By Dave Coen
It’s not only the start of a new year, but a new decade! That probably means you’re feeling more motivated than ever to make some positive changes and set healthy habits for your life. But whether you want to decrease your screen time, save more money, or start a new exercise routine, it’s not going to happen unless you make a plan. Your good intentions need to be coupled with practical steps in a realistic time frame or you’ll give up just as you get started.
This is just as true with college planning as with any other resolution. Once you start digging into what you need to do, it’s easy to get overwhelmed with the details and get stuck. That’s why we’re here to make it easy for you by giving 5 ways to take action on your college planning goals.
1. Create A Timeline
If your child is in the last three years of high school, it’s time to create a strategy to organize all the details. Start by getting help to identify your student’s innate strengths through an appropriate assessment process. Then start identifying possible career options based on the results of that assessment. Then identify what major will be pursued.
Once you know where you are heading as far as career and major options, only then should we start making a short list of potential schools based on the factors that matter to you, such as your child’s interests and talents, career choice, location, or affordability. Gather information from each school regarding deadlines and entrance requirements. You’ll want to find out what applications are needed, if letters of recommendation are required, what the testing requirements are, and, of course, fee details. Then map out a timeline so you get everything done with as little stress as possible. This is not something you want to wait until the last minute to handle!
2. Work Out Your Estimated EFC Long Before You Start The FAFSA Process
Did you know that the Free Application for Federal Student Aid (FAFSA) could save you tens of thousands of dollars? In order to understand how that works, you need to understand what goes into the process of determining your EFC, how you could possibly make it the most efficient, and what financial changes you could possibly plan for in order to make college cheaper.
Once you know what your EFC will probably be, then identify which EFC calculation the school uses – FM or IM.
Once you have that info, then look at historical grant and scholarship numbers for those schools in order to get an estimate of what that would look like for your family. Your neighbor with a child in the same class, with the same grades applying for the same college, could possibly have a vastly different final cost for college because each family’s situation is unique and different.
3. Start Saving Early
I can’t stress this enough. It’s never too early to start saving for your child’s education so you can reap the rewards of compound interest. If you’re already saving, find ways to save more by cutting back on expenses, channeling a healthy percentage of any raises and bonuses directly to savings, and setting up automatic contributions. It may not seem like you are making much of an impact, but every dollar helps. Get professional advice first from a financial advisor who understands the College Planning Process and EFC calculations before you place money into any type of savings account so that you can understand the impact on your future college costs. Be sure to get professional advice first to minimize taxes and reduce the impact of your savings on your expected family contribution (EFC) when you apply for financial aid. Consider all the variables before you commit money into any type of financial vehicle for college – especially a 529 plan which might not be optimal.
4. Invest With Purpose
On the savings note, make sure you’re investing your hard-earned money properly to maximize its potential. Regardless of what savings vehicle you use to create a college nest egg, it’s important to review your asset allocation annually to make sure the risk profile of your investments aligns with your child’s college time horizon. When your child is younger, you’ll most likely invest more aggressively because you have more time to recover from losses. But as your child draws closer to attending college, you’ll want to decrease risk and invest more conservatively to preserve principal.
Work with a financial professional to determine your risk tolerance level and create an investment strategy that will give your savings a clear sense of purpose. It’s also critical to rebalance on occasion to ensure your portfolio is still aligned with your goals and time horizon.
5. Join Forces With A College Planning Professional
Whatever your situation, whatever your goals, a financial professional well-versed in college planning can walk you through each of these steps to get your college plan in shape. You’re much more likely to make your New Year’s resolution a reality if you have a concrete plan in place.
At College Planning America, we specialize in every aspect of college preparation, starting as early as the day your child is born, and walking you through each phase of your child’s life. We help you prepare for the FAFSA, college choice, test prep, scholarships, and, of course, financial planning. If you want our help to make college more affordable and create a customized blueprint for how to reach your college planning goals, get started by emailing me at dcoen@sageviewadvisory.com or calling 800-814-8742.
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 comprehensive financial planning that addresses all elements of their financial picture. Learn more by connecting with Dave on LinkedIn.
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