The College Process

Is the Payoff worth the Investment?

Paying for college today is tantamount to purchasing a new car each year for four or five years. Unless you’re raising a genius, a sports star or a musical prodigy who will land a coveted full scholarship, some portion of your child’s college education is going to be pay-as you-go or financed.

Even more reason to plan and that planning must encompass more than just finding a good mutual fund to invest in.

It’s never too late and certainly never too early to begin saving for a child’s education. The biggest hurdle to overcome is keeping the dollar figures in perspective. Many parents just throw up their hands in frustration when confronted by the huge investment figures they’re presented with when using a traditional college planning worksheet.

The fact of the matter is, the majority of, parents won’t have to bear the entire financial burden. Even more important, retirement savings should not go by the wayside to fund college investment plans. We can’t predict what the future will hold, but based on today’s tax and financial aid laws we can do a pretty good job of calculating how much assistance parents can expect by projecting income increases, asset growth and cost of education hikes. Using the current needs assessment formula, we can predict the student’s Estimated Family Contribution (EFC--that powerful number that drives the financial aid train). More often than not, resulting investment figures are much more palatable. Parents can invest a realistic amount and feel they are making a difference.

It is important to note that tax strategies and financial aid strategies can conflict. Parents need to consult with a financial professional who is versed in both financial aid tax principles before making critical financial decisions, such as opening an Uniform Gift to Minors (UGMA) account for their child.

But while parents are busy socking away their extra dollars, their investment must also include their time.

Colleges and Universities today are looking for students who bring value to the school. Whether it be through academics, sports, leadership, or the arts, it is important that parents encourage their students not only to excel academically, but also participate in outside activities. The “whole person” concept is alive and well. Admissions and financial aid officers consider every aspect of a student’s high school career and look favorably on scholastic improvement, demonstrated desire and drive.

Here’s something else to think about--statistics predict that in the next 15 years 22 percent of college graduates will wind up in jobs not requiring a degree. How’s that for a waste of time, effort and parents money.

Part of the planning process is to ensure that students have been exposed to a wide enough range of activities and career possibilities, so when the time comes, they are better prepared to make career and major curriculum decisions.