February 5, 2020
It looks like another celebrity is coming to town! In case you haven’t heard, the son of famous rock legend Jon Bon Jovi, Jake, announced this week that he plans to attend Syracuse University in the fall. Now, if you live in this area you are likely an SU fan, and if you are a child of the eighties like me, you are also a fan of Bon Jovi. Exciting things like this don’t always happen in Central New York so we take the good news when we can!
This is the time of year when students are choosing their colleges and planning on how to sail through the remainder of the senior years so they can get on with the next phase of their lives. It’s also the time when parents are keeping their fingers crossed for scholarships and financial aid to come through so their kids can go to the college or university they want to in an affordable manner without breaking the bank. This is a stressful process, and if you are a parent you have undoubtedly thought to yourself, “how am I going to afford a healthy six-figure tuition package?” And that’s just for one child! I have 3 small kids, although “small” is becoming not so small as my two oldest children will both be in high school next year. College is creeping up on us too! So, let’s look at how you can plan for the time when your child is ready to go to college.
Start saving early. Do not underestimate the compounding affect and the time value of money. The earlier you start saving for a big expense like college tuition the farther ahead you will be in the long run. There are several ways to save for college expenses and the most popular is the 529 savings account. Each state has a sponsored plan, and many have tax incentives associated with them. Look into the right plan for you and begin saving something on a regular basis. 529 plans offer age-based investment portfolios so that your assets are invested more aggressively when your child is young, but automatically become more conservative as they get closer to needing the money for college. If you live in New York, visit www.nysaves.org to get started right away with this plan for as little as $25.
Consult an advisor. There is so much information out in the world about planning for college. Having said that, college planning is a specialty and not all advisors are created equal in this capacity. Look to consult with someone who has the specialized talent to work with you to make this fit into your overall financial plan. The last thing you want to do is take out a second mortgage to pay for tuition of borrow from your retirement savings. Find an expert that can guide you through your options, work with you as your child is selecting colleges, and involve your children in their education planning so they know exactly what it is going to cost you or them.
Become a master negotiator. I wasn’t exaggerating about the six-figure tuition nut that you are about to crack. Private education can cost 4 – 5 times that of an education at a public university. When it comes to looking at schools, do not dismiss the private school option based merely on cost without considering the financial aid factor. Most colleges have endowments that assist students with their expenses. It is very possible that a private college with a large endowment could cost you less than attending a state school. There are so many factors that go into awards such as grades, diversity, program selection, and so on. Don’t make a decision until you have all the offers on the table and don’t be afraid to go back to negotiate more favorable terms.
Also remember, it’s never too late to start this planning and don’t be discouraged if your children are already looking at leaving for school and you have buried your head in the sand about the cost. You don’t have to be an ostrich! If you develop a plan now, consult with the experts who can support you in the decision-making process, and implement action you will find tangible results. Living on a prayer is not good college planning, but in Jake’s case those words certainly helped his family support the newest member of the Syracuse Class of 2024. Let’s Go Orange!
Iris Buczkowski is the founder of Birch Wealth Management (birchwealth.com). Original content provided by Iris is for educational purposes only and should not be construed as investment advice.