FAQ – Frequently Asked Questions
What is a college funding plan?
A college funding plan is your road map to paying for college. It answers the two big questions: “How much does college cost?” and “How do we pay for it?”
Why do we need a plan?
You only need a plan if it is important to you to keep a lid on college costs so they don’t spill over and hurt your other financial goals and objectives. If that’s not a big deal to you, you can wing it.
Doesn’t our financial plan cover paying for college?
If you mean a comprehensive financial plan (only about 1/3rd of people even have one, and fewer than that actually follow them), then it probably does have a section on education. However, a good college funding plan covers far more than just saving for education. When your plan was put together, did you know exactly where your teenager would be going to college and what that college would cost?
Don’t we just have to pay what the college says we owe?
Yes, when you get the invoice you have to pay it. However, “what the college says we owe” is a moving target. Your invoice will be different than that of other students, in the same way your airfare is different than other passengers.
A good college funding plan addresses ways to reduce what the college will say you owe, well before the invoice arrives.
What goes into our plan?
The first part of your plan will focus on what college will cost your family – that’s different than what college costs. In-state schools, out-of-state schools, selective private schools, community colleges all have different prices and different financial aid resources. What you pay may be significantly different than another family of a student in the same class. Your plan addresses ways to both figure out and reduce what college will cost.
The second part of your plan is to identify all available sources of money. It is perfectly possible to borrow 100% of the cost of college (including spending money) from the federal government through student loans and parent loans, but is that wise for your financial situation?
Our checklist starts with your family’s cash flow and savings to see what can be reallocated to college costs. What education tax credits will you qualify for? Do you have the generosity of a grandparent or other relative to count on? Do you have a 529 plan or prepaid plan? Can you count on income from a part-time job for your teenager? Can a tuition payment plan help?
These are just some of the items we examine. The important thing is that your plan includes all the items that are relevant to your family.
Loans can be part of a college funding plan, they just should not be the first thing you turn to. Loans have to be repaid at some point, so you are going to need to come up with the money eventually. If a careful analysis shows you have confidence in your ability to do that, loans are an option.
What about all the “other” costs of college, like books and spending money?
The extra costs are significant and can add up to thousands of dollars per year. 40% of families report having some major expense they did not expect. Your plan should identify these costs and address ways to proactively lower them.
Here’s a huge cost that is often a surprise: the fifth year. It is increasingly common, especially at state schools, for students to need an extra semester or two to graduate. Nothing will blow your budget like an extra year. Your plan should help keep you on track to a four year graduation.
Why don’t colleges tell us about all this?
Colleges can be wonderful institutions, but it’s not their job to tell you how to pay them less money. That’s your job. Fortunately, your college funding plan will do just that.
When should we get started with our plan?
Today! What you can do will vary depending on the age of your child, but it’s never too early for information and it’s never too late to make changes. Ideally, parents of sophomores and juniors have more flexibility than parents of seniors or current undergrads.
Our son or daughter has graduated with student loans. Can you help?
Yes. Student loan repayment is incredibly complicated and college graduates are not prepared to make the important choices that are required of them. We go over the different repayment programs, cover the immediate and long-term implications, and help your son or daughter create a loan repayment plan. As situations change, the repayment plan will also change.
Can’t I make a plan myself?
Yes, absolutely. A college funding plan is not incredibly complicated. If you’ve been through the college process lately, understand how financial aid works and how to lower your net price, can tell when a financial aid award should be appealed, can compare the various and misleading aid award letters, are able to get a grasp on the 15+ education tax provisions and 10 loan options, know how to complete the FAFSA properly, and can manage your costs while in school, you do not need help.
Or, if you’d like help, or are just too busy for all that, we can get your plan started in about an hour.