There is no doubt that the ever-accelerating costs of paying for college are daunting for almost every family–the good news is that there are experts and professionals out there who can help you. A competent financial advisor who understands how the system works can work with you to uncover any number of potential strategies that may help reduce your out-of-pocket cost for college. They can also create cash flow strategies, educate you on different types of loans, and even blend in tax strategies that may create “tax scholarships”. There is considerable value to parents in having a competent advisor as a resource.
The Greatest of All Fears Isn’t Paying For College
When focused on planning for college and researching beneficial EFC reduction strategies, many parents lose sight of what their largest financial fear actually is: retirement!
According to the most recent Gallup poll, Americans’ number one financial concern is not having enough money for retirement. Not having enough money for college slipped all the way to number six. That is not to say that planning for college and exploring every possible cost-saving strategy should be ignored. What it does tell us, however, is that planning for college should be approached more holistically, right alongside retirement. What you need at this time in your life is a comprehensive financial plan.
When working with your college financial advisor, don’t simply focus on the fear of high tuition bills and heavy loan burdens or on any magic bullet that appears to be the best answer. You want to focus on your whole financial picture. If your financial planner does not encourage you to do this at some point during the college planning process, beware.
Whack All Your Moles
I loosely compare anything less than a holistic approach to financial planning to the classic county fair game “Whack-A-Mole.” For those that don’t remember that game, the player holds a rubber mallet while plastic moles emerge through different holes…one at a time. The objective is to hit each mole as it pops through the hole…one at a time. When you hit the mole, it goes back down the hole, only to emerge again! The same is true for the different facets of financial planning. As you address one, hit it as hard as you can, and then move onto the next one; the first one pops back up only to be hit again! The goal of financial planning is to hit all the moles at the same time. And yes, a mole will come back up through the holes from time to time, but that is why you engage a financial planner to work with you not only as the process starts, but most importantly as the details change.
As you explore professionals and resources to help you with the college planning and college payment strategies, keep in mind that what you need is larger than that. We, as parents, work very hard to provide for our families now and for ourselves in the future. If we ignore our number one concern (retirement) when working with a college planner, we just might end up living in the basement of our students’ home upon their graduation. And neither you nor your student want that!
Securities offered through LPL Financial, member FINRA/SIPC