Simply put, when you pay an upfront sales charge on the purchase of a mutual fund, the money that charge represents does not go to work in the market.  All else being equal, it has a direct impact over time, not only on rate-of-return, but on the value of the account as well.

Table A show shows the result of investing $150 for 12 months in a load fund that carries a 5% sales charge with an initial first year investment of$20,000.   So, 5%of your investment is lost before your money goes into the market.   Assuming a 6% annualized rate-of-return on the investments, the result at the end of 12 months is an increase in value of 4.07%, $20,813.55. 

Table B, while using the same investment history, shows a one-time annual advisory fee of .85%.  At the end of the investment period the account increased by 8.61% with a value of $21,721.69.

This is the positive effect of investing in 529 F Shares though Campus Financial can have,  rather than buying the CollegeAmerica Plan on a retail basis through a commission-based investment representative.

Call us today 804 937-2288.

That’s what traditional college savings calculators do.  It’s fairly simple.  First, the future cost of college when your child reaches age 18 is determined.  Second, based on the current rate of return, the future value of your investments and savings is calculated.  Then future investment value is subtracted from future college costs, which gives you the amount you’ll need to save in the given time period.

Based on what you need to save, how long you have to save it, and what your investments are returning, a monthly figure is calculated.  That’s when the well-intentioned parent faints, realizing that they will have to save some huge monthly sum, totally beyond the family’s budget to absorb.

Financially, traditional college savings calculators are too simplistic, often resulting in an unreasonably high investment figure.  But consider whether most folks paid cash for their home—probably not.  So they shouldn’t expect to pay cash for college.  If they have four years of college expenses saved by the first day of college, they are, in effect, paying cash for college.  That’s unnecessary and unrealistic.  Most families simply cannot save that amount of money, nor do they need to.

Furthermore, the government doesn’t expect the family to pay the entire cost of a college education, only their fair share based on their financial circumstances.  Thus enter the financial aid formula for calculating Expected Family Contribution (EFC).   This is the method the Department of Education uses (or The College Board via the CSS Profile) to determine the student’s fair share of one year’s cost of education, and then their financial aid eligibility.

There are two basic types of financial aid: Self-Help Aid, which consists of interest subsidized loans and work study, and Gift Aid, which consists of grants and scholarships.

The amount and type of financial aid is based on two factors: the merit of the student (scholarship, athletic achievement, musical or artistic ability, etc.) and the financial need of the student.

Need is by far the most important factor in determining financial aid, but that is slowly changing.  Most of the financial aid given by the federal and state governments is based on the financial need of the student, while most of the financial aid given by colleges is merit-based.

How is the financial need of a student calculated?  “Needs Analysis” is the process of determining the financial need of the student. It is calculated using the following formula:

1.            Cost of Attendance (COA)

-        Expected Family Contribution (EFC)

=       Financial Need

2.            Financial Need

-        Resources of the Student

=       Adjusted Financial Need

Example: If the cost of attendance at a particular college was $22,000 and the expected family contribution was calculated to be $10,000, the financial need of the student would be $12,000. In this case the student would be eligible to receive $12,000 in financial aid.  Whether he receives a financial aid award for the entire $12,000 is up to the discretion of the individual college.  Nonetheless the financial aid eligibility of the student is directly related to the financial need.

If the student had other resources to help pay for the college cost, the financial need would be reduced on a dollar-for-dollar basis for these resources. In this example assume the student had received a $1,000 private scholarship from the local Chamber of Commerce.  Since private scholarships (scholarships which are not given by the college) are considered a resource, the $1,000 scholarship would reduce the financial need down to $11,000. This means the student would now be eligible for only $11,000 in financial aid from the college.  Merit-based scholarships may be added to the mix as well.

The bottom line is parents don’t have to save the whole enchilada, but they need to invest something.  If they can have a year or maybe two of college expenses ready when the student begins college, they’re in good shape.  They have options—choose to pay for college from loans, from the investment account, from your income or a combination of all three.  They can also take advantage of the monthly installment plans.

How can parents use this information?  They should combine the traditional savings calculator with the needs analysis process.

Need help?  Call Campus Financial 804 937-2288 and we can calculate it all for you!

529 plans are invested in a selection of mutual funds.  Mutual funds come in two broad categories. Those that have a sales charge and those that do not. Those that have a sales charge are called load funds and those that do not are called no-load funds. When a broker recommends a fund for one of her clients to buy, that fund will be in all probability a load fund, and the load, or sales charge, is pocketed by the broker and/or other middlemen as payment for the “service of helping you pick a good fund. The vast majority of 529 plans are invested in load funds.

