Having a Education Financial Plan is Important
An education financial plan is one of the most important things you can do in your college decision. The problem is that the quality of information varies greatly. Most college financial aid offices will tell you that you do not need outside financial help. Over the past few years, paying for a college education has become very complicated. The financial aid offices cannot legally answers all of your questions due to these new complications. They are limited to only information related to the department of education process.
As an example, the financial aid offices cannot comment on how to use the 529 plan and if the plan you’re in is a good plan. Colleges will only give you a one year projection of your financial exposure. If you have multiple children in college at the same time this could make some colleges more affordable even if it has a higher price. If you understand how the award process works, this could work to your advantage for your children. Proper planning is required for this investment in your child’s future.
The history of the financial service industry in college funding is not that good. When you go through the financial aid process and complete the FAFSA, you need to disclosure your entire financial life. Some advisors have used this process to sell financial products. In most cases these products are not a long term solutions for how to pay for college the best way. At College Affordability, we do not sell any financial products. If you decide to use a college financial aid specialist, understand how they are compensated. If the solution they present includes annuities or life insurance, you need to make sure you fully understand both the short and long term impact of that decision. The critical issue of college funding is your current cash flow.
The education financial plan should consider the following items:
- Family Education Timeline
- Four Year Cash Flow
- Projected Changes in Financial Aid Position
- Investment and Tax Strategies
- Estimated total debt and monthly payment
- Ability to Implement
A college education is a financial investment and needs to be treated that way. Would you give an 18 to 22 year old, $100,000 to start a business? This is the decision that both the student and parents are making.