Pure’s Principal, Marc Horner, CFP®, shares tips for navigating college tuition with confidence.
Outline
- 00:00 Intro
- 1:00 Average Tuition Fees
- 1:16 Tuition Discount Rates
- 5:19 Tuition is negotiable
- 20:08 Financial Aid Basics
- 22:00 Roadmap for Affording College
- 29:02 Q&A
- Does everyone really need to go to college?
- To be eligible for the FAFSA, what’s the income limit?
- Is there a resource I can look at for a 529C Plan if I reside in California?
- So are you saying not to complete the FAFSA until you receive an award?
- What should I be careful of regarding investments and retirement accounts prior to filling out the FAFSA application? What’re they actually accounting when considering my financial aid?
Transcription:
(NOTE: Transcriptions are an approximation and may not be entirely correct)
Kathryn: Hello everyone, welcome. We are so appreciative of you being here for our college tuition webinar with our esteemed Marc Horner. He is our principal and a financial advisor at Pure Financial Advisors, so welcome.
Marc: Super. Thank you, Kathryn. Good to be here.
Kathryn: It’s funny to be sitting right next to the speaker.
Marc: I love it. I love it. So this is a topic near and dear to my heart. my dad has been a college president since he was 29 years old. He just recently retired from, his most recent job at the American College of Greece in Athens, Greece. So I grew up in a, in a college household. I misbehaved as a high school student, and my college, my only college option was to go where my dad was the president.
And I’ve got four of my wife and I have got four of our own children that we’ve taken through the college process. So I have, I’ve lived this literally, nearly my entire life, so I love to dive into this.
Why College Pricing Doesn’t Work Like Any Other Purchase
Marc: The college tuition world, it’s pretty murky. So you go to websites and you see the prices that colleges are, quote, “charging,” but then discounts come along with just about every, every application.
I think the average discount is something in the, 50 to 60% range. Big problem. Price comes too late. Price comes at the end. So what typically people do is they put together a list of schools that they want to go to. They go on college visits. They see all the, fancy dorms and the facilities.
Then they f- then they give the school all of their financial information, through the FAFSA or FAFSA, I always get it, I always get it mixed up, form. They provide all their financial information. And then after all of that, that’s when you find out what the price is. And, in my mind, that needs to be turned completely upside down.
When is the last time you went to go buy a car and said, “Hey, before I take a test drive, let me give you my tax return and my investment statements,” or, “Before I order dinner tonight, why don’t you, why don’t I show you what my investment portfolio is worth so you can tell me how much you think my steak should cost?”
N- I’m not aware of another, another consumer experience where you first show them all of your financial information, and then they tell you what it is that you should be paying. So, that just, that, don’t fall into that trap. I really, I’d say if there’s one thing I want everybody l- to take away from is that it’s okay to talk about price, and price should come first.
You don’t need to mortgage the, remortgage the house or take out a couple hundred thousand dollars of student loans to pay for school. that’s the one thing that I would like people to take away from. Yeah, so we went through the big- the, process. Start with cost.
How Colleges Hide Real Costs Until It’s Too Late
Marc: So one way, one place to go and get this information is a company called TuitionFit, who I have worked with, personally, and we’ve also had some clients, a number of clients work with TuitionFit. So that’s tuitionfit.com. Founder of that company is Mark Salisbury. He was– He joined us on this event last year. Unfortunately, he couldn’t join us this year. But they one of many, but they are an excellent organization to reach out to and inquire about, how to start to get prepared, how to start to get prepared for what college should actually cost you. And the best time to do that would be probably in maybe in your child’s sophomore year of high school.
If, you’re– If that is in the rearview mirror and they’re juniors or seniors and you’re working through that right now, don’t, don’t, worry, it can still work. But I would reach out to, somebody like Mark Salisbury to go through that process with you so tuition, let’s talk about, let’s talk about, award letters. Again, back to this process. We go ahead and apply, and then you get the great news that you’ve been accepted to whatever school it is that you’ve applied to, and then they give you your offer letter. So that’s another point that I want everybody to remember, and that is this is a business transaction, college.
Award Letters Are Offers, Not Final Prices
And, and that award letter is gonna contain an offer for your student’s tuition rate, and that offer is absolutely negotiable. And I know, it occurs to me that I know I’m talking a lot about money right now in the college, decision. actually, if we could go back one more. Sure.
