Category Archives: financial planning

financial aid, financial planning, Student debt

How To Avoid College Debt

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college debt

Parents want what’s best for their children. I’m sure you do. You want your student to succeed in life and if that path is college, you don’t want them to be saddled with college debt after they graduate. Entering the work force with debt puts strain on your student and their ability to live independently after college.  

But with college costs rising it almost seems impossible to attend without borrowing money to pay for it. At least that’s what you might think; but with some smart planning and wise financial choices, I t can be done and here’s how:

Know how much you are willing to pay

Before even starting the college search, you should know how much you are willing to pay. Set a budget before your student starts looking at colleges. If you know how much you are willing to pay, you can avoid going over-budget on a college, even though it’s a college your student wants to attend.

Have the money talk

After you know what you’re willing to pay, have the “money talk” with your student. Discuss with them how much you are willing to pay for college and how much you expect them to contribute. Do not (I repeat do not) allow them to apply to any colleges beyond your financial reach unless your student has been working toward and receiving scholarship awards. Do not count on financial aid or merit aid to fill the gap when planning for college. If your student applies and is offered admission to a college you cannot afford it makes for a difficult conversation and a very disappointed student if you cannot pay for the tuition.

Research individual college statistics

Before applying, research the financial aid footprint of every single college on the list. How much aid do they typically give? How much debt does the average student graduate with? Use their net price calculator and determine what it will cost to attend there before applying. If your student is offered admission, there will be no surprises and disappointment if you do your due diligence before the application process begins. Colleges offering small percentages of financial aid in the form of scholarships and grant

Think outside the box

There are thousands of colleges in this country. Many families make the mistake of not researching affordable colleges before applying. Smaller private universities offer more generous financial aid packages. Recognizable names and Ivy League colleges are not the only schools offering a quality education. Don’t assume that a state university is cheaper than a private college out of state. Look at the numbers, research colleges, and think outside the box.

Consider community college

Two years at a community college will save you and your student a substantial amount of money. After completing the basics at a much lower cost, they can transfer to a four-year college and graduate. Your student may also choose an associate’s degree in a technical field and graduate from community college with a skill and a career. In the past, community college has gotten a bad reputation from parents and students for being “less than” a “real” college. But smart parents and students know the education is the same at a much lower cost.

Apply for scholarships

Until your student graduates from college they should be applying for scholarships. The sooner they begin, the better. There are scholarships for all ages and if your student accumulates awards all throughout high school and into college those awards will go a long way to help them graduate without debt. There are resources to help you and your student find and apply for scholarships—take advantage of them.

Get good grades

Scholarships and grants are disbursed by colleges based on merit. Grades are a key factor colleges use to determine merit aid. They use this aid to entice student applicants to accept their offers of admission. Putting your student at the top of the applicant pool with good grades stack the odds of merit aid in your favor. Believe it or not, a great GPA results in more scholarship money than athletics. Use this to your advantage.

Graduate in four years or less

You might be surprised to learn that most students take more than 4 years to graduate from college. On average, a college degree takes six years. That’s two years more of college costs, not to mention two years of lost income. Plan to pay for four years and make a plan for your student to stay on track.

Become a National Merit finalist

Your student doesn’t have to win a National Merit scholarship to score some generous financial aid. All they have to do is become a semi-finalist—and with a little study for the PSAT, it’s entirely possible. Colleges who have money set aside for the finalists will use merit aid to entice your student to attend: full tuition, room and board, books and fees, laptops, study abroad and even spending money. They might also offer automatic entrance into the honors college, the best housing and priority registration until graduation.

Take AP exams or CLEP tests before college

It’s possible for your student to take AP or CLEP exams and test out of freshman subjects. Your student could enter college as a sophomore, cutting a whole year off the degree. For a small test fee, your student can save thousands of dollars and time by taking advantage of these tests.

With all these options available, your student does not have to take on college debt to receive a quality education. With knowledge and hard work, your student should be able to graduate college debt-free.

financial planning

Establishing a Saving Strategy

saving strategy

One of the key elements of adulthood is learning to save for the future. Before your student leaves for college, it’s crucial to teach them how to manage money and save for the future. They will be bombarded with opportunities to spend, making saving a low priority. There will be the usual college expenses, entertainment and the temptation to frivolously spend while they are in college.

