Mark Salisbury, PhD, CEO & Co-Founder of TuitionFit, alongside Pure’s Principal, Marc Horner, CFP®, shares insights on how families can approach the college tuition process with confidence and make smarter decisions.
Outline
- 0:00 Introduction & Overview
- 2:09 Education as a Pathway
- 4:22 College Pricing & Discounts
- 5:45 The College Selection Process
- 8:40 Starting with Price
- 13:43 Negotiation Strategies
- 22:06 Public vs Private Schools
- 27:04 FAFSA & Financial Aid
- 39:33 Appeals & Timing
- 48:03 Community College Strategy
Transcription:
(NOTE: Transcriptions are an approximation and may not be entirely correct)
Kathryn Bowie, CFP®: Welcome to this college tuition planning webinar with Mark Salisbury, co-founder and CEO of TuitionFit, and our very own Mark Horner. So we are here today to help you go through a bunch of questions. And Mark and Mark, thank you so much for joining us.
Marc Horner, CFP®: Mark and Mark have known each other for a number of years.
I think this is the, before we turn the cameras on, I think this is our fourth, fourth event like this. So really looking forward to this conversation. This topic is near and dear to my heart. For lots of personal reasons. One is one is I’ve got, my wife and I are parents of four kids. We’ve gone through the college process four times once by accident in the Mark Salisbury method.
And then once we learned, learned what we were doing, then more intentionally
Mark Salisbury, PhD: we can make this better ourselves if we all team up a little bit. And many of you probably remember when Edmonds came out in the car industry and was getting people to share prices of the cars. They. Actually bought. And Ford and GM sued them and then found out that it was a bad idea.
So joined them and started buying their data, and suddenly the car industry was a little bit better for everybody. Same thing was true with Glassdoor when they started doing the sharing information on salaries. So the tuition fit project was based, based on the same thing. But as far as that goes, that sets up the conversation that we hope to have here, which is.
How can we do a better job of making sure that every family is optimally positioned to be able to have the broadest set of options when they start thinking about college? And frankly, just not get surprised by any of the pricing tricks that colleges use. ‘Cause they aren’t the higher moral plane that we would all like to think they are.
And they would all also like to think they are. Instead, they’re businesses that are trying to make money in a capitalist society just like the rest of us. And so they do what anybody would do, and knowing how that works from the inside can change everything in terms of what you can do and what your
clients can do.
One of the things that. Really is important to frame this whole conversation around is something that is not what our culture sort of thinks of as the default way of approaching things. Turns out that we’re not working with a blank slate. The public has already been inundated with this notion of if you go to a brand named school that you can brag about and drop at the country club, somehow everything’s gonna be better.
And the reality is, for every single family and everyone looking at this stuff, the outcome is not the first day of freshman orientation. The outcome isn’t defined by the first sweatshirt you buy. The outcome is after you graduate, what’s that first real paycheck looks like and when do you get it? If it’s 10 months after you graduate, that’s bad.
If there’s no comma in the paycheck, that’s bad. Right. The whole point is after college, and that means we really have to think about this thing as education is a pathway to the outcome and not the outcome itself. So what that means is when we’re thinking about where we, where we wanna go for college, what option we wanna pick, we’re looking at maximizing value and minimizing price.
We’re not looking to spend, just to spend. Some people might be better off than others and might be able to write a check for a hundred thousand dollars every year. But I don’t know that anybody really wants to. We should have a, everybody that’s working with a financial planner is probably thinking along the lines of value, and that’s the way that we wanna help them approach this.
So it is really valuable to sort of start with that frame. And when anybody suggests that, you know, the prestige of a place or a brand name of place is, is the defining factor, and you can kind of remind them that many of us, some of us even on this call. Have been quite successful and didn’t go to a particularly pre prestigious place and just proves the point.
So it looks like if you look at all these tuition and fees, numbers, that the college prices have just gone bonkers. But what is actually true is that the real price hasn’t changed that much. That’s because colleges and universities have been compelled for a variety of reasons, some of their own making and some of the marketplace to discount more and more and more.
And this chart just shows you for the last 10 years, if you go back to the 1990s, which some of us can remember anyway, the, it wasn’t until 1995 that colleges even tracked. A data point called discounts. They weren’t even paying attention to it. Nobody cared. And then all of a sudden there was enough talk about it that somebody said, you know what?
We actually had to track this, so let’s start looking this up. And they found at that point that the average discount across all institutions was about 25%. About half the students were paying sticker price, which would, would make sense. Compare that to now, right? That is a pretty amazing change.
The system though, that we’ve got is such that it’s not an accident that the colleges introduce the idea of build a college list early, maybe during their second half of their junior year. Narrow that list further to the sort of group you might apply to narrow that to the group, you’re gonna actually send applications out because colleges know that once you narrow, your universe becomes that set of schools, that’s it.