The, I know I’m talking a lot about money right now in the college process, and it’s not all about money. The- it’s gotta be a, it’s gotta be the right fit for your student. so proximity to home, the size of the school. Obviously, if they’re interested in a particular field of study, it’s important that the schools that they’re looking at are, strong in that, area.
So money is not the only factor, but it i- but it is a factor, and it just shouldn’t be, it should not be ignored. So again, back to my personal experience on this tuition is negotiable. Again, my wife and I have got four kids, and so far I am, I’m four f- or no, we’ve had two kids transfer. I’m six for six in being with our own kids and being able to whittle a little bit off of the tuition price tag.
And back to the, fine people at, at TuitionFit, one of our clients, Catherine and I were just talking about this before we started, one of our clients was accepted at Yale, so very good school, and their first offer was $65,000 a year. The TuitionFit people were able to help that family get that number from 65 down to 25.
Amazing. Amazing. so not gonna happen for everyone, but, there’s no downside in, trying to, get those numbers sharpened a bit. no, that’s good. That’s good. oh, grades and vertical jump are not the only factors.
Your Kid Doesn’t Need a 4.0 to Win Scholarship Money
So right, if you’re sitting, if you’re sitting out there thinking, “Yeah, but my kid’s got a– doesn’t have a 4.0, GPA.
They, don’t have a 40-inch vertical, leap. They can’t throw a football, 60, 60 yards down the field, so there’s gonna be no opportunity for me to get any sort of, any sort of scholarship money.” That is not true. I personally know someone that went to s- college on a full ride for, drum roll, bagpiping.
A bagpiping scholarship. So my position would be if there is bagpipe money out there in scholarship land, who knows? Who knows whatever money, whatever other money is out there. So, it’s great to go out and do your own research and figure out what, what scholarships might be available and doing your– and, do all your own re– and do all your own research.
That’s fantastic. But I’m also a big fan of just putting it back on the school what, worked for us was there were sc- there were… Our kids applied to schools. They had their, priority list of what schools that they wanted to go to. Offers came back, and what I did was I went back to the school that was at the top of the list, and I said essentially, “How do we make money less of a factor in the college decision?
What, can you do to help me make that, make this easier for us to go ahead and convert from an accepted student to an admitted student?” And colleges and universities are extremely sensitive, at converting accepted students into admitted students. And so the time to negotiate is not on your campus visit when you’re going around and looking at the library and the gym and the dorm rooms and all that stuff.
The- when nego- when you know it’s time to negotiate is when those offer letters come back. Now the tables have turned, because the colleges have s- are now saying, “We want you.” And they are highly motivated, again, to convert you into an admitted student. They keep track of these. It’s the, the accepted yield rate is, what colleges talk about.
And what that means is of all the acceptances that they send out, what percent of those actually turn into admitted students? And so they pound their chests when they’ve got higher accepted yield rates. That’s the time, that’s the time when the iron is hot. That’s the time to strike. What, Are we seeing anything in the chat?
I wanna take a-
Kathryn: what– When you were talking about negotiating-
Marc: Yeah …
Kathryn: how do you negotiate college tuition? who are you speaking to?
How to Actually Negotiate with College Admissions
Marc: Yeah. So ideally you can devel- you can develop some internal sponsors, for lack of a better word. So again, back, to this idea about, a particular field of study that you might be interested in.
Maybe you’ve connected with a professor and you wanna study biology. So maybe you wanna, y- maybe you connected with a biology professor that can be an internal advocate for you to, help press the levers. Usually, though, it’s gonna be somebody in the admissions department. And I am, again, I am personally a fan of make it- Oh, sorry.
I, yeah, look at the camera. Yeah. I am personally a fan of doing it in, of, doing it in person, not sending emails, not sending, “Hey, we’re, making this offer. We’re having this conversation at three schools, and the first one to get to our number is where we’re gonna go.” I’m, more of a fan of doing it face to face, going ahead and saying, “Hey, you are our first choice.
If you can help us get over this, hump, and again, make money less of a factor in this decision, we’re in.” That, that is chumming the waters for the schools to figure out how to find the money that they need to in order to, shave, shave that price down
Kathryn: Another question since you were talking about the bagpiping scholarship
Marc: Yeah
Kathryn: How do I find out about scholarships like that?