As their parent, you know the importance of saving for college and continuing to save for retirement. You can set an example by your actions and encouraging them to establish their own saving strategy. If you help them set up a savings account before college, it will be routine for them to put a portion of their earnings in the account during college; and, it establishes a good saving strategy after graduation.

Start in high school

CIT Bank can help you with their Savings Builder account. You can start an account for your student while they are in high school with as little as a $100 deposit. The savings you accumulate can be used for textbooks and any additional college expenses after high school graduation. Just a small monthly deposit of $100 quickly becomes $1000 and more to help your student with college expenses.

Here’s how it works

With $100 you can open an account with CIT Bank and earn up to 2.20% APY by making a single deposit of $100 or more every month. By using this online bank, it’s easy to grow and preserve your savings safely and securely because they are FDIC insured. There are no opening, monthly servicing, or line transfer fees.

You can easily access the funds in your account using free electronic transfers between your savings account and any other account at another bank; or, you can call and a check will be sent in the mail for free.

You can open a Savings Builder Account with CIT Bank by:

  1. Entering your information online
  2. Funding your account with a minimum of $100 with an electronic transfer or check
  3. You will receive an email confirmation and you are ready to start saving

The benefits of a saving strategy

By establishing a savings strategy for college, you are not only saving for those college expenses, but helping your student see the value and the benefit of putting money aside for the future. As the savings grow (with interest), you are teaching your student good money management and setting them up for financial success in the future.

financial aid, financial planning, student loans, Uncategorized

Paying for College: Borrow Wisely

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borrow wisely

I received an email from a concerned parent whose student was going to be attending orientation next week. In the email, he confessed that he might need some help with information regarding financing his son’s college education. I was surprised that he waited so long. Unfortunately, I had to advise him that at this point his only options were private loans and advise his student to apply for scholarships over the summer.

Parents should consider college funding even before their student applies to college. The inevitable result of lack of planning is parents and students borrowing to pay and usually borrowing more than they can repay after graduation.

What do the statistics say?

With school starting shortly, student loan borrowing often appears in the news. It’s especially prevalent now with presidential candidates promising to erase student loan debt. Wherever you stand in the political landscape, it’s clear from the statistics that students have borrowed more than they can repay.

According to a 2018 report by the Federal Reserve Bank of New York, as many as 44.7 million Americans have student loan debt, that’s one in five adult Americans. The total amount of student loan debt is $1.47 trillion as of the end of 2018 — more than credit cards or auto loans.

How do you make wise financial choices?

Before applying to college, you and your student should investigate the cost. You can gather the information either on the college website or by using College Navigator. When viewing these figures, you should also research the college’s financial aid statistics—what percentage of students are awarded aid, how much aid is awarded and how much do students typically borrow. Since every family’s financial situation is different, these figures should help determine if the college is affordable to attend.

How does financial aid play into the equation?

If you complete the FAFSA, your student will receive some form of financial aid. The most common is student loans, but colleges also award grants and merit aid as well. Always complete the FAFSA, even if you don’t think you will qualify for aid. Colleges use the information on the FAFSA when awarding scholarships and grants. No FAFSA, no aid.

What’s the key to avoid borrowing too much?

Use repayment calculators before you sign on the dotted line. The rule of thumb is that students should only borrow as much to pay for college as their first year’s salary. By keeping your debt under one year’s salary, you won’t have to put more than about 10% of your income towards student loan payments. Borrowing more than your student can afford to repay sets them up for overwhelming debt after graduation. Your student can look at salary comparisons for their anticipated career at PayScale.com.

How can you avoid borrowing to pay for college?

The key to not borrowing to pay for college is to receive merit aid, grants, and outside scholarships. Your student should apply to a college at the top of his or her applicant pool. This means the college will be more likely to award aid to attract your student. Grades and standardized test scores are also a key factor in awarding aid. Your student should focus throughout college to pursue excellence in these areas. And, don’t forget outside scholarships. Your student should focus time and effort in applying to every scholarship he or she qualifies for. This means starting early and planning to submit the best application. Click here for scholarship application tips and see how your student can win enough money to pay for college.

