The first step to any planning process is to always uncover
what information is true and what is false. Throughout my career, I have come
across many families who have told me this or that about their college funding
experience and I have found 3 myths that many parents believe are true before
they even start their planning. These myths often cost parents thousands of
dollars or even worse, it may force students to change their plans and say no
to their dream schools. This article will clear up those myths so that proper and
effective planning can begin.
Myth #1: There are
many resources out there to help plan for college, planning should be easy
This myth is true to a certain
extent. There are many resources out there that try to help families properly
plan for college. The question becomes “which resources should I trust and what
do I really need to know?” When searching online, you will come across hundreds
of thousands of articles on every aspect of college planning, however what you
won’t find as easily is exactly what plans are right for your situation.
To give you a better idea of what I
mean imagine walking into a restaurant wanting a burger and the menu has a list
of over a hundred burgers that all look equally good. What would you do in this
situation? Many people would be confused and choose the first one that they
think is good even though there may be much better options out there. Trying to
sort through all of the college planning resources can be confusing and many settle
for plans that are simple even though it might not be the right plan for them.
Myth #2: My family
has too much money to qualify for financial aid
This is probably the most common
myth that costs many families thousands of dollars. There was an article in
Forbes magazine recently, which explained how a family making over
$120,000/year and who had multiple properties was still able to qualify for
financial aid.
If your child is currently in high
school, they may have heard the counselor say something like “you should apply
for FAFSA anyway.” The thing is, many counselors have not been trained
themselves on how to fill out the FAFSA forms so they bring in special speakers
from FAFSA. Those speakers, however, have been trained to help lower income and
lower middle income families. The FAFSA speakers are also trying to help
hundreds if not thousands of students every year to fill out the forms
correctly. Many simply don’t have enough time to individually go over the form
with you to make sure you can qualify.
If you think that you have too much
money to qualify for financial aid, my recommendation would be to go to a
specialist, who will take the time to sit down with you individually to help
you fill out the form.
Myth #3: Our family
needs to go into debt to pay for college
According to American Student
Assistance, there are over 20 million students attending college annually and
of that, over 12 million have taken out loans to pay for it. The nation as a
whole has over $1 trillion in student debt, according to the Consumer Finance
Protection Board.
Many of the families that I have visited
over the past few years have told me that they plan to take out a loan in order
to pay for their children’s education. This may not be a bad solution because
there are some advantages to taking out loans, however I want to make it known
that it is not the only way to pay for college.
When it comes to the question of
taking out a loan, everyone needs to take a look at their own situation first.
Just like many families consult a tax adviser before filing their taxes, I
recommend that you consult an advisor who specializes in college planning.
College is a big milestone for the entire family and this
series will continue to help uncover some of the myths of college planning. It
will also give you insight to what strategies others have used to successfully
fund higher education.