Marc: I don’t, I don’t even know where this friend of mine found out the bagpiping scholarship was even available. So you can go to, you could certainly go to, go to the school’s websites. You could call the admissions department if your, child has got a, a particular skill, whether it’s music, sports, academics. I think they’ve even got video game-based gaming scholarships right, right now. maybe just going to the school directly. So it shouldn’t be– I know I talked about this being a business transaction, and business transactions don’t need to be adversarial and nor should the college discussion, need to be adversarial.
Geographic Scholarships & Hidden Money Schools Don’t Advertise
Marc: Go ahead and call the school and ask, and say, “Hey, this is the general profile of our student. This is what they’re interested in. Are there scholarships that kinda line up with something like that?” Another one of our kids, when I was going through the– Actually, this is the first time that I went through the negotiation process. That number went from, that number went from 48 grand a year to 26 And I was stunned. I was stunned when that, happened. And so I said to the admissions person, how in the world did you do this? how were you able to do this?” And we live here in Chicago, and this was a school in Ohio, and the feedback that they gave me was, “Well, Chicago and the, western suburbs where you guys live, that’s a, part of the country that we’re interested in developing a higher profile in, and so we were able to, we were able to find a geographically, based, source of scholarship money to, put into your package to get that number down.” Which is just, that’s another example of I wouldn’t have found that on the school’s website, and even the power of AI, I’m not sure that AI would’ve known that. so go ahead and put it back to the school, but, in that, in the context of, “Hey, you’re on our shortlist” or, “You’re our number one candidate. We wanna make this happen. We just need some help getting over the, finances.”
Kathryn: Good answer.
Marc: Be a person. Be… it should be a friendly conversation.
Kathryn: Communicative.
Marc: yeah. Good- these are good questions.
Kathryn: One more.
Marc: Yeah.
Kathryn: do colleges expect the student to negotiate or the parents, and which would be appropriate?
Marc: I don’t think colleges these days expect anybody to negotiate. I think, most… My guess is most colleges think that the, think that their acceptance letters and their financial aid offer letters are generally viewed by parents as take it or leave it offers. So I don’t think they expect anybody to negotiate. The parents should be doing this. I’d, I would not be, I would not, expect a high school senior to, have this kind of conversation. Mom and Dad should do this, but again, it should be this last bullet point. It should be polite, personal, fro- coming from the, perspective of we wanna make something happen here.
Kathryn: Correct.
Marc: Yeah,
Kathryn: someone wants to know what universities and colleges do your kids attend?
Marc: Really?
Kathryn: Yeah.
Marc: That feel, that feels a little-
Kathryn: What universities did your-
Marc: That, that feels a little too personal. All right
Kathryn: No comment.
Marc: No, no, I will gladly share this. So the schools that my kids have gone to, we’ve had a couple, we’ve had a couple of transfer, so in no particular order, it’s been Wittenberg University, Carthage College, Coastal Carolina University, Point Loma University out in San Diego, the University of Wisconsin, and Texas Christian University down in Fort Worth, Texas.
Kathryn: Wow. I’d say those are pretty nice universities.
Marc: Yeah. It’s n- But they all differ … yeah, they aren’t, in strip mall somewhere. Right? yeah. these are, yeah, these are good, the-
Kathryn: But it also goes to show you that not everybody needs to go to Yale or Harvard or-
Marc: No … No, and then I went to North Park University. That’s where my dad was the, was, was the president, where I got admitted on academic probation. For those that are Animal House fans, I got admitted on double secret probation, that Dean Wormer put the, Deltas on, and then got myself, got my head screwed on straight. But, but yeah, many paths. No, for my own kids, those are, that list of schools is, there’s East Coast, Midwest, West Coast. There are small liberal arts schools, with maybe 2,000, 3,000 kids, and then there, and, University of Wisconsin, I wanna say, is like 50 or 60, maybe not that, 40 to 50,000 students, something like that. So Big 10, Big 12, small, the, and this can work across the board,
Kathryn: All right. Well, why don’t you, we’ll come back to some of the other questions that we’ve had, but go ahead and let’s-
Marc: Yeah, let’s keep going. Okay. Okay. Don’t fall for the old process. So this is back to the, this is back to the idea that there really, forget this dream school notion. Nobody should be paying 100 grand a year for 100 grand a year. So okay, so back to my own children. That’s reminding me the, of a, of an experience with one of my children. I won’t name the school, but, their tuition, our son was accepted there, their tuition was $95,000 a year. His acceptance letter said that, “We are excited to offer you a, a, scholarship of $3,000, bringing your, net cost of attendance down to $92,000.” And I didn’t s- I’m watching my son read this in our kitchen. I didn’t say a word as he’s reading this, and without looking up, and he looked up from the letter and then he said to my wife and I, “$92,000 a year. Who do these people think that they are?” And a tear formed in my eye. I was so proud of my son not to, fall for that nonsense. Okay. Yeah. Don’t call it negotiation, call it an appeal. It, yeah, the, the schools get… Yeah, schools get, funky about what language you use. But again, just keep it personal. Be– you’re all trying to get to the same place. The- there’s no reason for it to be combative.