Finally, borrow wisely. Only borrow what you need. Your student can borrow the maximum amount, but only borrow what is necessary. Just because you can, doesn’t mean you should. Choose the loans with the lowest interest rates first.

financial planning, parenting

Saving Money During College

saving moneyIf your child (or soon to be adult…) is off to college, then you could be worried about a few things. Are they going to fit in? Will they enjoy their experience away, or get homesick and struggle in their new city? Do they have enough knowledge about finances to get by? Well, we’ve spent a lot of time considering the latter question, so that you can be sure that your child is prepared when it comes to finances. Rest easy knowing that they’ve got it covered, by remembering these simple tips:

Teach them what you know

The reason that many kids at college struggle so much with finances, is because nobody has taught them how these things truly work. You don’t have to sit down and lecture your kids on this, but make sure you give them some tips in the months leading up to their big move to college. If they can’t cook breakfast and don’t know how to pay rent, they’re going to have some real problems. You can prevent all of this with a bit of advice, and it will go a long way, so show your child how to manage things like bills and rent (especially if they’ve been planning to eat cereal for every meal of the day…).

Use technology to budget

Helping your child to sort out a budget will be really useful to them, especially when they’re going it alone. The days of sitting down and trying to distinguish what you’ve spent, and where, are gone, and you no longer need to sit there with a pen doing the math for hours. Utilize the technology that is out there, and make sure your kids have the best money management app available. Your child probably spends a long time on their cell phone, and won’t forget about budgeting if it is right in front of them. We can’t promise that, but it’s worth a shot.

Emphasize the importance of researching

Ok, we don’t mean academic researching here, but if they have the skills to do it, then why let it go to waste. Many college kids decide that they need something – and this could even be a textbook – and then just buy the first copy of it that they come across. Please, don’t let your child do this, when they could get second hand copies from places like eBay for a fraction of the cost. There are plenty of online stores that specialize in used books, and doing your research first could save you hundreds of dollars over the academic year. Research, research, and research again. You won’t regret it when your wallet shows you the benefits.

So, there we have it. Some simple tips to help you to help them, when it comes to sending your kids to college. Teach them everything you know about finances, bills and rent, use the latest technology to budget, and make sure that they research before they splash out on expensive resources. Good luck!

financial planning

Managing College Finances

college financesThere are many aspects to college life which both you and your children need to get used to and understand as effectively as possible. One of the most important however is that of money – you of course want to make sure that your children are going to be secure financially, and that they will understand how to approach and deal with their money on the whole. As long as you can be sure of that, you will find that it is much easier to send them off without worry, so this is something you should think about for your own sake as much as theirs. In this post, we will take a look at a few of the concerns to consider if you want to help your kids through their college years in a financial sense.

Getting A Loan

The vast majority of students need to get a student loan in order to survive college, and that is something to make sure you are thinking about as early as possible. Encourage your child to apply for their loan early, to ensure that they get it in time, and back sure that you help them along the way wherever possible too. You might need to provide some information yourself as part of this process, so be prepared for that as well. Once they have that loan, that will make college much easier – but remember that it is technically a debt, even if not a terrible one to have. It is possible that years later they might be able to apply for student loan debt forgiveness or have it wiped off – or they might manage to pay it off instead. Either way, it needs thinking about.

Money Management

It might well be that this is the first time your child has had to manage their money on their own, and as such it’s likely that you are going to want to help them with this process. Chances are, they won’t really know what to do here, so you might need to help them along and teach them what money management means. By doing that, you help to keep them out of debt and financial worry, and you ensure that they are going to be able to master their finances much more effectively as a result. Bear that in mind and you will find that it makes a huge difference for them as they attend college.

Helping Them Out

There might be occasions where you need to help them out with your own finances, and there is nothing wrong with that as such. When this is the case, you should of course make sure that you don’t allow them to suffer – but you should also think about trying to encourage them to help themselves first and foremost. That could mean arguing that they need to get a part-time job, or it might be that you want to just give them tips on how to look after their money better, as above. However you do it, be sure to help them mostly by allowing them to help themselves.

college guidance, college planning, college prep, extracurricular activities, financial aid, financial planning, organization, scholarships

Getting In to Your First Choice College

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first choiceWhile many students are busy packing their bags and getting ready to leave for their first year at college, still others are working on their applications for the next round of admissions. Of course, if your child fits the latter category, it’s likely that they already have a college in mind that they wish to attend. Happily, by reading the post below you can find out about the tactics that will help them get into their first choice. Keep reading to discover more.

