Every year we have to have this conversation. We would love to NOT have to have this conversation ever again. Every year, we hear the same heart-breaking stories from parents many of whom have never connected with Capstone before. Their senior high school student is making the final decision about where to go to college. They are shocked by the prices of the schools who accepted him or her, and their student is balking at going to a more reasonably priced school. In the students eyes, they did all the hard work to get into prestigious schools that they were encouraged to attend. Paying for college can be a client/child battleground. Client’s need ammunition to help their students be prepared for the realities of paying for college.
The biggest roadblock to an easy process…not starting early enough.
We don’t just mean starting to save early enough. (Although starting to save as early as possible (birth!) is very important.) We mean having the conversation early enough. Understanding the real cost of college early enough. Making sure both your clients, and their child are all on the same page early enough.
Get started early with a money conversation. How much do your clients expect their student to pay for either through work study, loans, or through the scholarships they earn? How much are your client’s willing to provide? Our “having the money conversation” blog is a great starting point for this conversation.
Both your clients and their students need to understand some basic things.
Without a common understanding about how much it will cost, how much they will have to spend, how to take advantage of tax credits, scholarships, loans, etc., and what life after graduation will look like for their child, the battle will be great indeed.
What do we suggest?
First, client’s need to understand how college funding works and the realities of today’s costs. The sticker price of college is irrelevant if they are an informed consumer. Don’t let a college visit in your client’s student’s junior year be the first time they discover the dream college will cost $60,000 per year (or more)!
They will need to do a little homework. Read the college’s website to discover what their costs and financial aid policies are going to be. Try their “net cost calculator.” Read blogs to understand how scholarships work and discover tips they can use to plan and pay for college. Take advantage of special events like college fairs or planning webinars as a tool to help them learn. The more information they can gather the better prepared they’ll be.
Use this knowledge (shared with their student) in the parameters of their college search. The cost MUST be part of the conversation.
Hope is not a strategy, and some grim realities must be taken into consideration. We often say that the price tag is just a starting point, but if the cost is $60,000, bringing the price down to an in-state public school level is probably not going to happen. If your clients and their students are on the same page early on, the search and decision become much easier.
A strategy that has worked for some of our families is having the student commit to being a resident assistant (RA). These highly coveted positions can cut the cost of college by 10 to 15 thousand dollars per year by providing housing and in some cases a meal plan! Your client’s student cannot be an RA their first year, but years two, three and four they can. This could shave a total of 30 to 45 thousand dollars off the total cost. This could bring the cost within reach and that is the kind of commitment some students have so they can attend their dream school!
Understand the realities of a “name brand”
We often hear something along these lines–my student was accepted to both “Exclusive University”, costing $50,000 per year with no financial aid, and “State College”, costing $20,000 per year with substantial merit aid offers. Families are left weighing the value of the college’s name and reputation versus the mountain of debt they will need to take on. How to decide? We would recommend you consider a few things. First, college reputation does not mean it is a good fit for your child or will serve them well. We would also recommend you read Frank Bruni’s Where You Go Is Not Who You’ll Be. Sometimes an expensive college can be worth it, but the strength of that school’s specific program your child is pursuing has got to provide you with a strong return on your investment.
April of the student’s senior year is too late to really help.
Students are expected to make their decisions by May 1st. Your client’s have the offer letters and need to decide. If your clients have had the college money talk as a family and agreed to a College Pre-Approval™ amount the decision process really comes down to comparing the awards side by side to see which ones fit the budget.
Now, if your clients are a regular readers of your blogs or Capstone Wealth Partners blogs, these dilemmas may not apply as much to them. They understand the reality of the cost of college. They are armed with some tips about how to find colleges they can afford. They have tried to make saving for college a priority. Your client’s student ALSO understands all these truths.
But what keeps us up at night is the parents who never received the message with the important information they needed. Please take a moment to tell all of your clients who have students who are headed to college. Share what you’ve learned and point them in the direction of helpful tools. Every client can use this information. Things can be done to make the process easier, but they can’t be started in April. Together we can end the student loan debt crisis by sharing our knowledge with our clients.
Originally published 4/2018