Kathryn: Does this also work for graduate school?
Marc: that’s a great question. I don’t have, I don’t have any experience with clients working on this with graduate school. But I would come back to the idea that this is a no-lose proposition to follow. Because once you’re ac- There is no chance, whether it’s undergraduate or graduate school, that you get a, that you get admitted to a school and you s- and you ask them nicely, “How do we make money less a part of this decision?” That the response is gonna be, “Okay, you’re unaccepted. Hit the bricks, kid. we don’t want you.” There’s no chance that’s gonna happen. So it might not work. it’s not gonna work all the time. But you’re not g- you’re not gonna blow up your college or your graduate school career because you ask, “Hey, can we sharpen the pencil here?” And that’s all that it is.
Kathryn: That’s a great answer to a question that was asked. Oh. Basically, will they expect you to show more financial need if you’re asking for less, or are we just asking for them to lower the price?
Merit Aid vs. Need-Based Aid: Understanding Both Pools
Marc: Okay, so that’s digging in. That’s a great question. So that’s getting into the two different s- pools of money that are available to get your net cost down.
So one is gonna be need-based, so that’s gonna be based on your family’s or student’s financial profile Another is, the other pool is gonna be merit based. And what we’ve been talking about so far, entirely is merit-based money. So need ba- need based, again, it’s based on your financial profile.
So for, back to that, when I was on the Amherst College website earlier this morning, I think the first number I put in for household income was 200 grand. That didn’t move the needle at all from a, a, need-based perspective. I dialed that down to 150. It didn’t move the needle at all. So the– Mark Salisbury would have a better answer for this, but I think the financial need-based numbers are probably gonna start to top out at maybe 100, 125 grand in household income, where you’re gonna get little to no need-based financial aid.
So but that doesn’t mean the party’s over. That means we’re looking for merit-based aid, and that’s, it– that could be academic, it could be athletic, it could be bagpipes, it could be geographic. Who knows what it is? There’s lots of different pools over on the, merit side. That’s a, great, that’s a great question.
Kathryn: All right, next slide.
Marc: Yeah, so this next one, yeah, we already talked about tuition. Okay, financial aid. Financial aid basics. Yeah, let’s go to that one. There we go. All right, there. FAFSA. I don’t know why I’ve got a mental block on this, but, I always mispronounce it. So Federal Application for Student Aid.
Again, the, the old way of doing things is you fill out that form first. I think that form should be filled out last. And, and some schools, I have had this experience, some schools will say, “Well, we’re not gonna proceed with your application until you fill that out.” Don’t cave on, that.
push back on, that, and wait to see what they’re able to do before you show them all of your, all of your financial information. So that fourth bullet down there, the FAFSA pulls income from prior-prior. I think what that means is two years prior, the, your two-year prior tax return. So you wanna be thinking about, you wanna be thinking about what’s showing up on your tax return in, case you end up do filling out the FAFSA.
You wanna make sure, yeah, two years prior. You wanna make sure that you’re thinking about this from a financial planning perspective. So, for example, if you’re doing a Roth conversion two years prior and that shows up, on your tax return, that’s gonna be something that you’re gonna wanna have to explain to the schools that, “Hey, that’s a one-time deal, and, that’s not an accurate, representation of my ongoing income.”
So you j- you wanna be thoughtful, as your kids are sophomores and juniors in high school about what financial planning, moves are we making that, might be setting me up for problems, when it’s time to start, getting the kids off to college.
