We have a love/hate relationship with the month of April. The LOVE part is easy…we hear of our clients successes, financial awards and options that are good, and the family is exuberant! They choose the best choice among a host of good ones.
It is the HATE part that I HATE. Families who call us in desperation, who have either not come to see us, or they chose to do things “their way”. I can recall sob story after sob story…and even after hearing reasonable options at this late hour in their child’s senior year, they STILL choose to go full speed ahead into financial disaster.
In drivers ed, our driving instructor used to have a steering wheel and a set of controls…in case we got in trouble. Afterall, what kind of idiot would send their precious 17 year old out in their expensive race-car without any restraints or controls? (don’t answer that). Yet a college education costs at least as much as a fancy car…and your childs emotions and values are far more precious than to put a price on them…So why do parents allow their inexperienced (in life, work, and finances) children to drive the process of college planning…without any restraints? No answer is a good one.
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The particular case I will refer to today is a client who is Cal-Grant eligible… but the child didn’t want to go to college in California….so they didn’t do the GPA verification for the Cal-Grant. BAD MOVE. Lesson number one…a FREE application for close to 10k of FREE money is a no-brainer…
In this case, the child was lured to a college by a sports coach full of promises. And the promises never came to fruition…so typical. And because they thought this unaffordable college was “the one”, they not only didn’t apply for the CalGrant, but they didn’t apply to any other college. At the 11th hour, with only one unaffordable college on the list…the family is out for the season…at least that would be the best case scenario.
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The idea timeline for this family would be to go to community college while working…plan for college next year the right way…and the student will still be in and out WAY before classmates who are still bopping around the big government colleges, racking up debt, and frustrated at the lack of guidance and availability to resources. But that will probably not happen. The parents feel guilty, the child is disappointed, the culture heaps a scoop of entitlement and blame on the whole situation….and there ya go! The family will likely NOT do fiscally responsible thing…but will let desperation be the guide to a very poor decision.
3 lessons for everyone here:
1- No matter how mature and academically astute the student is…they need the experience and guidance of their parents. I am not talking about the college experience….as many of our best success stories were those who were 1st generation college students. I am talking about true respect and guidance.
2- If you don’t have a plan to pay for all 4 years of college (without loans…), you need to get one. You need to find out your Expected Family Contribution, and choose colleges that will give merit aid to make up what you cannot afford. You need your financial planner to create cash flow plans…your CPA to get your AGI within range (if you are on the border) of FREE money. Go see a professional college planner. With a 4 year success rate of less than 35%, you need to do this right the first time. Your high school academic advisor is not a college planner…nor is your CPA or financial planner. Oh and while we are at it…neither is your neighbor, your cousin, or your hairdresser.
3- Start as a freshman or at the latest…sophomore in high school. By the end of the junior year, all of our client families have their final college list of 8-10 great fit colleges, that the family knows are affordable, and that the student would be happy to attend.
Think of this huge chuck of college money as an investment…wouldn’t you do a lot or research and hire someone to optimize the process if you were going to invest it in stocks, real estate, gold…or pork bellies? College is a high risk investment…so just as with other high risk investments…why chance your hard earned money to a 17 year old?
