Forgive me, but I’m about to be blunt.
Have you checked your 529 Plan lately, or for that matter your recent 401(k) statement? I know that the pundits all tell you not to look (in jest, I hope); but if you have a child who is in high school and plans to go to college in the next couple of years, you really ought to sneak a peak.
Because if you’ve been diligently – if not reflexively – saving for college in a 529 or similar investment plan, you might be surprised by how quickly your ‘gains’ have evaporated in the last couple of years.
Can you imagine the panic that washes over someone who has ‘estimated’ the value of his 529 at $50,000 only to find himself with half that amount when we open his statement during our first financial aid planning meeting? True story, by the way.
Of course every situation is different and for some people, there’s little risk to riding out the latest market upheaval. But that’s not usually true for parents or students in high school, especially those who are in the later stages of the college planning process.
Now before you totally unravel, you should know that you are in very good company. In fact, we just surveyed more than 300 11th grade families from our community and 97% of them said that they were extremely worried about paying for college and that they had not been able to save nearly enough money in these instruments to be able to do so.
So, maybe it’s time for a new plan.
The good news is that there are lots of later-stage college planning strategies that can help you make up the gap. I have been guiding students through the college admissions process and their parents around the nuances of the college funding process for nearly a decade.
In that time, I have seen the discount rate (the average amount by which colleges reduce the published price with financial aid grants and endowment based merit/talent scholarships) reach an all time high of 48%. And I have watched the number of first-year, full time college students who are receiving this type of ‘discount’ change from more than 88% a few years back to a more modest, but still impressive 65% (when the market declines, so too do the returns on colleges’ endowment investments that fund many of the grants and scholarships that are available for upper income families).
Through it all, I can tell you that there is no fail-proof, one-size fits, ‘set it and forget it’ college funding plan. What does exist are plenty of strategies (academic and financial) that we can put in place in high school that will ensure your children have college options that are academically suitable, aspirationally appropriate, socially palatable AND affordable for you… regardless of which way the market is moving.
If you’re the parent of a college-bound high school student, you still have time to educate yourself about how college works today and then act upon what you learn to make it work for your family. Frankly, the earlier in the high school process that you recognize and act upon the new(ish) realities, the greater the college opportunity.
And in case you’re still on the fence, I can assure you that none of what I talk or write about is based on some theory. Our program works for families (1,100 and counting) who are facing today’s college realities.
Want to go to bed at night knowing that you’ve got this college thing covered – no matter which way the stock market is swinging, or whether the price of oil slumps? Then come to hear me speak on what’s really happening in college funding today.
We’re holding three college planning talks this month– all are free and open to parents with college-bound high school students – and they’re filling up. You can learn more or reserve your seat at one of our February programs by clicking here.
We’ll also be talking about the changing tide in college admissions, what we can glean from the early admit rates, the financial aid formulas, new regulations and deadlines for college funding, the transformation of standardized testing and much more.
If you have a child in high school, we hope to see you there.
– Peter (and Jill) Ratzan
P.S.. Once again, our classes are open to all and they’re free. You’ll hear what you can do while your child is in high school to affect her chances for acceptance and funding in college, You can go here to find out where and when, and to reserve a seat and your materials! And if you want to get some information right now, you can also get your Amazon copy of our new book NOT! Your Parents College Plan today!