Kathryn: Great.
Marc: Let’s see. Yeah, net price calculators.
Th- they’ve got them on the, the, most schools have got those on their websites. Amherst has it, has one on theirs. So that’s a great resource. I, really would be inclined though to, reach out to a, a place like TuitionFit, and I’ve got no financial connection to TuitionFit whatsoever. I’m just a big fan of, what Mark Salisbury and his team does, and I’ve seen the results, which are, fantastic.
Your College Funding Checklist: Start Here
So, right. Like any other financial planning topic, the earlier you start, the better Again, don’t worry if your kids are juniors or seniors in high school right now. it’s not… The, the game’s not over. But the earlier you start, the better. Take a look at price calculators first. Make sure that you are looking at award letters carefully. So that one, I have seen an award letter from a college that said, the tuition was X, the discount w- the discount was Y, the loan amount that they were, that they built in to make up the difference was Z, and then the bottom line said, this is a direct quote, “Out-of-pocket cost for college, zero.”
Kathryn: Wow.
Marc: When there were loans. There were loans up above. So you re- you really need to r- read these letters carefully. I mean, for me, I think that is, borderline criminal misleading because l- loans, student loans you can’t get away from. And so it- very important to be, thoughtful about making a decision about borrowing money for college.
it- it’s just a, it’s a big decision. So just be, careful about reading those award letters. Consider appealing for more aid. That’s a nice way of talking about negotiating. and yeah, start, start early, and the FAFSA should be not the first thing that you do later down the road So here’s, there’s TuitionFit on there as some resources for families to take a look at.
there’s a few others there, and I’m sure there’s other companies out there that do what, TuitionFit does. Oops, sorry … so they’ll help you through the, they’ll help you through the process and walk you through the process. I think those other, resources, I’m not, I’m not as familiar with those other resources as I am TuitionFit.
So some are gonna be more do your own research sort of data aggregators where you can, slice and dice. The, the TuitionFit offering is gonna really, they’re, gonna hold your hand and, walk you, through the process.
Kathryn: But if you are s- a member of our Pure Financial family, contact your financial advisor and he or she will be able to go through all of these steps and help you with your children’s or grandchildren’s, college journey.
If you’re not a member or a client of ours or part of our family, please come in or via Zoom, have an online assessment with a very talented financial advisor like Marc Horner. Ah. Someone like him.
Marc: Yeah. Bottom of the barrel if you talk to me.
Kathryn: But, we would love to talk to you and find out what your specific questions are so that we can give you specific answers rather than just kind of going over things, because your situation’s gonna be different than anybody else’s.
So please, send us an email, give us a call. Make sure that you are contacting us so that we can help you out in any way possible. Okay, so let’s… So if my child, as you said, is not jumping over- has all the accolades, but they are a decent student.
Marc: Yeah.
Kathryn: So they’re not a 4.0, they’re not, What would you recommend? How do they find a school that’s actually right for them?
Narrow Your School List: Geography, Size & Major First
Marc: Going to a resource or having a conversation with, a company like TuitionFit to go ahead and say, “Hey, I, only wanna be, I wanna be within four hour, a four-hour drive from home, and I wanna study this particular topic, this particular educational topic.
And I’m looking for a, I’m looking for a school size that’s maybe, that’s maybe no smaller than 5,000 kids but I don’t really want anything that’s more than 15,000.” As you start to, as you start to put in some of that, data- Mm-hmm … and give, kind of paint the picture of what your, child is looking for college, that’s gonna narrow the universe a ton.
And I am a big fan, with our four kids, w- we did, this, with each of them. I am a big fan of starting off with geography, ’cause not every kid is comfortable having to get on a plane in order to get home. and, that’s a great way to start chopping off big parts of the country, that if you live out in, if you live in well, out in San Diego and you don’t want to be more than three hours away, a three-hour drive away from home, you’re not gonna be looking at a school that’s in Kentucky.
Kathryn: So I’ve already done, I started negotiating- Yeah … and I’ve been talking to the c- the school counselor.
Marc: Yep.
Kathryn: And if they say no, is there any other options, or am I just done? Any other options of negotiations or hi- being able to go higher up?
Marc: Yeah. The, I don’t know. I’ve never had the experience of going higher up.