You’re not even thinking about any place else besides that set of schools. And if I can get you to go from a couple thousand colleges and universities down to 50 in the spring of the kids’ junior year. Well, if I’m in that 50, I’ve got a real good shot. So I’m gonna sell prestige. I’m gonna sell the emotional stuff that makes people swoon and pay more.
This is the classic battle in a marketplace, right? Seller wants you to buy based on emotion, and the buyer wants to buy based on value. That’s just how this game plays out, and it’s a constant stretch. So. If the colleges can get you to start narrowing and narrowing and narrowing and then add things like early decision and add things, like if you come to our fall campus visit day, we’ll give you a $500 scholarship that starts to just force people to narrow their list earlier and earlier and earlier, and then the colleges just don’t have to tell you what your actual price is.
Until after they’ve decided who they accept, which is pretty nifty trick, right? If you’re the colleges, this is great. Now, what we’ve found in an analysis of financial aid offer letters when they actually send you this letter that says what your price is, impressively. Sometimes they don’t even include what your debt price is on that letter, and this has been looked at now a couple of times over the past 15 years.
As folks have started to say, you know, that whole student loan problem and all that debt that’s been accumulating maybe that’s because people are buying something that they didn’t realize how expensive it was gonna be. Sure enough, this is exactly how this works. As the tuition fit project has grown, we’ve collected all these award letters and we’ve seen some of the most fantastic stuff.
Like an award letter at the bottom says, your out-of-pocket cost is zero.
Then you look up higher in that letter and it turns out there’s about $45,000 in loans. Subtract as, as if it was a grant that you don’t have to pay back. And you know, the snarky comment is something like those are, that money’s coming out of your pocket.
It’s just a different pair of pants.
Marc Horner, CFP®: So Mark, when you’re talking about the process, should begin with price? I think there, I, I think there’s two elements of that that, that we will, that we’ll cover about when, when price gets involved and how, how a, how a family should interact with a school. So I think that last bullet should begin with price.
That is not to say. The first, we’re not advocating that the first phone call should be to a college to say, Hey, if I choose to apply, what’s my price gonna be? It’s, I think that’s, I think that’s that that comes later when, when we, when we might talk a little bit about negotiation, but I think I just want to be clear about.
For everybody, everybody listening out there that to start with price, we’re talking about doing, doing some research with tuition fit or or whoever. Or whoever else, so that you narrow down the list with an understanding already of the zone of what the net price, not the sticker price should be. Am I?
Mark Salisbury, PhD: Yeah, and to just to add to that or sort of flesh it out in the context of what the role of a financial planner can pay. Can play is let’s start by an early conversation of what’s a price range that’s gonna work within your larger plan retirement, expanding your business, doing any kind of other plan that you have for your house or your family.
All that stuff is laid out. Let’s position college costs within that. Let’s not have college costs be this sort of random thing that’s just gonna show up and blow up the whole plan. Let’s establish a price range and different families can be in different positions and come up with different price ranges.
It’s not that one of them is better than the other, it’s just start with price, meaning let’s figure out what’s the price range that’s available and, and a smart move for your family. There’s a lot of reasons to decide that a higher price is entirely reasonable. And there’s a lot of reasons to decide that a lower price is entirely reasonable, even amongst the same socioeconomic category.
Right? The only, the point here is really is let’s start with, don’t just start picking out schools that you’re swooning over. Let’s start with what’s the price range we wanna, we wanna think about, because you can build from there.
Now we’ve got this nice set of visuals to, you know, imagine if we were doing this with any other expensive product. Here’s a set of houses. Pick the one you like. You’ve been approved to live in that house. Oh, by the way, here’s what your price tag’s gonna be. And you’ve already signed on the dotted line and you’ve already told all the other houses.
Thanks. We’re gonna pass. So now you’re sort of stuck or you go buy an rv, right? Like you’re sort of in an impossible situation there.
So if we start the process with cost, just building it out as to say this is our price range. Then what happens is first of, and we can talk a little bit more about some of the tools that you can use to identify the schools that will fit within that price range. Or maybe to think about it a different way, figure out ways to identify the schools that are just simply not even gonna be close to that price range.
Then as you receive all of those acceptance letters, now you’ve starting to have a set of, of armament to take on the school and actually negotiate, because one of the things that has happened. And Mark, you might talk a little bit about this because you’ve been through it a few times yourself. One of the things that’s happened is colleges essentially got to where they need more students than are actually out there and, and they then want more certain types of students that are actually out there.
And once they’ve accepted your student. Unless they have tremendous evidence to change their mind, they’re not gonna take away that acceptance you’re in. So now it’s about them wanting to get you to choose their school. Two numbers that colleges pay attention to an awful lot. They pay attention to the acceptance rate, which they want to be really low because they all wanna think it’s really, really hard to get into our club.
But then as soon as they do that, it flips, and now they really want it to be Every person that we accepted was just dying to come here. We’re your first choice. Everybody’s first choice. So they want everyone that they accept to say yes. So if you’re accepted and you have a bunch of offers. You have leverage.
