- Have we thought of what the impact of that might be on student #2 or #3?
Sometimes we are so focused on getting our first student through college that we forget that there are one or two more coming along later. As parents, we are just trying to do the very best we can for our students, but it is not uncommon for us to see the students who come later suffering as a result of decisions made for their older sibling. Our planning should include all our students. - Where, in my mind, is this money coming from?
“Do you have a plan in mind as to where the money is coming from?” Sometimes I ask parents that question and the reply might be “Oh well my student will have to get scholarships” or “We were thinking of borrowing from our 401K” For undergrad studies, there is a limit as to what the government or colleges will lend or give money to students for college. It is highly unusual for students to get the bulk of their college money from scholarships. Unless your child is Kobe Bryant or Tiger Woods, don’t expect a “Full Ride”
Money taken from a 401K has a high cost that most parents do not understand. Once most people get shown the actual cost of taking money from their retirement account, they rule that option out. A proper strategy that is best for your family’s unique circumstances could be extremely valuable. - What is the best savings vehicle for us if we are going to save for college?
There are many places where you can save money for college. The most common plan that people know about is a 529 plan, or Coverdell account or some other tax-advantaged savings account. These plans are not good and are not bad, but they do however have some severe consequences that are overlooked when they are initially set up and could cost you valuable dollars in financial aid. In many cases, there are other alternatives that would be as good if not better for the family to store their hard-earned dollars for college that might make the process much more efficient. The difference between Saving and Investing is huge and many of the plans that parents have are opposite of what they think they are. Talk with a financial professional that is an expert on College Planning to work out your unique plan that could be tax-advantaged without sacrificing financial aid.
- Do we have a plan of how to get Endowment money from the colleges of our choice?
For most families, their planning ends once the student has been accepted at one of their choice colleges. The reality is that many families sacrifice thousands of dollars of endowment awards because they fail to negotiate. Negotiation should be part of our strategy, but the preparation for successful negotiation comes at the beginning stages of the planning process long before choosing schools. Tens of thousands of dollars are left on the table because of lack of preparation before application time and lack of knowledge on how to obtain the endowment money that schools have available. Most schools have tens of millions of dollars [and many have billions] available for endowment funds, but many families miss out on these funds because of lack of knowledge. These dollars are not necessarily for the needy but are available for high income and high net worth families.
Whether it be for Retirement Financial Planning or College Planning, let’s PLAN
To schedule a time to meet with us please e mail davec@collegeplanningamerica.com or call 714-813-1703
Dave Coen RICP® is CEO of College Planning America and a Registered Representative at SageView Advisory
davec@collegeplanningamerica.com dcoen@sageviewadvisory.com
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