goals then devel­op a plan for get­ting them into col­lege in the most cost effec­tive man­ner as pos­si­ble. This should include dis­cus­sions on both the hard facts such as com­par­ing costs vs ben­e­fits, as well as the emo­tion­al con­sid­er­a­tions such as inter­ests, goals, and “fit” of edu­ca­tion­al options.
  2. Max­i­mize your school’s resources — specif­i­cal­ly your school’s Guid­ance Coun­selor, teach­ers and advi­sors all of whom want your child to suc­ceed in school and in life.
  3. Under­stand your finan­cial aid options and how your assets are used in cal­cu­lat­ing your Expect­ed Fam­i­ly Con­tri­bu­tion (EFC), a key com­po­nent in deter­min­ing how much finan­cial aid you will be awarded.
  4. Under­stand employ­er and employ­ment options that could be avail­able to you and your fam­i­ly to help low­er your expenses.
  5. Devel­op a sav­ings plan, because the more you save, the less you have to bor­row. You don’t want your new­ly mint­ed col­lege grad trapped in a debt bub­ble that could lim­it his or her finan­cial future.
  6. Under­stand your bor­row­ing options and the ben­e­fits and costs asso­ci­at­ed with each option
  7. And, as always in this dig­i­tal age, watch out for scams … because there are plen­ty of them out there.

In the end, send­ing your child to col­lege is a sig­nif­i­cant invest­ment. Do some smart, edu­cat­ed research to help your child start his or her career on the right foot AND to help you keep as much of your hard earned wealth as pos­si­ble so you can start your retire­ment on the right foot as well.

To read all of the Late Stage Col­lege Plan­ning blog series click here.