Why is this important?  According to the latest survey by the mutual fund data analyzer Morningstar, even excluding the drag on returns if the load were included in the calculation, no-load funds actually have a superior record to load funds over the last 3-year and 5-year periods.

Again, funds that impose no cost to purchase have outperformed those that brokers pay themselves to find for their clients.

The most widely used load is the front-end load. Nothing too complicated here.  The day that you buy the mutual fund, you pay a sales fee, usually around 5%, and somewhere between 3% and 8.5%.  There’s nothing confusing about this arrangement.  You immediately lose a big chunk of your money.  It is so obvious that the arrangement of giving 5% of your money away for nothing in return is a lousy deal.

The only thing that you really need to know and remember about mutual fund loads is that you don’t ever have to pay any.

Let’s revisit the CollegeAmerica plan through American Funds.  If you were to invest in this 529 Plan directly with American Funds, you would have to engage a broker and yes, pay an average 5% front-end load.  As discussed above, that means 5% of your money is taken before any of it is invested, whether a lump sum or monthly deposits.

Campus Financial, as a fee-only, Registered Investment Advisor firm, has arrangements with American Funds to invest client’s money in the same funds, but with no sales charge or load.   !00% of the client’s investment goes right to work in the market.  Over the life of the 529 plan, that could represent hundreds, even thousands in saved principle and additional growth.

So how does Campus Financial get paid?  A small advisory fee is assessed each year based on the value of the account.  That’s it – simple and straight forward.  If you’re interested in finding out more, contact us for a free consultation.  It could mean the difference in what college or university your child attends.

 Do a thorough analysis of the debt circumstance.  How much debt can the family tolerate on the other end of four or five years of college.  Is there a second student in the picture in the near future?  

 Another easy trap to fall into–college work/study.  This money is not a gift.  The student must earn it.  If the student does not work, the family pays that amount as well.

 Here is a list of tips to use in comparing packages:

 Compare the debt first by adding up all the loans being offered.

 Compare unmet need and the family contribution–the more need met may mean more family debt, the more gift aid may mean a larger family contribution.

 Make sure books and miscellaneous are expenses are included in the cost the college used to figure the family’s need.

 Consider travel costs if institutions are some distance away.

 Determine if any outside scholarships are renewable and if the college will allow self-help portions of the package to be reduced by them.

 Compare the terms of any loans included–what the payments will be and the real cost to the family once they’re paid off.

 Check what aid is provided to upperclassmen–Freshman award packages are often better.

 Write it all down and look at the numbers–don’t just guess which package will be less expensive.

 Last, compare the economic benefit of your future career with the need to incur substantial debt.  It may well be worth it.  After all, that’s what it’s really all about—what are you willing to pay, what level of debt are you willing to endure, to achieve a college education?

 The long-term benefits of  higher education are often overshadowed by the sort-term burden of the ever increasing costs.    

Read full article: http://www.thedailybeast.com/articles/2012/09/26/steve-cohen-on-the-three-biggest-college-admissions-lies.html

It is suppose to be an easier and more seamless process — students often get their need-based grant and loan aid all directly through a college’s financial aid office as well.

While there are subsidized federal Stafford loans based on need and offering up to $20,500 per year depending on the degree and years in school, others may qualify for an unsubsidized Stafford loan to supplement work study, grants, and scholarships.

Generally, subsidized loans, offering fixed rates at just 3.4% now, are made available to those with less than $50,000 in income, phasing out at about $100,000. With subsidized loans, interest does not start accruing until after the student graduates or leaves college. Unsubsidized loans, with rates at 6.8%, start accruing interest immediately. Neither loan type requires payments until 6 months after college.

 Fall/Winter Junior Year

 1  Analyze Your EFC

 Your Expected Family Contribution is that magic number that drives need-based assistance (more on that later).  What you’ll be expected to pay as a family impacts the college selection process.

 2  Begin Exploring Career Options

 Take Interest Inventory Tests.  Do informational interviews.  Aside from all those personal and social reasons for choosing a college, career choice certainly has some bearing on which schools provide the education to support that career goal.

 3  Begin Exploring Schools

 Take a look at the multitude of options using your EFC, career interests, and personal qualification and considerations.

 4  Begin Investigating Private Scholarships

 As discussed later in this book, the amount of time you spend chasing private money depends a great deal on whether you establish need.  That’s why we calculate the EFC at the very beginning.

 5  Make Financial Adjustments

 You will need to make any necessary financial adjustments by the end of the year.  Once you cross over to the New Year, the student is in the base year for need-based financial aid eligibility.  Anything you do financially after that point on may have an impact on the amount of financial assistance that is provided.

 Spring Junior Year

 6.  Continue Exploring Career Options

 Remember to tie career to required college degree and major.

