The Top Four Regrets In College Planning

When you first held your child in your arms, you might have dreamed of all the things they would do in their life. Was one of those dreams seeing them get a top-notch college education that would launch them into their career? According to a ChildTrends report, almost 90% of parents expect their children to go to college, (1) yet 35% of parents have not started planning for college at all! (2) And even if you have put some money away for education costs, do you have a well-thought-out strategy for the whole college planning process? At College Planning America, we have worked with parents and students for many years and our experience has given us perspective on four common college planning regrets to keep in mind as you prepare to send your child off on their higher education journey.

1. Taking On Too Much Debt

When told how much their wedding might cost, a survey of brides-to-be said that the cost would be worth it. (3) But in post-wedding interviews, over half of the couples surveyed, regretted spending so much money on their big day. (4) The same trend often occurs when interviewing students and parents before and after college. It might seem worthwhile to take on hefty loans for a quality educational experience, but it is hard to stay excited about those student loans when making payments for 10-15 and sometimes 20 years after college. Looked at in those terms, taking on too much debt can make it hard to also buy a house, save for retirement, raise kids, build a career, and contribute to caring for aging parents. Is it worth it?

2. Prioritizing High-Cost “Name-Brand” Schools Instead Of Reasonably-Priced “Good-Fit” Schools

Think of school choice like going to eat out at a very expensive restaurant to try to impress your guests or friends. The food is great, the company is enjoyable, and you put the bill on a credit card to pay later. When you get your credit card statement, you realize that you could have had wonderful food and the same friends over to your house for a quarter of the price and the memory would have been the same without the cost. Research has shown that it is rare that the “name” of the college that you got your degree from will have a significant impact on your career prospects. (5) The school on your diploma might help you get your first job, but after that it is up to you to impress your bosses or move forward in your career. The person in the office next to you who got their degree from another school and graduated without debt or costing their parents their retirement is just as likely to succeed as you are.

It’s more important to brainstorm potential career choices in light of your child’s skills and interests, look at majors that will get your child to their career, then choose a college that fits those parameters.

3. Saving Too Late And In The Wrong Way

When should you start saving for college? I normally say, “3 days after you get out of the hospital after having your baby!” Although it’s a joke, it’s important to realize that the sooner you start, the less you have to save on a monthly basis. For example, let’s say that you want to save $100,000 for your student by the time they turn 18 and you can get a rate of return of 5%. If you start when they are born, you have to save $290 per month. But if you start when they are 10, you have to save $650 per month to reach that goal.

In addition, how you save your money makes a difference as well. If you save in the wrong financial vehicle, your $100,000 savings could cost you over $20,000 in financial aid due to the various factors that make up your Expected Family Contribution (EFC). Since you can’t predict the future or even guarantee that your child will go to college, it’s critical to consult with a financial advisor who understands college savings options and can advise you based on your unique circumstances. You want to make sure you invest wisely and in accounts that increase your financial flexibility.

4. Not Setting Expectations Early

As overwhelming as they may seem, these questions need to be addressed early and often:

Who is going to pay for college? Will we, as the parents, pay for everything or do we want our kids to have some skin in the game?
What is the budget for college?
Does it HAVE to be a 4-year college or are we prepared to look at other options?
Can the degree be completed in 3½ years instead of 4-6 years?
What grades do your kids need to achieve their goals? (It’s too late to start working on those in junior year).
How does college for my first child affect college for my second child?
How does this plan affect our retirement goals?

These are all questions that should be discussed from early on in the high school years. From there, the answers can be implemented in a college plan that will help you achieve your goals. You don’t want your child to excitedly open an acceptance letter they worked so hard to get only to have their hopes dashed when you tell them you can’t afford to send them there.

Our College Planning Process is a wonderful opportunity to teach kids how to plan and make good decisions. How we, as parents, handle this process could be a crucial teaching opportunity for our kids for the rest of their lives.

Live Without Regrets

At College Planning America, the most common comment that we get from clients is “I wish I had spoken to you earlier.” No matter where you are in the process, working with a professional who specializes in Financial College planning can maximize your resources and streamline the process. If you want to avoid facing these common college planning regrets, email me at dcoen@sageviewadvisory.com or call 800-814-8742.

About Dave

Dave Coen is a Financial Advisor with SageView Advisory and the CEO of College Planning America. Along with his financial industry experience, he is a College Planning Specialist and has served on the advisory board of a national College Planning training organization. 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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