Address any study or subject issues

Number one of the list tactics is dealing with grades, as this is the base level that a college application will address. Happily, this is something that you can definitely help your child with, without micromanaging them as well. Firstly, it’s vital that you take a keen interest in their progress with their studies, without being overbearing and demanding.

Then, if they or their teachers flag up an issue on a particular topic, it will be much easier to address this constructively. It may be that your child is struggling with a specific subject, or that something is going on in their life that creating a distraction for them. However, as long as you are able to have an honest two-way conversation, you will ultimately be able to get them the support or help they need to ensure that their grades remain on target to get into the college of their choice.

Help your child to present a rounded application

Please do remember though that while grades are essential for college, they are not the only thing that the application board with be looking at. In fact, lately, there has been a definite move towards reviewing the whole person and looking at their extracurricular activities as well as their academic ones.

What this means is that you can quickly help your child by encouraging them to engage in activities outside of the home. These may include sports such as basketball, football, and athletics, as well as getting them involved in community projects like food banks, reading programs, and soup kitchens. Even having a part-time job, or getting some work experience in a firm that is related to their studies can go a long way to helping them stand out amounts all the other candidates. Something that can help them secure that much-needed place in their first choice school.

Seek additional help

It’s also wise to remember as a parent that there is plenty of help out there both for you and your child when it comes to making a successful college application. First off there is lots of advice online that can take you through the process step by step, and also help you hone your child’s particular application documents.

Although, if your child is aiming at one of the top schools in the country it can be helpful to approach specialists like Ivy Select admission consulting for some additional help. After all, as they have been through the process of being accepted to an ivy league college, they are the best people to know all the little tips and tweaks to make to your child’s application for the best chance of them getting into their first choice.

Explore financial aid and scholarship options

Lastly, it is important to remember that it may be finance and scholarship issues that are standing in the way of your child getting into their first choice college. In fact, as university fees have risen so sharply in recent times, it is widespread for students to pick the more economically viable options, rather than where they genuinely want to go.

Luckily you can assist your child in dealing with this, by going through the costs of their course with them, and showing them what sort of budget they will be working on. You can even help them by demonstrating how this will affect their income when they are qualified and have to pay any loans back.

It’s obviously also important to openly discuss how much, if any financial help you will be providing to them, and not leave them guessing. After all, this may have a significant impact on whether they end up applying for the genuine first choice or not.

Lastly, it’s crucial that you also go over the options for scholarships with your child as well, and make sure that they understand these entirely before they make their applications. After all, the can be complicated and confusing and they may even need to start working on things like their grades or other requirements before it gets to application time. Something that you can support them with and that can ultimately help them get into their first choice college.

financial planning, how to

How to Save for College: A Numbers Game

 

save for college

There’s no doubt about it – college is a huge investment for you and your kid. Not only will you need to save up to cover the fees, you will also need to save to cover living costs as well. Many parents start saving when their children are at a very young age, but for many families, this is simply too much financial pressure.

The reality is that for many families beginning to save can only really happen a couple of years in advance when it becomes clear that your kid is heading for a college education. While many colleges offer substantial awards to help you, and student loans are available, if you want to make the most of the opportunity, it is best to save as soon as you can.

College Saving Plans

If you know that your kid will want to go to college in the future setting up a savings plan like a Roth IRA or a 529 College Plan will be a big help later on. There are also several other saving plans you might like to consider. These savings accounts work well because you can contribute any after-tax money and withdraw it tax-free when you are ready to start paying tuition fees.

These plans are also great because family and friends may also contribute funds (though there may be a small charge). This means that over the years, they can give you a helping hand to get your kid to college.

Investments

Investments can vary in risk and type and some may be quick while others are very much as slow burn. However, if you do already have some savings, finding the right investment could see a good return that will give your savings a boost.

Stocks and shares are quite volatile at times but they can be a good option for faster saving. You can also utilize covered calls to make the most of your current investments. You can read more about the basics of covered calls online, but essentially they are a kind of feint that protects your current investments while leaving an opportunity to profit open.

