Episode 103: How To Pay For College With Ann Garcia, Author of How to Pay for College: A Complete Financial Plan for Funding Your Child's Education
Ann Garcia, aka The College Financial Lady, has helped thousands of families save millions of dollars on college. A fee-only Certified Financial Planner and managing partner of Independent Progressive Advisors, Ann specializes in helping families balance the desire to support their children’s dreams with the reality of funding their own lives. Her book How to Pay for College is available from bookstores everywhere; its companion online course is available now and has an affiliate option for podcast hosts. Early in Ann’s career as a financial advisor, she heard the same two questions again and again from her clients. One group asked, “How can we possibly afford to save for college and retirement?” Another group asked, “How can I save for retirement when I’m paying so much on my student loans every month?” In working with families– including her own– to plan for college, Ann has learned that a good college plan is equal parts good parenting and good financial planning. Ann has been featured in the New York Times, US News & World Report, CNN Money, and countless other media. Ann and her husband, Bob, live in Portland, OR. Their twins will graduate debt-free from college next year.
What Makes Parents Shut Down from Thinking about the True Cost of College?
There are so many things that have to do with being a parent. Their dream is for their kids to get into a good college. All their life the kids are getting messages, do this because it will help you will get into a good college so essentially they are trained to focus on getting into a good college. They do not get trained on getting focused on getting a good education which is available at a lot of colleges at a lot of different price points. We as a society tend to equate cost and exclusivity with quality, and so when we think about the children, and wanting the best for them, there is a tendency to assume that the most expensive colleges are the best choice for the kids.
What Are All The Tools Available To A New Parent With A Kid To Pay For College?
There are lots and lots of pieces of the college funding plan and savings need to be a part of it. Given the cost of college, it is almost impossible for the vast majority of people to cash-flow college, so you need to have savings. It is never too late to start saving, especially not if your state offers a tax benefit for contributions to your college savings, because that’s just free money that you can add back into the mix. Most families also spend out of pocket When a kid goes away, the spending cost of the household decreases so there is extra money there too that can be used. You also might be eligible for the American opportunity tax credit. That is another $2,500 every year for 4 years of college. There are also talks about student loans but federal direct student loans are not a bad option if that will close the gap for your student between the cost of college and another resource you have available for it. One thing families are unaware of is how much colleges discount tuition. We always hear the top line numbers like $80,00 a year and a 6% inflation rate. What gets less attention is what’s called the tuition discount rate and this is a number that is tracked across colleges nationally. The tuition discount rate is the rate by which tuition is reduced on average, and that number is above 50%. This means that for every $1,000 of tuition that’s charged in the form of list price, less than $500 is collected. The next important piece besides the money is figuring out what colleges are going to offer scholarships to your students. Almost every public university system offers some form of merit scholarship. If you are the parent of a high school freshman, you want to look up what scholarships your State offers, who they're offered to, and what the criteria are for granting them.
The Worksheets and How Parents Can Benefit From Them?
Everyone wants a bigger college budget than they have so as a financial planner, Ann comes up with realistic dollars that are used with them. The same worksheets she uses with her clients, where they look at what are you doing for savings and what a parent of a high school freshman should be doing right now. You should look at your savings considering how much you are contributing every year, what you expect that growth to be, what is that number gonna be when you get to college, and is that enough to provide your child the choices that you want them to have. It is much easier to adjust freshman year than senior year. It is a good exercise for parents that every year on your child’s birthday, think about what a great year you had, and then think about the person that you want them to become and see if you can identify another $20 in your monthly budget that can go into their college savings plan to help them become that person that you want them to become. There is also a net price calculator from the colleges that can be used to help. With a net price calculator, you can punch in all of your information, and it will tell you what students paid in the previous in the previous academic year. Those can be really really helpful tools for parents and students who want to narrow down a list.
Contact Anna Garcia
LinkedIn: https://www.linkedin.com/in/ann-garcia-cfp%C2%AE-647507/
Twitter: https://twitter.com/anngarciacfp
Instagram: https://www.instagram.com/collegefinanciallady/
Facebook: https://www.facebook.com/collegefinanciallady
Website: https://howtopayforcollege.com
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