Mark, you got any experience with that by chance?
Marc Horner, CFP®: I got a little bit of experience with that, so I, so, so identifying the right cost that fits within one zone. Personal financial plan, personal financial circumstances. Then also getting educated about what the net cost, not the sticker cost is at the very, at the various schools that might be in your universe.
To start really narrowing the. Narrowing the universe and then getting yourself ready for negotiations. When those offer letters, which is what they are, they are offer letters. They’re not take it or leave it letters when those offer letters show up so that you’re armed and ready to, and ready to negotiate.
So yes, I have nego, I personally have negotiated for all four of our kids tuition and, and it’s worked. So I stumbled into it on our first, on our first child, where I said in the admissions office when our daughter was doing an exam to, to get a to get a scholarship. I said something just offhanded.
I just wish there was a way that we could make, make price less of an issue because this is the school that she’d like to go to, but it’s way expensive. And then a couple of days later, they called me back with a, with, with a substantially discounted. Second offer to to, to attend college. And, and, yeah.
So, and I think schools, schools are motivated by all sorts of different, all sorts of different reasons. So in that case, we live in Chicago and they told me they were trying to develop more, there’s a school in Ohio. That they, they were trying to develop a bigger presence in Chicago and that was one of the reasons that they were able to whittle away, whittle away some of the cost.
I also, I have personal experience, not from my family, but in a hobby. I’m in a bagpipe in drum band. I know somebody that went to that, went to college for free on a bag piping scholarship. So what I’ve said to clients is, if there is bag piping money out there to help pay for help pay for college. Who knows what pools of money might be available for your, for your students.
So my, my personal preferred tact with negotiation is just to put it back onto the, onto the schools and let them figure out where to, where to get scholarship money from, where to get grant money from, how to sharpen the pencil on, on this, th this line item or that line item. But as you said at the very beginning of this, mark.
I think it’s a, it’s important to go in for all parents, all families, to be going into this process fully aware. I, I am negotiating with an institution that that is, that’s got a profit motive, even if they are, quote, not not for profit. And, and to approach it, approach it that way. Don’t be fooled by the Ivy.
Ivy covered walls.
Mark Salisbury, PhD: Yes. That is so important That, and it’s, it’s not our natural assumption about colleges and universities, right? It’s, it’s still, it, we still, it’s easy for us to think that’s in their DNA, that they’re. Public good and they’re public nonprofits and it’s just not that way anymore. It’s not that way for any of them.
If anyone’s familiar with a fellow named Scott Galloway who is a fairly well known entrepreneur, but he regularly calls Harvard, basically a hedge fund with a small college attached, and that’s quite true. Many of these schools have an insane amount of money that they are making all kinds of revenue on, and this little college exercise is almost a dalliance, and for that reason, you have leverage.
Not to mention the fact that the number of students graduating from high school every year in this country is now dropping since last year, and we’ve been seeing it coming for a while. There’s, as far as people have looked out, even to 2035, we’re fewer and fewer students graduating high school each year.
The colleges meanwhile built lots of buildings last decade. Last two decades, and the cost of those buildings goes all the way out into 2040s. So they are in a position where now they can’t downsize very easily. So they just need to get students at whatever it takes. That puts the seller in an off, in an off awkward position and puts the buyer in a whole lot of power that they didn’t have before.
Anything else you wanted to add, mark?
Marc Horner, CFP®: No, but let’s maybe Catherine, do we have any questions already coming in?
Kathryn Bowie, CFP®: Hello there. Sorry. Yes, we have a few, so shouldn’t we focus on the college that we want and figure out the money later?
Mark Salisbury, PhD: Well
Kathryn Bowie, CFP®: fit first.
Mark Salisbury, PhD: So what happens when people do that is that they tend to end up. Basically giving themself over to whatever price that school knows that they can charge them. And the schools actually know this stuff. I don’t know if people are aware of a little thing called surveillance pricing that’s been going on in, on the internet in particular where they’re tracking your every move, they’re watching what you watch and look at it at Amazon.
And so then when you go to buy a particular product, they’ve already figured out, oh, you’re a. A person in this age group and looks like you’re probably gonna have a baby pretty soon, so we can charge you a lot more for that crib than we would otherwise. That’s surveillance pricing. Colleges have been doing that forever, and so things like.
Picking the school you really wanna go to and then demonstrating to that school that you really wanna be there and really trying to convey how important it’s to you and really sort of buddying up with that school. It’s actually got a term for it. In the higher education world, it’s called demonstrated interest, and the colleges have been telling the public it really helps to demonstrate interest.
And it’s true that if you demonstrate a lot of interest, there’s a small chance that you have a better likelihood of getting accepted. There’s also a very high chance that they’ll offer you less scholarship money. Why? Because in their mind they think, well, you really like it here, so you’re willing to pay more.
