We do dozens of workshops every year at high schools around our region to help educate parents on how they are going to pay for their children college. And while we love doing them, the one thing that is most frustrating to us is how most parents wait until their child is a senior in high school before they start to road map out where the money is going to come from.
From the student’s perspective, they probably started academic planning for college late in the sophomore or early in the junior year. They’ve done career assessment, test preparation, maybe some campus visits, and even practice writing an essay. But most parents haven’t really addressed the money issue.
We recommend that parents start looking at the financing facts at the beginning of their child’s sophomore year in high school. Here is a checklist of some of the things that they should begin to address:
- Estimate your expected family contribution: estimate your financial aid eligibility so you know exactly the amount of need that you have. Learn more at this Department of Education website.
- Loan planning: understand exactly how much debt you can incur without jeopardizing your current budget, or your retirement planning.
- Tax planning: review your income tax schedules to discover potential tax savings that can be converted into funding college. This should include an understanding of tax incentives that might arise during the college years as education incentives. See this site for more details.
- Cash flow planning: review health costs, insurance costs, living expenses, investments, mortgages to discover any areas that you can improve on your cash flow to help pay for college. Try to make an estimate of how much per month you could contribute toward college on a pay-as-you-go basis.
- Investment planning: review all your investments to see what the real rate of return is. There are many hidden costs that can be converted to cash flow that can be used to pay for college.
College is one of the most expensive things you will ever buy. It is vital that you have a plan in place to be able to do this. If that something that you feel you want to talk more about, reach out to us as soon as possible for a free consultation. It’s the things you don’t know that will eventually cost you!