first child turns 18 and aim for 1 / 3 of that in savings and income . Of course , this target also depends on your values ! Some parents tell their kids early , “ if you want to go to college , you ’ ve gotta find a way to pay for it .” Others promise to cover the full cost .
Either way , it has hopefully occurred to you by now that planning for college cannot and should not be done by in a vacuum . Why ? Because you have a more important expense to cover : retirement . At the end of the day , you cannot borrow or find free money for retirement like you can for college . Make sure you have the money conversation with your kids and draw a line in the sand — they need to know this so that their dreams are not dashed , and you both get put in a prickly situation .
Talk to a financial planner who understands BOTH college funding and retirement planning . Late-Stage College Funding Tips Perhaps your kids are a bit older . Instead of saving as early as possible , you are now saving as soon as possible . This does not necessarily change the principles of college saving , but some of the tactics might be different . These would depend on your unique financial situation and should be discussed with a college funding expert who understands not only financial planning but also the financial aid system .
Late-Stage College Cost Planning
If your kids are starting to get close to college and you are behind in saving , the early tips mentioned before this still apply ( and vice versa ), but your time horizons have changed , you have less flexibility , and you will have to take a much more proactive role in cutting costs .
limited list of college rankings that may be guiding your decisions at the beginning .
Make sure to get a sense of whether you ’ ll qualify for any need in the first place . If you will , there are legal and ethical ways to maximize need-based aid that involve some financial maneuvering . Generally , the schools that meet the most percentage of need are private and selective . The few public schools that do so are also selective . If you will not qualify for any substantial amount of need , you may think that the in-state public is the way to go . But you ’ d be surprised how many private and out-of-state schools are known for substantial merit aid and tuition discounting . By researching these schools , you can build a more balanced college list , and ultimately even leverage your award offers !
Consider alternatives to the “ traditional four-year university ” path . Live with parents and commute to college . Or arrange a housing deal with extended family or good family friends who live near the college . Consider apprenticeships , gap years , and trade school . Can you graduate in three years instead of four ? Have you thought about federal service academies or ROTC ? Remember , you ’ re saving through college , not to college . You have more time than you think . This is where you can really get creative with the help of a college funding expert . #
Never , NEVER , utter the words , “ we ’ ll find some way to make it work ,” after your child gets into a college you cannot afford . This can create a perilous journey of debt for both parent and student . Keep this in mind when helping your child create their college list .
Make a concerted effort to understand college pricing models and the financial aid system . The sticker prices of most colleges can be intimidating , and establishing what you will actually pay is a murky ordeal .
Make sure to compare colleges based on net price and not the advertised “ sticker ” price . Net price is the college ’ s sticker price minus the grants and scholarships awarded by the college . Colleges must have net price calculators on their websites , but unfortunately , many of these are not updated or are inaccurate . As part of your homework , run an EFC calculator , such as our free college money report ( ectutoring . com ), to estimate your Expected Family Contribution . This is not the number you will pay for college . Instead , the federal government and colleges themselves will calculate this number to determine your eligible need when you submit the FAFSA and CSS Profile .
The kicker is that most colleges do not cover the ( Cost of Attendance – EFC = Need-Based Aid Eligibility ) amount in full . You also must understand that “ need ” includes work-study and student loans . Each package will vary by school .
Only focusing on brand-name schools ( the prestige complex ). Focusing on academic and social fit at the expense of financial fit . There are plenty of affordable schools out there that will help your kid thrive academically , emotionally , and socially . You just have to cast a wide net and glance away from that very arbitrary and very
JANUARY 2023 21