They don’t tell you that though, do they? So this is the game you’re in, and this is the nature of this system. So if you start with just picking a school, you should probably plan on paying more than you wanted to pay. The larger issue to that larger question or larger piece behind that is this. It turns out that higher education institutions are far more similar than they are different.
If you start looking at schools and ask students about this in particular, give ’em a bunch of brochures and then ask them, can you tell the difference between these schools? And the answer’s always, no, you can’t. They’re far more similar than they are different. And what we know from research on college student success, there’s a good 60 years of research on this stuff and over and over and over, what we find is turns out that what you do in college defines your success after college.
And we all probably know somebody who really blossomed. And we all know somebody who arguably got dumber. No offense to anybody, but you can think of somebody who after four years of college, was a sort of, hmm, not real impressive, and it’s just true. That’s the nature of this thing.
Marc Horner, CFP®: And I, so I would add to, I would add to to that, that I know I’ve come out of the gate hard on the financial, the financial side of it, which is not to say that college is only a financial decision.
It’s a, but the financial, financial piece of it is an element of the decision. And so geographic location with, they’ve got the right major school size. Large, medium or small, all, all sorts of other factors to, to consider, but finances and cost should be on that list and, and a serious part of that list.
And, and too often, more often than not, it’s not, in my opinion, it’s not high enough on the, on the list because I, I completely agree with what Mark just said, that it’s, it’s, it’s far more about what a student does. With their degree then where that degree is from.
Kathryn Bowie, CFP®: Absolutely. And on that note, so when we’re talking about, had a couple of questions, I’ll kind of combine them because one person’s thinking that it seems like you’re talking more about private schools than public schools.
And then also are you against private or elite schools? So maybe kind of. Give us your feelings. No, it’s a
Mark Salisbury, PhD: great question. The public school thing is an interesting piece of the puzzle because traditionally we think of our in-state public schools as being relatively inexpensive. Some of them still are in-state.
Students in Montana can go to college for about $20,000 a year. In-state students in Illinois are gonna go for $45,000 a year. You know, I’m not gonna judge who has mountains and who doesn’t, but I would think it would be the other way around, frankly. But the in-state stuff is one thing. The out of state piece of the public institutions is a whole nother kettle of fish.
It used to be that the difference between in-state and outta state on average was maybe 10, $12,000. The difference today. Is way more than that, closer to 30,000. And some schools are closing in on a $40,000 difference. Why not by accident? They know that they can do that, and they’ve essentially adopted the private school idea of set a high sticker price and then give yourself the flexibility to discount if you need to.
So the public institutions out of state is, are playing just like the private institutions. And so there’s, there’s less difference there than you might think. Now the question of the question of the in-state public, it is used to be true that for anybody, the in-state public was gonna be the cheapest option.
And 25 years ago, that was pretty much true today, however, and largely because of the discounting practices. For many, many students, especially students who are in that sort of middle income space, the family’s making 150 to $250,000 a year. It’s gonna be very common for those students where the in-state public, at places like Penn State, anywhere in California, Michigan, Virginia, Maryland, those schools are actually the most expensive of the of the options.
There are out-of-state publics that will be less expensive than the in-state public because they’re trying to get students to come. There will be out-of-state publics that you would have to pay the sticker price to, but it’s not all or nothing. And then there will be all kinds of private schools where the actual price at that private school will be far less than the in-state public.
And that is not something that you’ll be able to find published anywhere because why would they?
Kathryn Bowie, CFP®: How do you use competing acceptance letters to your advantage? And should you name the schools where you have accepted where you have been accepted?
Marc Horner, CFP®: I’ll, I’ll take, I’ll, being genuine
Mark Salisbury, PhD: is great. You go ahead.
Marc Horner, CFP®: Yeah, no, I’ll take, I’ll take a swing at that one. Speaking from my boots on the ground experience, I personally, I’m my negotiating style personally is just to basically say what it, what it is that we’re capable of doing. And so what we’ve, what I’ve done personally is I’m, I’m not a big fan of, hey, you’re in our top three, and whoever gives me the lowest price, that’s where we’re going.
I mean, that’s one way to go, but, but I’m not a big fan of that. What, what is, what has worked for us is to say, you are our number one choice, and, and this is where, this is where our student wants to go, if we can just tighten up the numbers. We’re in and put it back on them, which I think, which I think that demonstrates that they’ve got, that they’ve got a student that’s serious there that is gonna become, it’s gonna go from being an accepted student to an admitted student, which is Mark Shared.
That’s an important metric that schools are very much aware of. So that’s gonna, that, that should, that should resonate with them. And, and, and again, put it back on, put it back on the school of, if you can get us here, we’re in. And leave it and leave it at that. I wouldn’t, I wouldn’t personally, I would not get into, I would not be a fan of, Hey, we’re, we’re accepted at x, y, Z school and a b, C school and yada, yada, yada, and these are the numbers that they’re giving us.
