5 Unexpected Threats To College Planning

When you think of things that could impact your child’s future education, your mind probably goes to thoughts of your child not getting into the college they want, insurmountable student loan debt, or missing important steps in the planning process. And while these are all valid concerns, there are little-known and often ignored threats that could make or break your college plan. Here are 5 factors that could threaten your college and financial plan, along with some strategies to overcome them.

1. The Cost Of Private High School

It’s easy to see the draw of private high school. You want your child to get a top-notch education and have every opportunity and advantage it brings. According to the National Center for Education Statistics, 95.8% of the studied private secondary school students enrolled in post-secondary education, (1) and these students were almost twice as likely as public school students to receive a bachelor’s degree or higher. (2) But is it worth the cost? Private high school now costs an average of $14,205 per year, with the actual amount you pay, depending on where you live, ranging from $5,313 to $33,098. (3) Those numbers often require parents to sacrifice their current cash flow, taking that money away from paying for college.

Sending your child to public school does not condemn them to a lower-rated college or fewer college acceptance letters. The quality of public schools vary greatly based on where they are located. Instead of blowing tens of thousands of dollars on private school, find neighborhoods to live in that have highly rated public schools. Many school districts also offer accelerated academic programs, advanced placement classes, or the option to earn college credits while still in high school. Extracurriculars also set students apart, regardless of what high school they attended. In fact, the acceptance rates to Ivy League colleges are roughly equal for private and public schools. (4)

2. Not Saving For Every Child

The college tuition landscape can be intimidating, especially for parents who want to contribute significantly to their children’s education. I have seen too many families save for the oldest child, and then run out of money by the time their second or third child enters college. In this situation, it’s essential to consider the cost of college for all your children before they enroll in post-secondary education. If you can’t pay 100% for all of them, divvy up your savings and pay a percentage for each. In this case, it’s even more important for you to start saving early to maximize your contribution through compound interest. And finally, the more kids you have in college at the same time, the better. Having two children enrolled in college simultaneously can decrease your expected family contribution (EFC) for the FAFSA by 40%-50%, (5) making it possible to receive more financial aid. If your children are close in age, think about delaying college for the eldest so they can overlap.

3. Being Part Of The “Sandwich Generation”

If you are in the Sandwich Generation, defined as those caring for both their parents and children simultaneously, you have an extra burden to carry. You not only have to contribute financially for your parents, but you still need to provide for your kids’ expenses, including college. This is more common than you might think, with 15% of middle-aged adults financially supporting both parents and children. This number is only expected to increase, since 47% of adults in their 40s and 50s have a parent aged 65 and up and are still raising young children or supporting adult children. (6) And with fewer people earning pensions and more people striving to provide for their retirement on their own, retirees may have to rely on their kids, who are still bringing home a paycheck.

This threat is twofold. First, you need to make sure you prioritize your finances to cover all your responsibilities; second, you need to be careful of what you spend on college for your kids so you don’t force them to become part of a future Sandwich Generation, providing for you when you are retired.

4. Not Exploring All Your Options

Sometimes we set our minds on certain ideas and don’t look at other opportunities. We commit to paying for our children’s entire education or vow that they will never take out student loans. We pledge that our kids will only go to a prestigious school or a four-year college and turn our backs on more affordable options like community college. While things may end up going the way you want, it never hurts to look at other options that might lighten your financial burden or provide a more sustainable path to the same end result. There are so many different college options that are unique to each family. This is why it’s critical to set clear expectations, create goals, and explore multiple scenarios, something best discussed with someone who is experienced in this area.

5. Taking Advice From The Wrong Sources

You might enjoy talking to your water cooler buddies, but you might not want to rely on their advice or follow their examples. College and retirement planning can be complicated and stressful due to the many unpredictable factors that go along with it. When you don’t partner with a financial professional, you put your money in a dangerous spot. Make sure you verify any information others give you and find a trusted advisor to run ideas by before you implement them and put your money at risk.

Create An Action Plan

At College Planning America, we know that no two individuals’ financial planning needs are the same, which is why we create a plan focused on your goals, circumstances, and unique needs. By helping you understand some of the risks and common roadblocks you can experience, we can show you how to plan ahead for the unexpected and reduce the chances that your college plan will fail. If you think your college or retirement plan needs a second look, email me at dcoen@sageviewadvisory.com or call 800-814-8742, and take our college strategy quiz.

About Dave

Dave Coen is a Financial Advisor with SageView Advisory and the CEO of College Planning America. Along with his retirement financial industry experience, he is a College Planning Specialist. He works closely with individuals and families to provide them comprehensive financial planning that addresses all elements of their financial picture. Learn more by connecting with Dave on LinkedIn.

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