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How College Planning Fits into Comprehensive Planning

College planning is a universal part of the American parents’ experience. There’s going to be a $20-80,000/year expense in their children’s future, and the cost of college is consistently on the rise. Unfortunately, most American families are overspending and making uninformed decisions. The next generation of college grads is burying themselves in debt. This huge loan crisis is altering the course of the American economy as we know it.

This is where financial advisors can help. The sooner advisors see that college planning is an inevitable part of comprehensive planning, the sooner we can start setting future generations up for financial success and minimize the total amount of student loans they take on.

The Number of People Dealing with College Funding

The truth is that there are 16 million students in grades 9-12, with 3.5 million students expected to graduate this next spring. That means millions of families who need your help in providing financial guidance as they make one of the biggest financial decisions of their lives – selecting a college and funding education.

The number of college graduates who are going to higher education each year is huge, and their families’ needs don’t start and end with college funding. As an advisor, if you can address college funding (their #1 financial concern), you can then move on to address their laundry list of other financial to-do’s such as:

  • Retirement planning
  • Investment management
  • Tax planning
  • Cash flow and savings
  • Debt management
  • College planning for their other kids

In other words, if you can address the #1 financial concern of the families who are college-bound, you’ll start to earn their trust and build a long-term client relationship with them.

The College Pre-Approval™ Process: 6 Critical Steps

The best way for advisors to incorporate college planning into their practice is to create a streamlined repeatable experience for their clients. Our trademarked College Pre-Approval™ process is a battle tested framework that is helping advisors have more meaningful and informed college financial planning conversations with their clients.

Prepare For the Cost of College

Nearly every parent wishes they had been able to save more for the cost of college. The reality is that the runway to college is short. For young families just getting started out the resources to meet the competing needs of funding their current lifestyle and saving for retirement and education are stretched thin. In turn, rarely do families have enough banked to simply write the check.

We need to go beyond just saving for college and help our clients understand financial aid and how they will actually pay for college. This is from a combination of savings, cash flow, student loans and financial aid.

The sticker price of college is irrelevant if you know how to shop. This entails understanding financial aid and the fact that there is no one size fits all. Colleges award financial aid very differently from school to school. As advisors we can provide tremendous value by helping our clients understand if they are candidates for need based aid, merit based aid, and their families opportunities get most free money!

Understanding the total out of pocket cost for all 4 years of college and the potential job opportunities post-graduation is critical to help your clients make fully informed buying decisions. Using a tool like College Aid Pro™ can help you to weigh the apples-to-apples cost of different colleges on a net price basis. Not just for one year of college, but all 4 years. This turns the concept of waiting to receive aid and letting colleges dictate what you pay on its head and allows you to put your client in the driver’s seat. Ideally, you’re helping clients who have kids between their freshman and junior year of high school during this phase.

Applying for Admission

College applications happen between September and November of a student’s senior year. Once they apply to a set number of schools, you can help them move to the next step in the process.

Apply for Financial Aid

Helping your clients organize a strategy when applying for aid is critical. Typically, this happens in October of a student’s senior year. Depending on the schools they applied to, you’ll need to guide them through:

  • The Free Application for Federal Student Aid (FAFSA)
  • The CSS Profile
  • Institution specific forms
  • Applications to scholarships and grants

Analyze and Appeal Financial Offers

This is where you truly get to shine. When the financial offers come in, you’re able to closely analyze them to understand:

  • How much the parents and student will be expected to pay out of pocket
  • How much aid is being provided
  • What the total cost of different colleges mean for the financial future of both the parents and the student

However, just because a college offers aid doesn’t necessarily mean that it’s the best choice for your client and their child. It’s important to look at the total cost of each school, not just the amount of aid offered. Not just on a one year basis but a four year basis including the funding gap, student loans required, and the resulting student loan payment!

Choose Your School & Accept Funding

It’s not always easy to have conversations around college affordability. However, when you’re able to help a family look at the raw numbers behind what different institutions cost, you can help them make a positive financial decision.

Evaluate Your Options for Covering the Short Fall

There’s always going to be a difference between the amount a school thinks your client can afford, and the actual amount they can afford to spend on higher education for their kids. Your job is to help them determine the difference between those two numbers – and how they can come up with the remainder.

In a perfect scenario, there will be enough savings or funding to avoid loans. However, this isn’t always the case. You can help your client determine how much loans are truly necessary. You can also help them decide how they can budget for ongoing education expenses for the next few years using their current cash flow.

College Funding as Part of Your Process

Many advisors ask us how college funding can be part of their client service calendar. The one way to incorporate this 6-step process into your practice is to look at your services annually on a calendar basis. In the fall, you’ll be able to help all of your college-bound families determine aid and make a college funding plan. You can view college planning as another seasonal “to do.” In fact, it’s similar to how many advisors incorporate tax planning into their services in the spring.

College planning doesn’t have to be complicated, but that’s how our culture often views it. As an advisor, you can help your clients demystify the process and guide them to better college outcomes.

Want to learn more? Book a demo call with us today! We’d love to chat with you about how college planning can be part of your business model.

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