I would just go, this is where we wanna go, but we need the price to come down. I saw one about about my favorite phrase that I can never pronounce, right? The, the FAFSA or the, the fajita FA fafsa.
Kathryn Bowie, CFP®: Yes.
Marc Horner, CFP®: The fa the fajita. The fajita form. Where was I saw
Kathryn Bowie, CFP®: something. Yeah. So understand price, understanding price.
Before sharing financial information, don’t we need to fill all finance information into the faf fafsa? And can you explain the detail?
Mark Salisbury, PhD: There’s two things that are worth talking about here. One is the fafsa, that is the, it’s the free application for federal student aid that many states now have a mandate in Illinois, there’s a statewide mandate to try to get everybody to complete the fafsa.
There is a waiver process, but they schools don’t tell you about the waiver process because they’re focused on getting everybody to fill out the FAFSA under the auspices that if you fill out the fafsa, you’re gonna get more aid. It’s not necessarily true, and it’s particularly not true for the folks who are outside the realm of qualifying for a Pell Grant fam.
Typically, if your family’s making more than $80,000 a year, you’re not gonna qualify for Pell Grant or public aid. Generally speaking, in California, there’s a little bit of aid if you get up to incomes of about a hundred thousand. But generally speaking, once you get outside of that, you’re not qualifying for any public aid.
However, if you fill out the FAFSA right away and send it into the schools, the schools actually now see your financials. And it’s not uncommon for schools to actually use your financials to decide, you know what? Yeah, the, they would qualify for the president scholarships, that’s $25,000. But our analysis of the data says that their likelihood of enrolling sort of flattens out at 22,000.
So guess what? We’re not gonna give you the full 25, we’ll give you the 22. We don’t tell you all that. We just say, Hey, you got the President’s scholarship. Isn’t that wonderful? We were able to give you $22,000 per year, and what is very interesting is that if you don’t fill out the FAFSA at all, they presume that you are lower income and you get the full thing.
Interesting, right.
Marc Horner, CFP®: So it is super interesting, and again, I’ve lived that experience. So I filled out the fajita form for our first, for our first child, and then declined to fill it out for the, for the rest of the, for the rest of them. So I would, I would say. I, I would encourage everybody out there to say, I, I want, I wanna look at, we’ll get to the, we’ll get to maybe financial need late later.
I want to understand what merit, what merit awards I might be able to get. So, forget about, forget about my financials. We’ll, we’ll come back to that. We’ll come back to that later. ’cause there’s, again, back to this idea that there are all sorts of pools of money available to the schools. Put the, put it back on them to, to find, to find ways to get the.
To get the, your net cost down before you start turning over tax returns and, and, and all your, all your personal financial information. Catherine Pam’s question. Yeah. Sort of related about scholarships.
Kathryn Bowie, CFP®: Sorry, I’ve got a lot to, oh, here we go. Do scholarships, offer, do scholarship offers. Come together with the acceptance letter.
My daughter got an accepted to a college with no scholarship offer, and we’re still hoping the scholarship offer is coming.
Mark Salisbury, PhD: It is not uncommon at all to get an acceptance letter and all of the confetti that comes with that, and then not receive any information about financials, including financial aid for a month, six weeks.
Because what happens at the college is the college has tens of thousands of applications. Somebody asked a question in here earlier about the California schools that get hundreds of thousands of applications, UCLA 160,000 applications last year. That’s like 14 million from the kids that you denied, by the way.
Just think that through for a second. All the kids you turned down, you made 14 million bucks. Pretty cool, huh? That’s a great business model. So you go through all those applications. You decide which ones you accept. Then you send that list of students over to the financial aid office, and the financial aid office then starts processing the financial aid information.
So the financial aid folks don’t even see that stuff until admissions has already gone through all of the applications. So it’s really common for a school to send out the application acceptances and all of the confetti that comes with it. But not have the information to give you a price yet. And they’re sort of used to this process of, you know, you’ll get it later.
So that is not unusual.
Kathryn Bowie, CFP®: Well, what about the universities that question are they gonna be willing to negotiate at all the uc schools or California colleges? Do you think
Mark Salisbury, PhD: It’s a, it is a great question. And negotiation sits on sort of that basic supply and demand. Reality. If you are a school that just can’t get enough students to keep the lights on, you’re willing to negotiate for anything anywhere anyhow.
Mm-hmm. Just that’s, you just are. If you’re a school like UCLA and you get 160,000 applications a year and you can have, you have a thousand kids dying to come for whatever reason, there are going to be situations in which you don’t have a whole lot of. Leverage to negotiate with them. And this is part of the reason why you don’t let your student just swoon over the schools that everyone’s heard of and only apply to those schools.
’cause now you have no leverage and you have no choices. Right. At the same time though, even UCLA, even a Stanford, even a Harvard, if you can bring to them information about your financial situation that they don’t know. That might reshape the way they evaluate what you can pay. You can absolutely negotiate, and this is there where there is a major hole in the whole financial aid model that allows you to drive a truck through it if you know what you’re doing.
