Due to the increase cost of college, many families are searching for college funding solutions. The problem is getting the proper advice is not easy. As a person who has just finished educating my three daughters and being a personal financial planner, this is one of the most complicated and expensive decisions you will make in your lifetime.
To create the best college funding solutions you need to bring together the financial aid process, college saving plans, educational tax credits, various financing options and the different student loan repayment methods. If you are looking for a college funding advisor to help you create a solution they will need to be both an expert in college financial aid and personal financial planning.
Over the past few years, paying for college has become very complex. As you can see from the list above, a good college funding solution needs to include a variety of personal financial decisions that needs to include the different aspects of the college financial aid process. This increase in complexity has limited the answers the college financial aid offices can provide to you. The colleges cannot legally give you personal financial advice yet you need that information to lower your cost of education and maximize your financial resources.
The college financial planning process needs to include the following items:
- Detailed review of the Expected Family Contribution or EFC (Both methods should be developed)
- Project financial outcome by college using a four year cash flow
- Family timeline for financial aid positioning
- Evaluation of college saving plans
- Analyze the various financing options and legal responsibility of each option
- Utilize educational tax strategies and credits
- Understand student loan repayment options
- Determine education and financial requirements for career decision
- Identify best merit aid college based on your academic position
One of the biggest issues facing families when they are evaluating the various college funding solutions is the numerous sources of information. You need to be careful when you are creating a college financial plan because you will need to disclosure your entire financial life. This is required to develop your EFC and financial aid position. Many high schools will bring in a college financial aid director to give parents an overview of the process but as stated above they are limited in what they can tell you. This is especially true for parents of younger children since they cannot address college saving plan options or tax strategies that you may work to your benefit.
Another resource is a personal financial planner. You need to evaluate each financial advisor’s expertise. Many will promote that they have knowledge of the financial aid process or education saving plans. You need to be careful since some financial advisors will use this opportunity to sell financial products that may not be the best college funding solution. If life insurance or an annuity is presented as a recommendation, you need to fully understand the impact of that financial decision on both a short and long-term basis. In some cases, this financial product purchase could improve your financial aid position but could also increase your borrowing cost significantly. Being an informed consumer through this process is critical.
Evaluating the various college funding solutions can be a daunting task. It is one of the most important and expensive decisions you will make as a parent. Getting the best advice is critical to maximizing your financial resources and lowering your cost of education. The collegeaffordability.com website is designed to help families through this process. Please visit the other college financial planning videos and pages. Our free EFC Calculator and College Funding Roadmap may help you make a better and more informed decision.