I’m a nice guy, fair, smart, reasonable, measured, open-minded… pretty much anyone who has met me will tell you that.  That’s why this is worth a read  cause I’m not going to sugar coat this — way too much at stake.

 The phones were ringing off the hook this week as desperate parents sought answers, solutions, advice and prayers for their ‘lousy’ financial aid awards — or almost more tragically, their ‘fair’ awards at the wrong schools.  It wasn’t pretty, as in:

“But I did plan.  I have an EFC of 0, I have the FL Prepaid Plan and a 529!”, barked one distraught mother who called to see if we could help her after her daughter received only $5,500 in a Pell Grant from Penn State University and another $5,500 in federal unsubsidized loans.”  or

“My husband must have messed up our FAFSA, because our EFC was over $25,000 and we can’t afford that”, exclaimed another.

I absolutely hate to say no to these families, but sometimes it just isn’t going to work out for them this year.  It’s been a difficult year for many members of the Class of 2015… both for admissions and financial aid, with the former being more competitive than ever — acceptance rates for the class of 2015 fell across the board — and the latter, unable to keep pace with rising tuition and shrinking grants and endowments.  Even historically generous schools like UPenn are withholding money to deserving students, despite their own press clippings about their generosity.  Most of you know my position on this, but the short version is ‘ask for more.’ – and for tips on how to do so, check out my post from Thursday, March 29.

In my classes and on my blog, I hammer the concept of how early planning yields the best results.  But in full disclosure, I don’t think I’ve been clear enough about what I mean when I talk about college planning.  I heard ‘”But I did plan…” way too often this week.

“Planning for college” means different things to different people.  For some it simply means purchasing a prepaid plan and investing in a 529 Plan, and then hoping that their kids will get accepted to and go to the University of Florida (or some other in-state public university) so that these will cover the bulk of their expenses.

This is not what I mean when I discuss planning.  This is hope and hope is not a strategy.

And by the way, UF — and all of the Florida schools — have become much more competitive since the 1980s, when many of today’s parents graduated from Gainesville.  And if you’re counting on a FL Prepaid plan to cover your costs at UF, you’re in for a rude awakening.  I had a parent sit in my office this week and tell me that there should be a class action suit against FL Prepaid, because they sell the plan with the promise that college costs are covered.  The reality is that the FL Prepaid tuition + fees plan covers $3,973.50 per year, assuming a full course load.  The total cost of attendance at UF next fall is $19,820.  So you’re left with a bill for almost $16,000.  Bright Futures Scholar Award will cover about $3,800, leaving you with about $12,000 per year (maybe – check out Sunday’s Miami Herald, April 3).  I see why this parent thinks a class action suit is worthwhile.

I don’t care what you’ve been told by your guidance counselor at school or your financial advisor,  FL Pre-paid, Bright Futures and 529s are certainly not the only way (and may not even be a good way) for you to afford college. Period. Exclamation point!  

And that brings me back to the importance of proper, stragic and intentional college planning.

Never assume that you have to pay full price.  A proper college plan incorporates not only financial planning, but also a keen understanding of right approach for your student when ‘shopping’ for schools.   There are schools that are generous with merit-based aid (yes, even for B students), need-based aid, both, none.  There are schools that ‘look for’ gender balance, geographic balance or are in the market for some other ‘special’ type of student to round out there class.   

What I mean is the Ivy League, Stanford, Northwestern, Tufts, Amherst, and Davidson — among others — only offer need-based aid.   Wash U, Tulane, UM, Vanderbilt, and Johns Hopkins offer both, but not in equal measure.  Others, still, are simply not so generous and they’ll tell you that up front.  These include many out of state public schools (hello Penn State, Indiana etc.) and oddly enough NYU, where they acknowledge that they’re expensive even after financial aid is awarded.

The key to economizing for college and meeting your student’s academic, social and career needs is to KNOW WHERE TO LOOK IN THE FIRST PLACE.  There are two concurrent strategies that should be at play here, starting when your child enters high school but not later than 10th grade:

1. Position your student for merit aid by researching schools that award money in areas where your kid has strengths, unique attributes, geographic or gender leverage.  A good resource is www.meritaid.com.

2. Position your finances so that you can maximize need-based financial aid.  A good resource to find out what your EFC might be is http://www.collegeboard.com/, and a great way to learn how to manage that number is www.LearnCollegeFunding.com.

3.  Position your student to go to a school that tends to graduate their students in 4, not 6, years! With college, you may think you’re saving money by sending your child to the less expensive school.  But if it takes 5+ years to graduate then it could end up costing more than a more expensive, private school (A great resource for graduation rates and other statistics is http://www.collegeresults.org/).

Unfortunately, most students only look at big name schools whose teams play on the gridiron on Saturdays in the fall, or on the hardwood in March… or whom they’ve read about in the much-publicized ‘US News & World Report Rankings.”  Or are steered only to in-state schools by well-intentioned but uninformed guidance counselors.  Believe me, I’m as big a college football and basketball fan there is so I get this.  But unless you are a Division I caliber athlete, or one of the .2% of students guaranteed to get into an IVY, selecting a college should be about a lot more than sports, rankings and/or Florida.

I talk about all of these strategies and about ‘comprehensive’ planning for college, come to one of my free workshops.  I have a couple in the near future, one next week in Miami and another in Weston next month.  I don’t sell anything, you cannot buy anything, and my promise is that I will teach you a ton.  If you put this off and ignore the message, you may find yourself fearful and angry in April of your child’s 12th grade year.

For more info or to register, go to www.LearnCollegeFunding.com.

Best,

Peter

P.S. We also took a lot of calls about student loan options… so just a few words on that. I hate them, personally and professionally — it’s one of the reasons I got into this field in the first place.  Alan Collinge, the founder of StudentLoanJustice.org, said that “student loans are more predatory than payday loans.”  The New York Times reported recently that 2 out of 5 (40%) of students wound up delinquent at some point in the first five years of starting to repay their loans.  That said, they are a necessary evil for some – and if you find yourself having to navigate the student loan maze, here are a few pointers to consider:1. Look beyond the school’s lender list, 2. exhaust your federal loan options before even considering private loans and 3. always ask about the fine print – whether a loan comes with an up-front discount or a waiting period, for example. Check out finaid.org for more – it’s a fair and good source for all things financial aid related.

Again, to capture tuition discounts without needing loans, ‘plan early’ – I’m at ATM High School on April 7th and in Weston on May 3rd.  Reserve your seat at http://www.learncollegefunding.com/.

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