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College Planning Made Easy in Six Simple Steps

The student debt clock for 2020 just keeps on ticking. Americans today have over 1.64 trillion dollars in student loan debt, affecting nearly 45 million borrowers. Students today are carrying an average of about $30,000 in debt with them as they make their way into the world only to be further impeded by a dwindling job market and an influx of bills. 

We have seen this crisis impact so many families and have worked to develop a system that will help advisors hone in on college planning to bring this debt down one dollar at a time.

Many advisors who work with families will be approached with a question concerning education costs and when you are better prepared to answer those questions in a comprehensive and accessible way, you will be able to help your clients secure a better future not defined by the burden of student loan debt. 

How can you walk your client’s through a comprehensive approach to college planning?

Our College Pre-Approval process can help. 

What is College Pre-Approval?

The student loan crisis has gained so much momentum over the years for a few reasons

  • Lack of time to prepare for college
  • Lack of financial literacy and resources to help families and students understand and plan for the cost of college and the ramifications of student loans
  • Lack of transparency in the financial aid process
  • Families not fully understanding what they are getting into and making emotional buying decisions
  • No process to guide families through the complex process

Education is among the top concerns for families today but without a strong planning strategy, these costs can leave students in debt for a majority of their adult lives. This growing concern led us to create our 6-step college pre-approval system.

This system is centered around creating and implementing a strong financial plan that looks at the long-term financial obligations of education costs. College should have to be pre approved just like a mortgage. Demonstrate how you will pay for all four years down to the penny, including the resulting student loan and subsequent student loan payment.

Before you purchase a home, you need to obtain a pre-approval letter that analyzes your income, assets, and credit to determine the threshold for your loan. This process stipulates how much money you can borrow for your mortgage, based on how likely you are to pay that loan back. We think of our college pre-approval process in this same light. 

This process helps families approach college planning in a proactive, educated, and strategic way. Below are the six steps to making the most of college funding. You can use this information as a template for working with your clients on their comprehensive college planning needs. 

1. Prepare for the cost of college

The first step to approaching college planning is to analyze the numbers. Start by helping your clients set their budget for college. Budgets aren’t just useful for household expenses, they are also important when allotting money for education costs. Encourage your clients to work with their child to look at current saving measures to determine what they can and can’t afford, knowing that additional expenses will need to be covered by a loan.

Using numbers as a baseline, research some schools. Be sure you ask your clients if they have thought about the following questions:

  • Why is this school in the running?
    • This question can separate an emotional decision from a logical one. 
  • How can a specific program(s) help your child reach their goals?
    • This can help both your client and their child think about life after graduation and paying back whatever loan needed
  • Does the cost make sense?
    • This opens up a door to talk about public vs private institutions. 

Remember, the sticker price (tuition) is just one factor in planning for education expenses. It is also important to take into account fees, housing, food, books, educational materials, transportation, and emergency funds as well. 

Planning for college expenses takes time and should start as early as freshman year through junior year. 

2. Apply for admission and scholarships

Once your clients know which schools their child will apply to, the next step is to meet all application deadlines including sending transcripts, test scores, letters of recommendation, and essay requirements. 

Alongside the application process, it is important to start looking for scholarship opportunities that college or program has to offer. Make note of those deadlines and ensure that they are met. 

Scholarships are an excellent way to offset the cost of college and keep student loans at bay. Some scholarships are one time whereas others are recurring. Be sure to look into the specifics of each scholarship and factor that into the education budget. 

3. Apply for financial aid

January of your client’s senior year is an important milestone, as it is the time to apply for financial aid. Be sure that you help your clients with FAFSA, as many can get confused by the forms which can lead to mistakes in the application process itself. 

Help your clients make an additional plan for any costs not covered by savings, scholarships, and financial aid. A comprehensive plan will help them understand the costs while also building a strategy for paying off any remaining debt after graduation. 

4. Analyze financial offers

The results are in! Once your clients know which schools their child was admitted to and their corresponding financial commitments, it is time to evaluate each one based on the financial merits. 

You can walk through each letter with your client to help determine which school has the most competitive financial package based on a combination of tuition, scholarships, grants, and financial aid offered. 

BUYER BEWARE! Financial aid award letters can look very different from institution to institution. You have to be careful to understand what is truly “Free Money” in the form of grants and scholarships, as opposed to loans and work study. By definition, loans and work study are financial aid. They often disguise loans and work study to make it appear that it is free money. It is not!

The bottom line is that you need to understand the total cost of attendance and the discounts you will receive to understand the true out of pocket expense. Not just on a one year basis, but on a four year basis!

5. Make a decision

This is the fun part! 

You are able to help your clients make the best decision both financially and academically. After understanding their financial and personal considerations, you will be able to help them make a choice that makes sense financially while still giving their child a great education. 

6. Funding the shortfall

In all likelihood, even with personal savings, scholarships, and grants there will still be some costs leftover. Now is the time to solidify the plan for covering those additional expenses. You can help your clients look at proactive tax strategies, distributions from investment accounts, contributions from other family members, and last but not least smart lending strategy.

This is a crucial stage in mitigating the long-term financial burden of college costs and can help your clients feel much more confident and secure in their decision. 

Come join CAP to learn more

Here is the good news, we have designed software that demystifies financial aid and allows advisors to guide families through this complex maze with confidence and ease! Our CAP community is designed to prepare advisors for a success in college planning. We are passionate about your role in ending the student loan crisis and with our system you can be part of that change. 
Ready to take a closer look? Start a free demo of our system today.

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