My college counselor made a big difference in my life, and it wasn't the one from the school but an outside expert. Without Dan, I may not have ended up with the life and family I have today. It is amazing when you think about it, I even met Allison at college, and now we have four amazing kids. A rejection to my top-choice school would have been a completely different path.
Since that experience, I have intended to help my kids with the college planning process by utilizing experts. Just as I always recommend giving it your best (and sometimes sparing no expense) for test prep for professional and college exams, this falls into the same category. After all, if you can make a little investment upfront, the change in outcomes can be massive.
College Inside Track is one of the groups that help kids and parents plan for a good fit that will work out and help get an edge on the application process. These are my notes from an educational session we recently asked them to provide to our advisory team.
Please let us know if you would like to discuss college planning beyond the 529s and investment accounts. The rules and tips are complex, and it might be worth talking with an expert specializing in them as well.
Thanks for taking a look!
2021 College Inside Track Notes
College Inside Track helps kids prep and choose schools that are a good fit
Planning beyond just saving money is a potentially large benefit to parents and children
Often people show up to talk about this when kids are either very young or close to college. If you are looking for a good fit school, you MUST start early. Sophomore year, Senior is WAY too late in the process. Age 15 sounds like "go time" – I now have that in my calendar.
One common misperception is public is cheaper, private more expensive. Not necessarily the case, don't assume a type of school isn't an option too soon.
Many are now borrowing in private loan markets, which are more costly than government loans.
The FAFSA asset protection allowance has changed significantly; previously, you could shelter 52k in assets, now 6k, soon $0.
38% of kids change schools at least once when they do it, they increase the cost of their degree by ~$14,000, changing twice increases it by ~$24,000. So find a good fit the first time. "just get to any school," and changing later is a bad strategy.
Two kinds of aid, need and merit. FAFSA, feeds needs-based. Separate buckets of money are given for different reasons. Common language does not apply! When colleges refer to Financial aid = needs and merit grants, AND loans.
Senior year, fill the FAFSA out in October, then put it on a recurring calendar reminder every year.
Almost nobody we will encounter will get any need-based aid from the Feds. But many will qualify for need-based aid from the college. Private schools are very different than public, run the numbers, do the FAFSA. Just filling out the forms can get you some aid from the schools – some colleges actually add merit money for doing the form via the little-known college pricing algorithms. See below.
The cost of college enters into the aid calcs, so you can be more likely to qualify for help from more costly schools.
- Parents are assessed an "Expected Family Contribution" of 5.64% on assets and income up to 47%. This means it's still good to save for college! Don't fall for the false belief that saving money hurts your chances for help.
- Students are assessed and Expected Family Contributions of 20% of assets and 50% of income. UGMA and UTMA assets are assessed on their assets.
- Grandparents – not assessed at all
RETIREMENT ACCOUNTS DO NOT BELONG ON THE FAFSA IF, IN PARENTS OR KIDS NAME, SAME WITH YOUR HOME, rental properties are reported as assets like a brokerage account.
The Expected Family Contribution is going away and changing to the "Student Aid Index", and dropping from 108 questions to 30 or 36 depending on financial complexity. We will no longer be getting credit for multiple kids in school.
Divorced families will then be changing to who financially supports the student more.
Grandparent-owned 529s WILL NO LONGER HAVE ANY IMPACT ON THE FAFSA starting NEXT YEAR – question disappears on 2023 FAFSA, so some MULTI-GENERATIONAL CONVERSATIONS for families. Maybe keep it in Grandma and Grandpa's name? So assuming good relationships, possible to impact estate planning.
All small business owners will have to list their assets; we don't know how detailed it will be.
High School kids often miss emails that offer them scholarships, and they miss the deadline – get good emails for the kids that we can also monitor?
Do NOT spend any time on your own looking on the internet for private scholarships, the average needed for 1 is apply to 50-80 programs, the average award is $500. For the time involved, they would be better off getting a part-time job.
You ARE NOT going to get being smart scholarships at the highest end schools like NYU etc., either pay $80k a year or be low income, don't bother applying unless willing to pay
Test optional schools are still accepting the tests, so you still need to take the tests.
Junior year is ideal for college tours – need to plan ahead; they fill up!
Not enough to just be smart anymore, need essay, rigor level of education, category of the school.
College is not on sale bc of COVID unless you go to a lesser-known school.
Consider whether using the 529s all at once or spreading it out is better for your family.
Current federal student loan rates are 3.73%, so it can be a good call to take some of that too, depending on risk tolerance.
Grad school loans are ALWAYS about twice the interest rate of undergrad, so if they are going to go, maybe take out loans for undergrad, use 529s for grad school.
College Inside Track can help with the decision to do the AP classes or not, ACT or not, and get deep in the weeds on questions – the BEST time to do this is sophomore or junior years; for Seniors, it's way too late.
Essay work is a walk-through process to get them to their topic, work individually with their consultant, work one-on-one with a coach, elevate acceptance opportunities – help on supplemental essays too, go line by line with the applications.
97% of their kids get into one of their TOP THREE schools
How much to save? It depends on how much mom or dad wants to pay for and school tier goals.
4-year college costs today range from a low of $20k to a high of $80k – sticker priced – some are flexibly priced, others not.
Slides I liked:
-only 4% of their kids change schools