Written by: Guest Contributor College is a big expense, and saving for it can be…
Investment News recently ran an article with the above title. The point of their article was to tell financial advisors that there is an urgent need for them to learn. They need to learn all of the financial strategies available to help their clients survive the ever-rising cost of college and be productive in their financial planning for college—in essence, go back to school! More importantly, the article is also a “wake-up call” for families who may be using an advisor who lacks this expertise.
In his book, Paying For College Without Going Broke, Kalman Chany says that using an advisor who does not have this knowledge “can cost families thousands of dollars in lost financial aid.” As a financial advisor with My College Planning Team, I know how important it is to integrate college cost-cutting strategies into the financial plans I do for my clients. Indeed, college costs represent an expense that is now almost as large as their family home.
Financial Planning For College: What You Need to Know
1. College costs are now reaching an absurd level
Since 1978, the CPI increased 279%. College costs, however, in the same period, increased 1,225%.
The average annual cost of attendance at a top-tier private college is now $54,900.
Endowments to private colleges are still down 20%, which means less financial aid is going out to middle-income families.
Thirty-six states cut funding to their state universities last year. The response of these universities was to not cut costs but to raise prices.
Colleges are replacing full-time professors for cheaper part-time adjunct instructors and with less-experienced teaching assistants while increasing spending more on amenities. They also continue to hire more administrators than they need.
Just last year it was reported that it was taking 5.7 years for the average student to graduate. The stats were just updated. It is now taking 6.2 years for the average student to get a four-year degree!
2. Call Upon Informed Professionals
When financial planning for college, more than ever parents need an unemotional third-party expert to help them through this overwhelming process—a financial advisor who can help them decide the best possible way to pay for all of this. As a consumer, be sure to do your research and find an advisor who knows the field.