Strategic Planning for Education Funding
Don’t Jeopardize Your Own Plan for Retirement
In general, too many parents compromise their own retirement plans because they are focused on financing their children’s college education. And unfortunately, that is a big reason why many parents will not have an adequate retirement nest-egg for themselves.
Most parents don’t know (or find out too late) that money invested in a retirement plan will not count against them when it comes to the family’s financial aid package. So the more parents contribute to their own retirement plan, the better it will be, not only for the parents, but also for their students.
So while it is important to begin to plan for your children’s education as soon as possible (for example, when they start Middle School, if not sooner), parents should have been planning for retirement much sooner than that (as in the family planning stage—before the children were born).
Families Should Think Beyond the Financial Aspect of College Planning
Although saving for college may be the most important part of planning for your children’s education, strategically planning for college is not just about putting money away in a savings and/or investment vehicle(s) designed to pay for college.
It’s high time that more parents look at their kids’ education much like any other expensive financial endeavor: ROI (return on investment) . . . . Either you take the time and energy to do the required amount of research to increase your ROI, or pay an expert to do it for you.
In other words, one doesn’t want to overpay for, or lose money on an investment. History is replete with folks that have learned “the hard way” the cost of entering into an expensive endeavor without having done their “homework.”
So, parents (and students) need to appreciate the real money they can save if they make the extra effort to find the college or university (and major field of study) that is the best fit for your child in the first place.
Two Quick Facts:
28% of college students drop out after the 1st year.
12% transfer to another college for their sophomore year.
Both of these types of decisions that students make, cost their parents (and/or themselves) money that can never be gotten back . . . a negative ROI.
We submit to you, that if enough research and homework would have been done in the first place . . . prior to that student choosing that college (and/or field of study), those negative outcomes could have been avoided.
Obviously, no one can predict the future or guarantee a flawless educational experience, but logic dictates that time spent avoiding and preparing for potential pitfalls, is time well spent.
Beware of the “Dream School” Syndrome
Another way to avoid overpaying for college is to not overestimate the real value of a college or university’s brand name. Just think about, are the salaries of most jobs arranged in a continuum of highest to lowest based where the jobholder went to school? Absolutely not.
The most important factor is the degree itself (and your child’s name on the diploma, not the school’s name). The second most important item on the diploma . . . when it comes to financial return . . . is the field of study.
So when it comes to a college degree . . . “you get what you pay for” is NOT applicable in the vast majority of cases. In the long run, the student’s major and how well they performed in school are much greater determinants in the salary that the graduate can expect, than where the student went to school (and the amount you paid).
While we realize that the brand name of a school is important, we just want folks to be careful, and not allow that particular factor to become more important than it actually is, in the real world. We advocate expanding your purview of "acceptable" schools and be open to some "hidden gems" of which you may not be aware.
Just because _____ Univ (fill in the blank) is a great school, that school may not be the best school for your child. Our goal is to find the best school for your unique child not only to attend, but to thrive . . . both academically and well as socially, all the while sparing you and your family many of the excess costs that can come along with a college education.
Strategic College Planning Can Be Overwhelming, But It’s Doable
It is not possible for me to put all of the information that I would like to share with you on this website. I can’t even impart all the knowledge that we feel is needed for parents to know before sending their children off to college in one of our workshops.
I get asked all the time: “Where were you when my sent my kids to college?” Well it may be too late to help some, but it is our goal to help as many families as we can to at least understand how the process works, and then make their own decision on how they should proceed.
We look forward to hearing from you soon.