Side Hustling

It might sound terrible, but side hustling is a kind of job you can do in your evenings and weekend to make a little extra cash. There are lots of things you can side hustle and one of the most popular is blogging. All you need to do is pick a topic you find interesting and set up your page. Then, you can partner up with affiliates who will pay to post on your blog. It takes time to set up but can be a very easy side hustle once you get going.

Crafts are another popular side hustle and creating drawn versions of photos is very popular. Plus, if you are already crafting, it makes sense to sell your creations on sites like Etsy to make a small profit.

It’s never too late to start saving and even a few hundred dollars will help more than you think.

admissions, financial aid, financial planning

Should You “Follow the Money” When Choosing a College?

 

choosing a college

I’ve said over and over again to parents, “You’ve got to look at the statistics when it comes to paying for college.” Before the list begins, before the college visits start and before the applications are completed, you MUST know how much it costs and if you can afford to pay for it. You should “follow the money” when choosing a college!

Where can you find the statistics? You can do your own research on College Navigator or CollegeData, or you look at these compiled from a survey by the Princeton Review.

Look at these statistics from the Princeton Review’s 2018 Edition of Colleges That Pay You Back:

  • “Best Financial Aid” #1 Bowdoin College (ME) / #25 Macalester College (MN)
  • “Best Career Placement” – #1 Harvey Mudd College (CA) / #25 Cornell University (NY)
  • “Best Alumni Network” – #1 Pennsylvania State University / #25 Union College (NY)
  • “Best Schools for Internships” – #1 Northeastern University (MA) / #25 Gettysburg College (PA)
  • “Best Schools for Making an Impact” – #1 Wesleyan University (CT) / #25 Kalamazoo College (MI)
  • “Top Colleges That Pay You Back for Students with No Demonstrated Need” – #1 Harvey Mudd College (CA) / #25 University of Michigan—Ann Arbor

These are more than statistics. They help you decide if your college investment will be worth the cost. Your student may not be thinking along these lines, but it’s your job to bring them down to earth.

When choosing a college, ROI (return on investment) should be part of the decision mix. Take a look at these Top 50 colleges with the highest ROI.

What does the survey tell us?

Among the 200 colleges (135 private and 65 public) in the book:

  • the average grant to students with need is $26,800
  • the median starting salary of graduates is $55,700 and mid-career salary is $108,700.

Among the book’s 65 public colleges:

  • the average net cost of attendance (sticker price minus average grant) for in-state students receiving need-based aid is $12,700
  • the average admission rate is 53% and 12 colleges admit over 70%

Among the survey findings, 99% of respondents viewed college as “worth it,” but 98% said “financial aid would be necessary” to pay for it (65% of that cohort deemed aid “extremely necessary”).

Why should you consider these factors?

Before my daughter chose a college, we didn’t examine any of these factors. We compared financial aid packages, but we didn’t look for a college that was a good return on our investment. When it comes down to it, you spend a good amount of money on a college education. It’s an investment in your student’s future. We would never knowingly throw money into a bad investment or purchase a home high above market value, but every day parents invest their money in a college that won’t pay their student back.

Whether it’s career placement, networking, internships or tremendous financial aid, you should consider some of these colleges when making that final college list.

college costs, financial planning

Preparing for the High Cost of College

 

high cost of college

It’s no secret that college is expensive, and most parents will spend their working lives post-children saving for it. Unfortunately, there are no fixed costs when it comes to college, and fees and other expenses can rise and fall in line with the economy. Knowing what to expect when it comes to college expenses will help you and your child be prepared for the high cost of college, as well as be able to budget.

The rising cost of college

The cost of college has risen in recent years, and the same applies to universities all over the world. If you Google ‘the cost of college,’ you could be in for a bit of a shock. According to Forbes, going to an elite college could cost as much as $334,000 ($68,000 a year) by 2018, with four years at a public college costing up to $28,000 a year and private colleges $59,000 a year. While college has always been expensive, you might not have been expecting costs to be this high.

Housing

Some college fees will include the cost of housing and meals that make it easier for you to work out how much you’ll be paying for the basics. On average, you could expect to pay between $8,000 and $11,000 a year for this – depending on whether you go to a public or private college. If you choose a meal plan, this means you won’t have to worry about how your child will eat for the next four years when you say goodbye and can feel happy knowing that this has already been covered.