The financial aid assessment is essentially based on your income, your assets, and your savings. You’re asked to tell them information on your assets and savings. During the application process, but the information on your income is coming from a tax return that by the time your student starts college is two years old, they don’t know anything that has happened between that tax return and now.
So there is any kind of change that you can make a case for in your income side. That you can bring to them now gets them to think, all right, maybe we need to rethink. And so it is not out of the realm of possibility to be able to negotiate even with a school that is particularly selective, an Ivy League school.
But the argument and the case to be made isn’t made based on merit, because they don’t give out merit aid. They focus on need. But they have committed themselves to a formula. So they live and die with that formula. So if you can know how that formula works, which is the kind of work that I do all the time, then help people organize their finances to line up with that and give themselves the best advantage.
Then in those cases, you really can negotiate even with the schools that are the most selective. Just remember though, none of ’em like to use the term negotiate. They all like to call it an appeal. It’s like the king in the 15th century where the peasant goes to the king and appeals that he would allow them to use their land for another year to grow corn.
And the king out of his kindness says yes. It’s the same thing with a college. The college thinks that they will listen to the pleas of the common person. And maybe accept their appeal. Colleges and universities have had a really rough go for the past 10 years. We all know how much bad press they get, everything else.
So let’s just let ’em have the word. Okay. We’ll appeal fine. Call. They
Marc Horner, CFP®: don’t like ma, they don’t like match either. On that, on on my experience, I did, I gave some, I gave some feedback to the, to the what, you know, when I asked them to sharpen the pencil my first comment was, I can’t believe you were able to match that price.
And for some reason, that struck a nerve because they said, we’re not matching anything. Nobody said anything about matching. We’re not matching. I, I, I said, okay, all right. I won’t, I won’t use that. I won’t use that word. So there, there’s something, there’s something in the college.
Mark Salisbury, PhD: Yeah, there’s
Marc Horner, CFP®: vocabulary, there’s
Mark Salisbury, PhD: whole lot ofs sensitive stuff there.
Yep.
Marc Horner, CFP®: Yeah.
Mark Salisbury, PhD: But this is where Mark, what you did was really genuine. And this is what I would encourage people to do is if you are coming at this from saying, look, we really wanna be at your school, but we’re just having a hard time justifying the value calculus here, and if you could help us get closer, that will make a difference.
Then in that context, even if you do mention some other schools, and by the way, if you take that approach, a college might ask you what other schools you’re looking at and ask to see what other offers that you’ve been made. Be ready to share those. No problem like, but if you bring that kind of genuineness to it, they wanna make the deal too.
Here’s just the way that these things work. You can look at the expenses and the sticker prices. But the reality of what’s going on is the discounts are everywhere. The discounts are coming out for all kinds of reasons. And by the way, this money isn’t coming from another bank account. This is Kohl’s cash.
This is coupons. This is not real money. No. Any college that says, oh, well, we’ve just run out of financial aid. They’ve, that’s, they’re making that up to make you think that there’s some pot that they take from, it’s not the way that this thing works. When we thought, think about the financial aid basics, if you will, and there’s a lot more that we could dive into, but the FAFSA is the form that every school would like.
You don’t have to give it to ’em, but every school wants it. And then there’s this subset of colleges that ask for something called the CSS profile. What is commonly known amongst the public as a financial colostomy. It’s just a very deep dive into your financials, and it is a wonderful example of how you can sort of get people to answer questions that they don’t want to answer.
But if you actually know what you’re doing, you don’t have to answer those questions either. There’s a bunch of required questions and a bunch of optional questions, but they don’t tell you which ones are optional. If you’re eligible for public aid, absolutely wanna file that FAFSA and get that in. If you’re working with somebody who, because of the way that their situation is, or maybe because they’ve got a small business and you’ve organized things in a smart way so that their AGI is actually within the.
Public aid threshold, you wanna file the FAFSA early. And it’s not because the Pell Grant has a cap, it’s because most states also have aid on top of the Pell Grant, but the states have a line item that when they run outta money, they actually run outta money. And so it’s important in those cases to file it before those deadlines.
But if you’re not in that mix. As we said earlier, there is a good argument to just holding onto that fafsa. Don’t file it with the schools. You might decide to file it because you want to access the federal student loan program. You don’t have to do that until June, in July long after the admissions process is over, so you can use that to your advantage.
Anything else you wanna add on this stuff, mark?
Marc Horner, CFP®: No, no. I think that this is, this is awesome on the fajita form about don’t lead, don’t lead with, don’t lead with it necessarily. Especially if you’re above the, if your, if your family income is above those numbers, where need-based aid is gonna be, is gonna be unlikely.
You can always circle back to it. There’s plenty of time. Don’t, don’t come out of the, in general, I would say don’t come out of the gate. Just dumping tax returns and, and investment statements on the, on the desk.