I would come back to that having an internal advocate could help you. So if your, child has connected with somebody at school in, in an area of study or extracurricular activities that they’re interested in, maybe you go back to them. You go back to that person and sort of try a different tactic and hit ’em from the, hit the, financial aid department from the side.
So to, to get somebody as an internal advocate. that’s, I’d use that, I’d use that tactic in that situation.
Kathryn: Is there a benefit to the pre, when you, do your acceptance, your early acceptance, is there a benefit to early acceptance?
Marc: Not that I’ve seen. So the, the early… And I’ve, not had any experience with, like, early acceptance being enforced.
And some of those, some of tho- some of those schools will talk about if you fill out early acceptance, you’re basically saying you are going to, y- you agree to come to the school under whatever terms, as long as you, as long as you get admitted. I’ve never heard of a story, I haven’t experienced personally, and I’ve never heard of a story where somebody has backed away from that, and then a school’s gone after the, kid.
But, no, I, don’t know, I don’t know that there’s a whole lot of power for the student in the early acceptance process. And Mark Salisbury, experts like that might have different opinions on that.
Not Everyone Should Go to College Right Now
Kathryn: All right. Here’s a good one. Does everybody really need to go to college?
Marc: No. That’s a no, absolutely not. Absolutely not. And so back to my own experience, one of our kids took a break. the college out of the college from high school, straight out of high school was not the right path for them. And so they ended up taking a two-year break, ended up going back, and, really zeroed in on what it is that, what it is that they want to do with their lives.
So I think that break actually was good for them. so no, no, going, to college right out of high school is not for everybody. So it could be later in life. I think I know somebody that maybe completed their college a little- … a little, later in life than, most, and that is completely fine.
And then there are, and then there are plenty of careers where college is not the right place at all. Yeah. So plumbers, electricians, and- Absolutely … and, a long list of, of, careers that can, have That can be very rewarding, both in what it is that you’re doing and financially work out just fine that don’t require conventional college. So no,
Kathryn: That’s right. It’s never too late either.
Marc: Many, paths. Many
Kathryn: paths. Never too late if you feel like going back to college. all right. To be eligible for the FAFSA, what is the income limit?
Marc: So there’s no eligibility requirement. anybody can fill it out. Anybody can fill it out. but to get…
So the FAFSA is the, is on that need-based, need-based side of the equation. When we were talking about those two different pools- Mm-hmm … you got the need-based, which is financial related, and then merit-based, which is all the other, stuff. And again, in– it’s gonna vary school to school, but in my experience, if your household income, so basically that, that bottom line of the front page of your tax return, if that number is, north of, 125, 150, $125,000, $150,000 in total income the likelihood of getting, meaningful financial, need-based financial aid, through the FAFSA I think is dropping, pretty quick.
But there’s no income limitations, and any- anybody can fill it out.
Kathryn: Got it. All right. I’m trying to get you back on camera, but for some reason I’m having difficulties here.
Marc: No problem. so maybe, if we- have we hit all the questions? No, there’s
Kathryn: one more-
Marc: Okay … but,
Kathryn: but go ahead with what you were, you, if
Marc: I was gonna- Well, I was gonna say, just sort of, sort of, tying it, tying this all together.
So just like any other financial planning topic, the earlier you start, the better in, in planning for this pro- So both in saving for college and then planning for the attack of, of finding the right school. So the earlier you start, the better. Ideally, you start the process when your, child’s a sophomore in high school.
it- there’s nothing wrong with starting with cost, and along with geography and fields of study and size of school, to, really narrow that list down. Go ahead and do a little bit of homework, whether it’s on your own by visiting, college websites to go through that net cost calculator, or talking to a company like TuitionFit to help you through the process.
Don’t, be, don’t as your first engagement with a school, take the, tact of just dumping all of your financial information in front of them first. I’d say play that, keep that close to the vest. And then when those acceptance letters start coming in, remember those are offers, and it’s totally fine to go back to the schools to, have them try and sharpen the pencil.
You don’t need to have all the answers when they, again, they’re, they’re– When they accept you into their school, that means they want you to attend. So they are gonna be motivated to try and figure out how to make it as easy as possible for you. And, the time to do this is gonna be as your child is approaching entering college, so going into their freshman year.
