The Key Step In Your Action Plan to Pay Less For College

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After 12 years and over 200,000 miles, my wife and I think it may finally be time to move beyond the minivan.

Ideally, we would like to have a vehicle that would hold our family of four plus the occasional additional passenger or two. Since we live in Minnesota, all-wheel drive would be nice especially when we make winter road trips to visit out-of-town family. Throw in at least 4 suitcases, a dog, a cooler and some extras like sleeping bags, fishing gear or Christmas presents, and before you know it we need the equivalent of a small truck just to go to out of town for the weekend.

When I saw the sticker prices for cars that meet our wish list our old minivan suddenly became a lot more attractive. Numbers for a new car ranged from $50,000 to $75,000 or more. Even used vehicles can hover around $50k depending on mileage and extras (like wheels and stuff).

Granted, it’s been a while since we bought a car, but wow.

As expensive as new cars can be, however, it is nothing compared to what some parents could end up paying for their kids’ college educations. In fact, with today’s college sticker prices exceeding $60,000 a year at many schools, paying for college might compare to buying a brand new SUV every year for the next four or five years – for every kid in your house!

That’s a carload of coin.

October 1 kicks off “financial aid season” as it is the first day you can submit your Free Application For Federal Student Aid (aka FAFSA) for the 2019/2020 school year.

My college planning workshop “Pay Less for College” also kicks into high gear this month. For a list of upcoming workshops try clicking here.

Through out the month, I am going to share with you some of my best tips and strategies to help you pay less for college.

No matter what your financial situation or how great of a student you have, the key step in your action plan to pay less for college should be this:

A Back To School Checklist for Parents Who Want To Pay Less For College

10 steps to get your college planning on track this fall

First Day of School

On Tuesday, September 4th , my kids got on the bus and went back to school after a summer break that went by way too fast. Just two short years from now we will mark my oldest daughter’s “last first day” as she starts her senior year of high school. Cue the tears.

Going to college, a vague idea that once seemed light years into the future, is now very real. Although she doesn’t think much beyond the next few months, where she will go to school, what it will cost and how it will get paid for rest top of mind for her parents.

Maybe you are in that place now.

To get on track with your college planning check out this 10 point back to school checklist for parents who want to pay less for college.

3 Steps to Financial Success for Recent College Grads

A simple strategy to create lasting financial independence

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With the national unemployment rate dropping below 4% and many state and local rates falling even further than that, the employment outlook for college grads is the best it’s been in a generation.

According to the National Association of Colleges and Employers, engineering and computer science grads command the highest salaries with an average starting salary of over $66,000. However, even college graduates with liberal arts degrees like communications and social sciences should expect average salaries of more than $50,000.

On the flip side, the average college grad carries almost $40,000 in student loan debt with many graduate and professional students exceeding that number by $100k or more.

Nevertheless, a strong economy, high employment rates and competitive starting salaries will help many young college grads to take a major leap forward in their financial life.

25 years of observing high net worth clients has lead me to believe that, for many recent grads, there are 3 key steps to financial success.

Step 1: Look for a job with great company match. Despite what you may read and hear from others, a company retirement plan combined with an employer matching contribution will likely be one of the best investment opportunities that will ever come your way.

A successful, growing company that offers a 401(k) plus an employer match on your contribution can be the difference between achieving financial independence someday and struggling financially for the rest of your life.

Even if your budget is tight, find a way to contribute at least enough to your company plan to get the full benefit of your employer match. If their contribution is capped out at 4% of your salary, contribute at least 4% to your plan. If they match more, contribute more.

Do this regardless of the economic or market conditions. Do this no matter how tight your budget is. Do this even if you have a mountain of student loan and other debt. An employer-sponsored retirement plan may not guarantee your future financial success, but your odds of success without one are small.

Step 2: Commit to always saving at least 10% of your income – starting now. Consistently saving a percentage of your income over a long-period of time is one of the keys to accumulating wealth. Ideally, you should try to save 15% to 20% of your gross income before taxes or other deductions.

In the book, The Millionaire Next Door, Authors Thomas Stanley and William Danko researched families that had a net worth of more than $1 million. What they found was that most families with a net worth greater than $1 million had consistently saved between 15% and 20% of their income for their entire careers.

In my experience, nearly all my clients who have $1 million or more investment assets committed to a long-term savings program early in their careers and they stayed with it through thick and thin.

One of the easiest ways to do save money is through payroll deduction into your retirement plan at work. Even if your employer doesn’t offer a matching contribution, find a way to add 10% or more to your workplace retirement plan.

If your employer doesn’t offer a retirement plan, start a Roth IRA. Oh, and find another employer.

Step 3: Become debt-free as soon as possible. It’s OK and perhaps necessary to have some debt from time to time. Most students borrow money to pay for college. Some student loan debt isn’t a big deal, if you pay it off quickly.

The faster you can pay off debt the less money you will pay in interest and the more you will be able to save and invest for yourself.

If you have student loan debt, create an aggressive strategy to pay off your loans within 10 years or less; sooner if possible. That may mean making extra payments or participating in a student loan forgiveness program.

Joy Sorenson Navarre, founder of Navigatestudentloans.com can help you determine if such programs are right for you. Although her niche focuses on physicians, her firm can advise anyone with high student loan balances looking to lower their student loan payments or have their loans forgiven entirely.

You can schedule a call to get more information by clicking here.

You’ve been living the life of a poor college student for the past four years. Now suddenly, you’ve got a world of opportunity before you. Make the most of it by getting a job with a good company match, saving up to 20% of your income, and paying off your student loans as soon as possible.

Follow these three simple steps and someday you may be the millionaire next door.

How One Family Leveraged Their Student’s Unique Talent To Pay Less For College

Photo by Cole Keister on Unsplash

Every year I do college planning workshops for parents of college bound high school students. These workshops are held at local high schools and parents often contact me afterwards for an overview of their situation. Often, I can help them make more well-informed decisions about how to pay for college and educate them how their college goals affect retirement.

One of my strongest recommendations is to be careful about the school your student chooses to attend. How much you pay for college ultimately comes down to the school your student chooses to attend.

A while back I met with Jennifer and her husband, Michael, to discuss their situation. Earlier this fall Jen sent me the email below. Jen and Mike’s son is exceptional. Their story isn’t necessarily a reflection of what you might experience when shopping for colleges. However, it’s a great example of how one family was able to leverage their student’s unique talents to their advantage.

After the email, I share some of the key takeaways below.

Names and other identifying information have been changed, and I edited the email for length.

Jen writes…

March Madness: It’s What Happens When You Find Out How Much College Tuition Really Costs

3 suggestions for parents facing crazy expensive tuition bills

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It’s that time of year…. March Madness! Time to get your game on sports fans!

At least, that’s what I have heard.

Truth is, I know next to nothing about men’s college basketball. In fact, I probably couldn’t even name four of the 68 men’s college basketball teams participating in the tournament, much less try to predict which teams will make the Final Four.

Apparently, however, it’s a thing.

According to the American Gaming Association, over 40 million Americans will test their sanity as they fill out their brackets and place their bets as to who will win the coveted NCAA men’s basketball tournament.  Over $10 billion in bets will be placed on this year’s event before the month is over. Odds of completing a perfect bracket (whatever that means): 1 in 9.2 quintillion. Good luck.

Something I do know. College tuition is insanely expensive.

If you have kids going to college next fall, the real madness begins when you get your college admissions letters and schools tell you how much you will need to fork over to attend their school.