Housing costs, of course, can vary, and if your child is paying these costs themselves, they may not necessarily want to live on campus. Off-campus housing can often be cheaper, as there is a wider choice of properties available that they could share with friends and fellow students during their time.

Books

Books are another cost that can be unexpected when your kid goes to college. Book costs will vary depending on what they choose to study, but the average is around $1,200 and up to $200 a book. This is of course if you buy all of the books brand new, which is unnecessary in most cases.Many textbooks can be accessed online, and most college libraries will carry the books you need if you can get your hands on them.

Computers

Computers and other equipment are other costs you’ll want to factor in when working out the total cost of college. While it’s likely your child already has a laptop, it may be due for an upgrade by the time they leave for college. A laptop should last the four years of college, although it might be wise to invest in some insurance as well in case of theft or accidental damage. Another idea is to lease a laptop as a way to save money and to get an upgrade after two years without spending much more than it would have cost to buy the computer outright.

Entertainment and other expenses

Entertainment is another cost that will need to be factored in and might be where you draw the line at what you’re willing to pay for as parents. There are many hidden costs of going to college, including laundry and nights out. For these expenses, your child may need to consider a part-time job, or you could set them a monthly budget for these costs. This is the part that will teach them the most about managing their own money, and if they want to enjoy a more active college lifestyle than you are willing to provide – they will need to think about how they’re going to cover those costs.

Financing college

There are many ways you can finance college. While many colleges will offer a scholarship with their acceptance, you need to be prepared for the possibility that they may not. You can find ways to fund college without a scholarship and might want to consider grants, loans and payment plans to cover it.

For many parents, funding college will come out of your income. This will mean certain sacrifices while your child is at college such as vacations, a new car or home improvements. If things get tight, you might need to seek options for a larger payday from time to time. It might be a tough four years, but it will be worth it when your child earns their college degree.

Going to college is a huge achievement for your child, and for you as parents. The cost can be worrying, but there are other parents in your situation who have survived and made it through. Once you’ve worked out how to pay for college, you can look forward to this special time in your child’s life knowing that you’ve been able to help them on their way.

financial planning

Finding the Right Financial Strategy for your College-Bound Student

financial strategy

Parents have tough choices to make deciding on their financial standing when sending their kids to college. How much help should they offer? How do they make sure that their children learn financial responsibility? What is the best financial strategy?

Here are a few possible answers.

Paying for your child’s college is a good idea if you can afford it

Various positions exist on how fair it is to expect parents to pay their children’s tuition. Some experts point to the fact that college isn’t an essential because success is possible without college. Some believe parents should only be expected to pay for essentials. Those in favor of having parents pay point to the unfairness of the high cost of education today, and the terrible financial burden that loans place on a student.

Whichever side of this debate you may stand on, there are a few things to understand. College is a wise choice if the career that your child has in mind does require college. If it does, it is an essential, not a luxury. Ultimately, it is the parents’ choice on whether to provide support or not.

It is also important to understand that supporting a child through college doesn’t amount to coddling or spoiling them. The idea should be to pay as much for your child’s college as you can afford, without putting your own retirement into jeopardy. If you can only pay for tuition but not for board and lodging, that’s what you should pay. Encourage your student to contribute to the cost by working during school, breaks and during the summer.

Give your child a monitored credit card

Letting your kids have a credit card in college can be a risky choice because many have no idea how to use their newfound independence in a responsible way. They may go out and blow everything they have on the card.

A credit card with a low spending limit, however, can be a good idea. It’s when your kids blow their money and scramble to understand what they did wrong, that they begin to learn about how money works.

There are upsides to owning a credit card, too. As long as the card is in your child’s name, they will begin building credit, an important thing for when real life begins four years down the line.

Teach financial responsibility

Heart-to-heart talks about how money works are a part of gaining an understanding of money. You should talk to your child about savings, investing, payday loans, how banks and credit cards can help you with consolidation, how compound interest works and so on.

Talks are important because far too many young people go out into the world with an inadequate understanding of money.

Restraint is important, too

It’s a good idea to encourage financial responsibility by making your kids earn their rewards. While you should pay for your child’s college if you can, everything else like nice clothes and cars should be things they earn.

Finally, once you do have a policy in place, you should stick to it. It doesn’t work to start out with solemn declarations but to always bail your children out when there is trouble. Lessons will never be learned then.