This, this wh- what we’re talking about as far as the financial element of it becomes very difficult once you are already an enrolled student. So I have had that experience, and that’s been not successful at all. So a, a, client’s child that was, already a, yeah, I think a sophomore or maybe a junior in college, we were talking about this negotiation idea, which they didn’t do at the onset.
So they took a swing at it and it, didn’t work at, at all, which I wasn’t surprised at. So the time to do it is before, you, you go to school.
Kathryn: Okay,
Marc: And then there are many paths. There are many paths. So don’t get hung up on junior’s gotta go to- I won’t name a school. So junior, j- junior’s gotta go to Harvard.
They can take it. junior’s gotta go to Harvard, and if they don’t go to Harvard, then they’re completely cooked for the rest of their lives. That is not true. You are looking at, one person in me that, that took an unconventional path, there’s many paths in life.
Kathryn: Amen to that. All right. Sorry, I was having technical difficulty, but I think I’ve figured it out. All right, so if a student loan is needed-
Marc: Yeah …
Kathryn: does the student take out the loan, the parents, or do parents cosign financially, which would be the best path?
Marc: Yeah. The, I would– So if, loans have to be part of the drill, I would be talking with your financial advisor about where to get the money from before I started, before I, went to just immediately a student loan.
So that, that’s a topic that I would lean on a financial advisor to say, “Does it makes– So does it make sense for us to refinance our house? Does it make, sense for us to maybe take out a home equity line of credit? Does it make sen- or are student loans, are those the, options?”
And have a financial advisor go ahead and compare the relative benefits, so the after-tax, the after-tax cost of that debt to really get a game plan together about what the right path is for you. ‘Cause there’s lots of different ways to put your hands on money. It does not, have to be just student loans.
Kathryn: All right. How many times should you appeal? Should you assume that if you ask once, then you’re, that you’re getting the best price, or is it just a feeling?
When to Appeal for More Aid (And When to Stop)
Marc: Yeah, the– So I’d go back to that idea of having an internal advocate, at the, school. If you’ve got an internal advocate, then I would go back to the well a second time.
If you’re, if you’ve made an attempt If you’ve made an attempt, and let’s, I mean, maybe let’s say you’re working with a, let’s say you’re working with somebody junior at the, in the admissions department. Maybe you go to the head of the admissions department and take one more swing at it. Again, I don’t think it’s gonna, I don’t think there’s really any downside in doing that.
my guess is in admissions departments that when, if you are working with a, junior person in the admissions department, my guess is they are not making the, they are not making the decision to say no to you alone, that they are coordinating with the balance of the department so that they’re already aware of this.
But it doesn’t hurt to go back and say to somebody higher up, “Hey, w- we’re really, again, we’re really trying to find a way to make price less of an issue. what can we, do?” I- it doesn’t hurt. I probably would stop there, though. two swings, two swings at it is probably good enough.
Kathryn: Okay, here’s a quick one they said. Here, is there a resource that I can look, at to see whi- which is the best option of a 529 C plan if, and this person is domiciled in California.
Marc: Mm-hmm. So 529 C plan, is that a California plan, Kathy? It
Kathryn: must be, because there’s a 529 plan, so he must be talking about the, or she, 529 California plan, which-
Marc: There’s gotta be a re- I’m not aware of one off the top of my head.
There’s gotta be a resource online to compare the various state-by-state 529 plans. I probably on that one, though, would defer back to go- Financial advisor … go, exactly. Go back to, your f- and it doesn’t have to be a Pure. Right, right. That’s not a, that’s not a, that’s not a commercial for Pure.
there’s lots of financial advisors in the world. But go lean on, your financial advisor to give you the, to, for your particular situation c- because there’s gonna, there’s gonna be different tax benefits state by state, and so it, that, that’s gonna be a hard one just to answer, Sure
blanketly. And if you are a do-it-yourselfer and think financial advisors are worthless, that, I can take it. That’s a- that’s okay, too. Then whoever you work with to do your taxes, maybe you’ll lean on that person for an opinion there.
Kathryn: Good answer. All right, if your parents are no longer married, how does the financial picture change, and will the income from both parents count?