 7.  Continue Exploring Private Scholarships

 8.  Continue Exploring Schools

 Remember to evaluate potential schools according to your determined criteria. 

Arrange to visit some of the campuses during the upcoming summer vacation.  You can take this word of advice to the bank. Don’t buy sight unseen.

Fall Senior Year

9.  Select 10-12 Schools

Try to finalize a broad selection of colleges (10-12) by this time based on general educational and financial parameters.

10.  Write for Information

Write a brief letter to the admissions and financial aid offices to request information.  Use the opportunity to include a short biographical sketch.  Keep in mind that what we are involved in is a marketing campaign, to get accepted and to get financial aid.

11.  Reevaluate Your EFC

This is necessary to determine if there have been changes that may require a shift in your selection of colleges and universities.  Make note of why any major changes occurred.  This may come in handy later when speaking with the financial aid office.

12.  Trim Your List to 6-8 Schools

By mid-October your list of colleges should narrow to 6 to 8 based on specific educational, financial, and personal criteria you have specifically defined.

13.  Apply

Try to submit all of your applications by mid-December.  We will discuss early decision and early action in Chapter 8.  While normal application deadlines are after the first of the year, you’ll be a leg up on your competition by getting your applications in prior to the holidays.

14.  Prepare for CSS Profile and FAFSA

You will need to get a jump on things if you’re one of those hold outs that still does everything by paper rather than Internet.  Go ahead and register for the CSS Profile so that you can have your application in hand by January 1^st.  The Free Application for Federal Student Aid (FAFSA) should be available in paper form in the career center of your high school by mid-December.  If you plan on filing your FAFSA and/or CSS Profile applications via the Internet, you are set until January 1^st.

 Winter Senior Year

 15.  FAFSA and CSS Profile Applications

 Complete whichever applications you need as soon after January 1st as possible. You can estimate your tax information and correct it later.

 16.  Continue Applying for Private Scholarships

 Private scholarships are often available for any year of college.  The search for money can and should be an ongoing process.

 Spring Senior Year

 17.  Correct FAFSA and CSS Profile Data

 You may need to update the information you previously submitted.  Some schools may ask for additional documentation such as tax forms or their own documents to collect additional financial and personal information.

 18.  Receive and Compare Award Letters

 With acceptance letters come financial aid offerings from those colleges and universities.  You’ll want to compare them to see where you’re getting the most assistance.

 19.  Talk to the Financial Aid Offices

 Initiate the flow of information to the financial aid offices and negotiate the aid package if appropriate.  In other words, talk to the college if there is information they need to know that the financial aid forms didn’t capture.  Do your homework before asking for more money.

 20.  Choose Your School

 Decide on your school and accept admission and their aid offering.  It’s always good form to decline the other schools in writing.

 21.  Form Your Financial Plan

 Decide how the family is going to pay their part of the bill.  This is where some financial planning comes in handy, comparing interest rates, investment growth, and budget constraints.

 As pointed out earlier, this same process can be accomplished in a shorter time period and can be adopted by families with a senior in high school.  What is important is to follow the procedure and to make the application and financial aid deadlines for submission.

These are all very good question, and parents wouldn’t be very sharp consumers if they didn’t seek answers to them. Families continue to do business with us at an increasing rate so there must be a reason. And that reason is the Campus Financial Advantage.

Let’s address those consumer questions:

Why can’t you do all this college stuff yourself? Well, the fact of the matter is, you can. You can if have the time and the inclination to. If you look at the trend today in service industries, growth is spiraling. Why—because families, parents in particular, are finding that there is truth in the adage, time is money. As consumers we are hiring people to do the things we used to do ourselves, we’re eating out more instead of spending time in the kitchen—it’s the way we live today.

Do you have the time necessary to do the job of college and financial aid planning correctly? Do you even feel compelled to tackle it, or will you just throw up your arms in dismay and take a second mortgage, destroy your retirement accounts, or worse, send your student to a school that is totally wrong for them educationally.

Here’s a great comparison: A lot of folks hire certified public accountants to save them a few dollars on their tax bill. Hiring Campus Financial could save you hundreds, even thousands of dollars in college costs.

Why should we hire you? We alluded to the one good reason in the answer to the first question. We can most likely help you save
money on your college bills. That’s easy to say, you reply. Well, consider there are over 3000 colleges and universities nationwide, most of which are fighting for good students. Consider the thousands of high school seniors that apply each year to those schools. Lastly, consider the under-paid admissions officer who has to decide who gets accepted and the over-worked financial aid administrator who has to decide of those accepted, who gets the aid.

