College Planning Education
Do You Have A Game Plan For Financing College? If Not. It Could Cost You Thousands Of Dollars!
Each year we are amazed at the lack of planning that some families put into college, especially financing college. The proof of this lack of planning comes out when we ask these simple questions in the initial interview with the student:
Why do you want to go to college?
Where do you want to go to college, and why?
What career (vocation) are you looking at, and why?
The lack of thought process is evident when we get answers from students such as; "I don't know," or "Because that's where my friends are going to school," or "I'll figure that out once I get in school." Simple answers like this not only show a terrible lack of planning but will almost assuredly cost these families a minimum of $10,000 to $20,000.
Why is it so imperative that both students, and their parents, plan far in advance?
With deficits in the billions of dollars, most states have little money to subsidize their state universities. As a result, these state universities' cost is now over $25,000 per year, per student.
Ten years ago, you could pay for college expenses with a few low-cost loans. Today, Stafford (student) loan interest rates are 5.2%, and it's not uncommon today for students to graduate from college with $25,000 to $40,000 of debt.
The college cost is now so high that parents must shell out a considerable chunk of their income and savings, yet they still need to borrow as much as $100,000, or more, for education.
Regardless, the current unemployment rate is under 4%. Many students who graduate today cannot find jobs in their field of expertise and end up waiting tables at a local restaurant or other low-paying occupations.
Today, building a game plan to pay for college is a MUST! Here are just a few things both students and parents should consider when creating that plan:
Student To-Do List
Career Assessment
– this could help you avoid the 5-6 year degree due to a mid-stream change in major.
College Selection –
rework your choices to 6-8 colleges to create maximum competition among colleges and increase your potential tuition discounts.
ACT/SAT prep –
a minimum increase in your scores could boost your chance for merit scholarships.
Campus Visits –
conduct face-to-face visits with admissions and financial aid officers, so you know exactly where you stand.
Extracurricular Activities –
maximize your resume of achievement.
Grade Transcript and Essay Preparation –
have these ready to go for early applications and acceptance.
Parent To-Do List
EFC Planning –
estimate your financial aid eligibility to know the dollar amount of scholarships and loans the student can receive.
Loan Planning –
understand exactly how much education debt you can incur without jeopardizing your current budget or retirement funding.
Tax Planning –
review your 1040 tax schedules to discover potential tax savings that can help to fund college costs.
Cash Flow Planning –
review your investments, health costs, insurance costs, mortgage costs, and current living expenses to discover potential areas of cash flow improvement.
Investment Planning –
review all your investments to discover the "real rate of return." Many hidden costs can be converted to cash flow and used for college.
Welcome to The Road to Financial Empowerment, where we're "Unlocking True Financial Freedom, One Step at a Time." I'm Darnell from Empowering Your Finance,
Financial empowerment begins with education. Equipping yourself with essential financial literacy skills transforms you from a passive participant in your financial journey to an active future architect.
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While some fads come and go, some timeless things always ring true. Money has been around in one form or another for ages; it only makes sense that certain truths have been discovered wisely to use this asset wisely. Here are ten rules that will never steer you wrong: 1. Practice intelligent risk management. Unless you have a large income and are very frugal, you're never going to amass a fortune by putting all your money in a savings account. That 0.31% interest might be about as safe as you can get; however, higher-risk investments are preferable over the long term to low-interest income-producing investments. In today's terms, think of stocks for long-term investments rather than low-risk bonds or savings accounts. 2. Have an emergency fund. With some savings to handle the inevitable hiccups that happen to everyone, your long-term plans can be in good shape. With an emergency fund, when a significant financial challenge comes into your life, you can avoid having to dip into your retirement to pay your bills. 3. Diversify. Putting all your eggs in one basket can be catastrophic if something happens to that basket. A significant financial loss to your portfolio can take ten years or more to recover from. Diversifying your investments limits the amount of your losses. 4. Be patient. Successful investors spend most of their time sitting, not buying or selling stocks. When you find an outstanding stock to purchase, it can be several years before the price matches the value. Many investors have sold too soon, only to discover they should have waited.