Kathryn Bowie, CFP®: A couple people have asked, who are you making this appeal to? So when you’re saying you’re appealing to, is that to the admissions office, the financial aid office?
Who is it that you’re wanting to reach out to when you
going through this process?
Mark Salisbury, PhD: If appeal, if your argument for appeal is primarily about financial need. As it relates to data you’ve provided, that’s going to be in the province of the financial aid office. But if your argument is to try to just get them to give a little bit more merit aid to adjust, to get closer to another school, oftentimes that discussion’s not with financial aid at all, it is with the admissions people.
And so it is really important to understand which group you wanna go to and you know whether you can make a compelling case for need. Or if it’s really more about getting him to, as Mark has sharpened the pencil.
Marc Horner, CFP®: Well, there’s one, one more element on that mark that I would say if you can, if you can identify an internal advocate at the school to, to, to also vo, to, to add to your voice, that’s all the more powerful, and that does not need to be sports.
I, I think that’s where people go often to athletic scholarships. In the mu back to the bagpipes music, a, a music a music connection. If you’ve identified a school for a particular reason, that’s, that’s got a major and maybe you’ve connected with the professor there, somebody from the economics department, if that’s what you’re interested in.
Somebody. Internally at the school to be an internal advocate. I think now we’re, now you’re starting to put pressure on the admissions department to make it, to make it happen, and that’s going to increase your odds, not guaranteed, but it’s gonna increase your odds of getting something done.
Mark Salisbury, PhD: We mentioned it a little bit earlier, but I think it is reper worth repeating the income part of the calculation or what a school thinks you can afford.
When they’re thinking about need, and they’re, the brand name schools that we’ve all heard of are the ones that are focusing on need. ’cause they can, they’re taking data from a tax return that will be two years old. So students that are families with a senior right now who are going off to college fall 26, that’s the 2024 tax return.
So what that means is when you have families that are starting high school students. Ninth graders, it’s not too early to start just thinking about those things for them, because it is the school year in which the student is the second half of their sophomore year and the first half of their junior year, that is the tax year.
That’s going to be the baseline for the college’s decision about need, so it is really valuable. Fall of that student’s sophomore year to start having that conversation now and say, okay, for example, do you have any five 20 nines? Yes. Who owns the 5 29? Mom? Does. Can we make that owned by an uncle or a grandparent?
Why? Because if you do that, it never shows up on any of the financial aid forms. Hmm. Let’s talk about that. If we have a small business, can we start finding ways to using small business processes to reduce your a GI at the end of that year? Lots of people have small businesses that do that, and there’s lots of people that start small businesses in their student sophomore year for the express purposes of producing that result.
Those are things you can do, but you gotta have that conversation then.
Marc Horner, CFP®: So I love the idea of conversation, especially with the kids. Get the kid, get the kids involved with this and, and, and talking, talking about that. This is all to me. This is all part of helping them. On their path to adulthood, understanding how the world works.
And so a heart heart touching moment for me in my own experience with my kids is our, our third child got his acceptance letter from a school that I won’t name. But there, there the letter said, we’re thrilled that you, you know, that you’re accepted to this school. And we’re also thrilled to let you know that your cost of attendance has been reduced from $93,000 a year to $89,000 a year.
And I was lit. I was watching our son read this letter. I didn’t say a word. And, and again, without me saying a word, he looked up after reading that letter out loud and he said, who do these people think that they are to charge that much for that much for college? And as a, as a crusty old financial advisor, it brought a tear to my eye to watch the, to watch the young one have that response.
So absolutely involve the kids in these conversations and be candid. And be candid about it. It’s an important part of their learning.
Mark Salisbury, PhD: Also sets in motion the opportunity for you to start developing a relationship with somebody that you’ll want to have a relationship with as that family starts to move to the next generation.
Right? Here are some resources that are really useful for folks. Some of ’em are just data, data and more data. College board has the stuff that the federal government has, but they’ve now put it into a little bit interesting, more sort of user friendly tool. College results is a wonderful way to sort of see things geographically and lay them out and sort of start looking at schools from a co, from a location standpoint.
Career One Stop is a. Source of scholarships that the federal government actually runs. They run it through the Department of Labor for who knows why. So nobody at the Department of Education actually knows about it, but it is a scholarship search tool that, unlike everything else in the private market, you don’t have to provide all your personal information to and create an account and pay money to get access to scholarships.
So this is a great way for people to sort of. Keep their information private and not, you know, not feel like they’re getting fleeced as they’re searching for scholarships.
Kathryn Bowie, CFP®: Thank you, mark and Mark for all of your expertise and information. If anyone out there is a part of our Pure family, you already have an advisor, please reach out with all of your questions.
If you are not yet part of our Pure family, please take advantage. Of our free assessment and you want to have more information about college or anything, then take advantage of our no cost, no obligation assessment with a pure financial professional. In this one-on-one meeting, we’re going to really hone in on your needs and then try to help you figure out how we can help you.
