Over the course of the school year, I give a number of presentations to parents on how to financially plan for their son or daughter’s college year, and now it’s available as an eBook. This past school year, Josie Robinson, the college and career center counselor for White Bear Lake Area High School recently interviewed me and here are the highlights:
JR: I recently caught up with Mike Branch of Focus Financial after his presentation “Pay Less For College” at the South Campus of White Bear Lake High School. I asked him what the five most common questions were that parents had about paying for college. Here is what he had to say.
MB: Josie, thanks so much for having me out to WBLAHS. Most schools offer some type of “financial aid night” for parents, but yours is one of only a handful in the Twin Cities that go the extra mile to bring in a financial planner to help parents figure out how to actually pay for college. Certainly financial aid is a key component for most families, but it’s just one factor of many that go into paying for college.
JR: Mike, you have done these presentations for several years now and there is always a long line of parents afterwards who have questions about financial aid and paying for college. What would you say are the 5 most common questions parents ask?
MB: 1) “How much will college cost?” A lot of parents have heard that it may cost something like $100,000 or $200,000 for a college education. With the total cost of attendance at many schools approaching $50,000 or more each year, some families could pay that much. However, in most cases the net cost that parents pay – the amount after you factor in financial aid, student loans, tax credits, etc. – is usually far less.
One way to get specific numbers for MN schools is to visit the website for the MN Office of Higher Education. There, parents can find out specific prices and click links that will take them directly to the websites of the schools are interested in. On the school’s website, parents will find a Net Cost Calculator that will help them determine the net cost to attend that school.
2) “When and how do I fill out the FAFSA form”? Generally parents will fill out the Free Application for Federal Student Aid or FAFSA in the February/March time frame of your student’s senior year of high school. For parents of seniors, that means right now.
How to fill out the form is a little more tricky. Most schools offer some type of “financial aid night” where they have a local expert come talk to parents about the mechanics of actually completing the form. Another great resource is something called Minnesota College Goal. These College Goal events are held at various locations on various dates around Minnesota. Financial aid professionals volunteer their time and are available to help parents complete the FAFSA form.
3) “My kids have money in their name. Will that reduce their financial aid?” A related question is “Should I reposition assets before filling out the FAFSA form?”
Truth is it depends on the student, the family’s income, the schools they are considering, and how much money we are talking about. Need based financial aid is generally a function of a family’s income and assets. In some cases it makes sense to do some planning prior to filling out the FAFSA form, but not necessarily.
Let me give you an example. Let’s say your student comes from a low-income family or is an excellent candidate for institutional need-based financial aid at an expensive private college. If the student has significant assets in their name or if mom and dad have a consider about amount of money outside of their home and retirement plans, they may want to do some planning before completing the FAFSA form.
On the other hand, if the student is not a candidate for need-based financial aid, then repositioning assets may not make much of a difference.
4) “I won’t get any financial aid. Why should I fill out the financial aid forms?” Most parents feel that they wont qualify for financial aid so why bother completing the form and disclosing a lot of personal financial information. Unfortunately, that’s just the way the game is played. Even high-income families can qualify for financial aid especially when you consider merit-based financial aid and student loans. To be eligible for scholarships and loans parents must complete the FAFSA form.
5) “What is the best way to pay less for college?” When I do my presentation Pay Less for College I tell parents that paying less for college often comes down to just one thing: the school your kids choose to attend.
That might seem obvious – Harvard University probably costs more than Mankato State — but not necessarily. It all depends on how that school views your family and your student for purposes of determining financial aid. Financial aid will vary from school to school, family to family, and even student to student with in the same family.
Parents (and students) need to make themselves smart consumers of a college education and pay very close attention to what schools they are considering. Some will offer very generous financial aid packages. Others may not. Some schools have sky high price tags. Others are much more reasonable. Ultimately, it comes down to the net cost a family will pay. If you want to pay less for college, take an active role in the school your student chooses to attend.
JR: If you could change one thing about your program, what would it be?
MB: I wish more students would come. Kids need to hear this information. Our kids are making financial decisions that will affect their lives forever. The colleges all tell our students not to worry about the money, but our kids are being swamped in student loan debt. MN ranks 4th in the nation for average student loan debt with the average Minnesota student borrowing over $30,000 for college. Today American students owe over $1 trillion in student loans. I want to tell your kids WORRY ABOUT THE MONEY.
JR: Where can parents go for more information?
MB: Fortunately there are a lot of resources available to parents and students. Some of my favorites include the MN Office of Higher Education, the College Board, and the websites of the schools your kids are considering. If parents would like to email me, I would be happy to send them my list of favorite college planning resources. These are the resources I go to every day to learn how to pay less for college.
JR: Any other words of advice?
MB: Never stop learning. Paying for college is complicated and expensive, and it changes all the time. Read books. Attend workshops. Make yourself a smart, well-educated consumer of a college education.
If parents are interested, I have a blog on my website, www.mikebranch.net, where I write about college and retirement related topics. I also have an eBook coming out very soon called “Pay Less for College”. It’s the written version of the presentation I did at WBLAHS. If parents want to sign up for free updates on my blog, I will add them to my email database and notify them when the eBook becomes available.
My goal is to help parents bridge the gap between paying for college and saving for retirement. Hopefully, this information will help them do that.
Josie, thanks so much for allowing me to share this information with parents. I look forward to seeing you again next year.
JR: Thank you.