Financial planners are an excellent resource for retirement planning, investment advice, and portfolio
management. But because college planning is such a multifaceted process with many non-financial
aspects, it can have a real impact on your finances that you financial planner might be blind to.
The following are three things your financial planner won’t tell you about paying for college.
529 Plans aren’t Always the Best Choice
In order to have enough money to pay for their child’s education, one family sold off some valuable
assets and put the money into a 529 account on the advice of their financial adviser. What they didn’t
realize was that their income would have qualified their child for financial aid.
Then, because they had so much money in the 529, their expected family contribution was much, much
higher and their child no longer qualified for financial aid.
Also, because a 529 is specifically for education it can only be used for that purpose. So when their child
changed his mind and decided to go to a two year college instead of a four year, they didn’t need as
much money as they had previously thought. Because they had all of their money tied up in the 529,
they had to pay penalties to get the money out and use it for other things.
High School Achievements Can Pay Big Dividends
College expenses can be significantly impacted by what your child does in high school. Their GPA, test
scores, extracurricular activities, and even which classes they take can determine how much or how
little your college costs will be.
For example, if your child takes AP classes and scores well on the exams, this can offset a significant
portion of tuition costs. Their GPA and extracurricular activities can qualify them for scholarships that
can take care of even more of those costs.
Early Career Exploration is Important
Different majors often take varying amounts of time to complete because they have requirements that
are specific to that major. For example, many science degrees can take longer to finish because of the
difficulty of the course material and the lab and research requirements. By determining early if your
child is interested in pursuing a career in the sciences, you can plan for the possibility of some extra time
at school.
This can also help you narrow your focus to the schools that offer those particular majors or have high
quality programs in that area of study. The schools that qualify will have a varying degree of costs
associated with them, and knowing these costs in advance will help you to more accurately plan your
finances.
Conclusion
When making decisions about how to fund your child’s education, make sure to take into account the
non-financial parts of the process that may help or hinder your finances. For help in developing a well-
rounded plan for your child’s future, schedule a consultation with The College Planning Source today.