So we wanna help you re achieve those retirement goals. Including all of this stuff about college and your family. So please reach out to us. And then just a last few questions that we have. I mean, what if our grandparents want to pay for college? Any advice about grandparents?
Mark Salisbury, PhD: One. Wonderful. Two help the, help the grandparents understand that if they, they can take a, for example, they could take advantage of owning a 5 29.
That benefits their grandchild and they can take advantage of some of the tax benefits that available if they’re in a state where there are some wonderful tax benefits. For example, if you’re in Maryland, every time you put money into a 5 29, you can take up to 5,000 of that as a couple as a state tax deduction, and you can carry those forward up to five years if you have to, if you want to.
That’s a lot of money that you could actually save just by putting money into the 5 29. And then the next day sending it off to the college to pay for college. It’s like a credit card with gives you money back, right? It’s the same thing. Sadly, California doesn’t do any of that stuff. So sorry folks in California, you know, trade you cold weather for no state tax deduction.
But there’s lots of ways to, to organize your funds so that you do this. The other thing then, if. We’re talking about the more, more expensive, selective places that are gonna ask more questions on the CSS profile. Get some guidance on filling out that CSS profile before you just fill it out, because there are questions there that if the school, if you answer all the questions the way the school wants you to, you’ll basically tell them that grandma and grandpa are paying for it, and then they will not come up with the need that you would otherwise really like to have.
So really get good guidance on filling out those forms if you have grandparents.
Kathryn Bowie, CFP®: So what about the strategy of going to a community or junior college for two years versus a four year school? It said that the lower division, freshmen and sophomore classes and curriculum are the same as community colleges versus four year
college.
Basically, it’s the same breadth required courses at the community college versus four year colleges.
Mark Salisbury, PhD: In many states now they have legislated it in such a way that the path from community college to a four, the four year school, especially the flagship in state, is now laid out and carved out for the student to start the community college, get the associate degree at the community college automatically transfer.
In some cases, you don’t even have to apply. You just automatically go on to the flagship. On track to finish in four years, done and dusted, and you’ve saved a ton of money. And the diploma that student receives does not say on the side of it, oh, this knucklehead went to community college for a few years.
Exactly. It says the exact same thing as the person who paid twice as much as you, three times as much as you for their freshman and sophomore year. So this strategy is brilliant now. Are there trade-offs? Of course there are trade-offs, right? There are trade-offs of going to a community college locally and living at home versus going off to a four year school.
Some of those trade-offs are absolutely worth discussing, but put those in the context of none of those trade offs are all negative or all positive. They are trade-offs, right? For example, I know of a couple of wonderful programs where. Families have said, look, you do the community college thing, and then because of that we would have the extra money to do a study abroad program or a gap year where you really get to spend a whole year in another culture soaking this place up with guides and support and like how is that not a good thing?
Right? There’s so many ways to think about this stuff, but as Clyde has pointed out, and it’s very true that. Today, that community college to four year pipeline has been so much better articulated in many states, California, Illinois, New York, Mari, like so many different states now that you can actually talk to high school counselors and they will have information on that.
And maybe the high school even has dual enrollment programs from that same community college so that your student. Gets a whole year of community college done while they’re still in high school. Paid for by who? The taxpayer. This is a brilliant way to start thinking about maximizing your outcomes and maximizing your ROI.
Marc Horner, CFP®: One thing I want to add to that as we’re, as we’re wrapping it up, completely agree with everything that, everything, with everything that Mark said, again, back to our own experience, one of our kids went that went that route. What we had to navigate, and actually my wife did, my wife took the lead on this, not me, is negotiating with the, with the four year school that he went to after, after community college.
Not around, not around the, the financial element. I took care of that, about what courses actually applied for credit to the, to the next, to the next school that he went to. And she was an absolute pit bull, which you’ll hate that analogy when she hears this, but, but she was an absolute pitbull on staying on top of the school about getting them to accept a variety of classes that they originally said they weren’t going to accept.
So even, even if you’re not negotiating money. You might be finding yourself negotiating what classes are gonna count towards the degree at that four, at that four year school. So don’t, don’t just take that first, that first No. As as a final. As a final, no.
Kathryn Bowie, CFP®: We are so appreciative of you all being with us, and we know that your time is valuable.
But please, if you’re ready to take charge of your financial future, reach out to us. This is a free assessment for you, personal questions answered in this one-on-one meeting just for you. So we’ll help you with your. Concerns, give you strategies and help you ret achieve your retirement goals. So thank you so much everybody, have a wonderful day.
We appreciate you and we look forward to seeing you again in the future.
Thanks everybody.
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Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed You are encouraged to seek tax or legal advice from an independent professional. Guest is unaffiliated with Pure Financial Advisors, LLC. Views are their own; content is educational and not a recommendation or endorsement.
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