Now how do you decide which schools to apply to, how to make your student stand out above the rest of the herd applying and get the attention of the financial aid administrator so they understand why your family should receive more assistance than another? Every college and university is different in terms of how each has historically distributed aid, and the policies regarding financial aid awards differ. That’s not to mention the obvious differences of educational programs, life-style and environment

There’s more ways to waste money on college than there are ways to save. Making the wrong decisions can create additional cost unnecessarily. Campus Financial can guide you through the land mines of college and financial aid planning, and get you the best dollar value.

What sort of return on the dollar can Campus Financial guarantee you? Let’s answer that with another question. What sort of dollar guarantee does your CPA give you at tax time? Does your broker guarantee your investments will provide a
certain rate of return? Of course not. First,
They can’t and if they do, they’re in violation of their professional codes. The fact of the matter is there are too many variables, year to year, to know exactly how things will turn out. College and university policies change. The profile of the freshman class fluctuates. The amount of funding available changes. The number of applicants vary year to year. And then there’s the family’s financial circumstance—will it remain consistent?

Campus Financial can guarantee that it will use its resources, expertise and experience to assist you in doing the right things in the right way at the right time to ensure you the maximum financial aid possible. It’s a process and one that is proven time and again.

What can Campus Financial provide that you can’t find on the internet? Well, to be quite honest—nothing. All you have to do is log on to the internet and search for college or scholarship and you will get more matches than you care to imagine. Hey, try financial aid and you’ll get 31,910 matches. We know, we looked! How long would it take you to weed through all those sites? Days? Weeks? Everything you wanted to know about colleges financial aid planning
is out there just waiting for you to download it and fill your dining room table with reams of information.

So what are you going to do with all that great information once you have it? How are you going to categorize it, sort it, analysis it? How are you going to make it mean something to your student? How are you going to bring some focus to it? Information is not a problem today—it’s managing it that’s the challenge and often the ruin of good intentions. Parents and students become overwhelmed by the volumes of information and in frustration, take the easy way out—let the system decide for you.

Campus Financial is equipped with cutting edge software and hardware to provide you the kind of information management that, coupled with our knowledge and experience, brings focus and meaning to the college search and financial aid process.

It’s not magic, it’s just getting the job done and done right—that’s the Campus Financial Advantage.

This appreciation in cost combined with the unemployment rate of recent college graduates and the increasing student loan burden, makes it even more critical that families take the time to think through the college process. The investment is great and the prospects of finding employment and a sustainable career path are narrowing. Parents and students must begin to have serious conversations about the costs and the anticipated return of a college education. It may be a better option to pursue technical training. Think about it.

The landscape is changing and our perceptions of education and how it emboldens our competitiveness in market place must change as well.

Do the research and look at the options. Is the student an artist? Instead of being a painting major, look at taking that creativity to the technical side and marry it with web design. Enroll in community college for two years and then transfer to a four- year school. It will save thousands of dollars and the diploma will still have the four- year college name on it. Shop for the best deal. What schools provide the student an opportunity to receive merit-based financial aid? Look for strong internship programs.

A college education has to be a value proposition.

It is important to maintain and improve your grades during your junior year. Grades can make the difference in whether you receive scholarships and grants. Work to improve your vocabulary, reading and math skills-achievement test scores are also very important for both admission and financial aid. Start a personal file to document your achievements, awards, community service, sports, club and school activities.

September:

 Register to take your PSAT.
 Use the career center to explore educational and career opportunities available to you.
 Get more involved in extracurricular activities

October/November:

 Take your PSAT in October.
 Discuss your family’s financial resources. Obtain an estimate of your EXPECTED FAMILY CONTRIBUTION (EFC) and determine adjustments to increase financial aid eligibility.
 Start a list of college characteristics that are important to you.

December:

 Register for January SAT.
 Attend local meetings about financial aid or college admissions. Take final steps to increase financial aid eligibility.

January:

 BASE YEAR FOR FINANCIAL AID BEGINS.
 Determine colleges and universities to explore based on admission requirements, educational programs and cost vs. your family’s financial aid eligibility and ability to pay.
 Take your SAT.

February/March:

 Register for May achievement tests in February.
 Spring break is a good time for college visits.
 E-mail colleges for information about admissions and financial aid. Include brief information about yourself.

April/May:

 Attend college fairs.
 Check admission requirements against your own course of studies.
 Take achievement tests in May.

June/July/August:

 Make a list of people who might write a letter of recommendation (teachers, counselors, employers).
 Visit colleges going or coming from vacation spots.
 Narrow your college list to 6-8 based on scholastic, financial aid and personal criteria.
 Start working on your personal essay and other writing requirements for the colleges you plan to apply to.
 Register with the NCAA if you’re an athlete
 It’s not too early to start looking for private scholarships.