Marc: Wow, that’s a really good-
Kathryn: Got a good one there, Brian …
Divorced Parents: How Life Changes Affect Your Aid Package
Marc: that’s a really good question. So that feel, bottom line is I’m not exactly sure, but it do- but it does open up that idea that you’re looking at, when you’re filling out the FAFSA, think I got it right, you’re looking two years ago. So maybe if mom and, dad unfortunately split up last year- The financial information that you’re loading into the, system when you decide to do that is not reflective of the current situation, so you gotta make sure that you clear that up with the schools.
And there’s a, there’s some kind of form to file to, to explain, what the, change in financial circumstance is. That’d be another one. I wouldn’t go to a financial advisor for that one. I’d go to the TuitionFit people for that one. Mm-hmm. You, wanna, you want a… That, to me, is complicated enough that you want somebody that, that, like, eats, sleeps, and drinks the, college financial process, and that’s the, the, the, that’s the place like TuitionFit.
Kathryn: Sure. They know all the ins and outs.
Marc: They do.
Kathryn: so you’re saying not to complete the FAFSA until receiving an award?
Marc: Not out of the– yeah, that’s what I would say. Okay. That’s what I would say. All right. And I would say increasingly, and maybe never complete it, depending on what that bottom line on the front, page of your tax return says.
if the bottom line of your, of the, of that first page of your tax return says like 400 grand, 500 grand, something like that, I don’t think you’re gonna get anything out of the, FAFSA. but yeah, don’t complete it, don’t complete it until, let, the, school sharpen the pencil before they dip into your pockets.
Th- this, this process, so this terminology, one of, one of the, one of the terms that they use in this process is called EFC, and that stands for the expected family contribution. So you’ve got s- and, now I’m getting a burr under my saddle on this, but but you’re in a, you’re in a financial transaction with somebody that somebody’s trying to sell you, is interested in selling you something, which is, that’s fine.
That, that’s fine. But, but the idea that, I need to see all your financial information so that I can determine for you what your, expected family contribution is just makes no sense to me at all, which, is why I just want people to slow their roll on turning over all that financial information to a school that’s wanting to sell you something.
Which is, it’s a good thing, it’s a good thing. College education is a good thing, but, it doesn’t have to, it shouldn’t have to cost 100 grand a year. Correct. That’s, all.
Kathryn: All right. This is, I don’t know how deep you want to get into this one.
What should I be careful of regarding investments and retirement accounts prior to completing the FAFSA application? What exactly are they counting that could potentially affect my financial aid?
Roth Conversions & Retirement Moves That Hurt Financial Aid
Marc: Okay, that’s a great question. So stuff that’ll show up on that tax return, from a financial planning perspective is what they’re, is what they’re looking at. so- So what Roth conversions, you’re converting, money from a regular IRA to a Roth IRA, there’s a tax liability associated with that.
That could make perfect, that could make perfect sense, and in many cases it makes a ton of sense to do that as part of your overall financial plan. It might make less sense for you to do that in that i- if you’ve got a, if you’ve got a, child that’s two years away from college. So that would, be another one that if you’re working through a Roth conversion on your own, so back to the do-it-yourselfers, I would check with your tax person about that before you actually do that if you do have a child that’s a couple of years away from college.
And if you’re working with a financial advisor and they’re talking about Roth conversions, and you’ve got a, and you’ve got a child that’s a couple of ways from college, ask the question, what is this, what might this do for our college tuition circumstance in a couple of years? So just be, just when you’re a couple years out from college, just be thoughtful about financial transactions that are gonna show up on that front page of the tax return.
Kathryn: Gotcha. All right, I’m putting something in the chat right now for you To make sure everybody’s got our key financial data, because it’s a great- our key college funding data guide. It’s a great resource. So you can click on the link and download that. That’s gonna be very helpful for all the questions that we didn’t get to, or maybe were a little too in-depth or detailed.
Give us a call if you wanna have a meeting with one of our financial advisors. We can do this via Zoom or in person, depending on where you live. And we can just talk about not only college funding and all the things college, schooling, education, but also all about your own financial journey. So please give us a call and, so that we can answer your specific questions and get everything that you need answered.
Well, thank you so much for being with us today. We appreciate you, and we hope to see you soon. Reach out to us with any further questions, and have a wonderful day.
Marc: Have a great day.
Kathryn: Marc, thank you so much.
Marc: Thank you, Kathryn. We appreciate you.
Marc: Always fun.
