College Plan
COLLEGE EDUCATION:
1. Equip your child with vital personal economics skills, including budgeting, understanding checking and savings accounts, recognizing the time value of money, opportunity costs, and balancing consumption with savings. This essential knowledge will empower them to make informed financial decisions for their future.
2. Engage in an open discussion about the benefits and drawbacks of trade schools, 2-year colleges, and 4-year universities. Align these options with your child's aspirations to help them discover the best fit for their academic and career goals.
When approaching this subject, consider developing a flexible plan that empowers your child. From my own journey—from public high school to the United States service academy at West Point, a private, Ivy League, research university in Philadelphia, a private for-profit online university, and an Iron Workers Union trade school, along with countless continuing education courses—I can attest to the power of the unpredictable future.
Many paths await your child, and each unique journey holds the potential for growth and discovery. Start with their aspirations and remain open to the opportunities that lie ahead, embracing the possibilities of where the journey may lead.
3. Strategically Plan College Savings: To achieve your child's college dreams, assess the timeline until enrollment and consider the type of institution they aspire to attend—an “esteemed” (expensive) private university or a “hands-on” (zero-cost) trade school offering immediate employment. Explore the various funding sources available to them. This proactive strategy empowers your child with the financial knowledge needed for college and instills a sense of preparedness for the journey ahead.
Among the most effective savings vehicles are 529 plans and cash value whole life insurance. While 529s offer aggressive, market-based growth, flourishing in a rising economy, cash value whole life insurance provides a foundation of stability, with funds invested in the general fund of a Fortune 200 policyholder-owned company. This approach ensures your child's future is secure, even during tumultuous economic times.
4. Craft a Comprehensive Budget: Construct a category-based, simple monthly budget that includes projected college expenses. This practice not only fosters financial awareness but also solidifies their preparation for college life. Don’t waste your time with a detailed budget of projects that don’t come true! No matter the budget, monitoring and adjustment are key, so keep the projections simple, by category or card account, or whatever works for you, that you can easily track and assess moving forward.
5. Explore Powerful Savings Solutions: Investigate a range of effective savings strategies for college, such as annuities, cash value life insurance, Coverdell Education Savings Accounts, Section 529 plans, and custodial accounts (UGMA and UTMA). These options can significantly enhance your child's financial foundation.
6. Uncover Financial Aid Resources: Research scholarships, grants, and work-study programs that could alleviate college costs. Every bit of financial assistance can make a remarkable difference in your child’s educational journey, and there are a literal million scholarship opportunities for every student in America - if only they would just apply. FAFSA deadlines are not suggestions! Perkins grants (not loans) are generally available to any emancipated student (or otherwise lacking parental financial support for college).
7. Always Maximize Tax Advantages: Familiarize yourself with the tax credits and deductions available for educational expenses, including the American Opportunity Tax Credit, Lifetime Learning Credit, and student loan interest deductions. Leveraging these benefits can further ease the financial burden. The tax code changes frequently, and I am not a tax preparer - please consult your professional accountant, CPA, for tax advice specific to your situation.
8. Understand Financial Aid Regulations: Clearly identify which assets, including education savings plans, are considered for financial aid purposes by both the student and the parent. This knowledge is crucial in navigating the financial aid landscape effectively.
9. Guide Application Processes: Assist your child in preparing and submitting scholarship applications and financial aid forms. Emphasize that completing the Free Application for Federal Student Aid (FAFSA) is a critical step in accessing federal loans, grants, and work-study opportunities.
10. Implement Financial Safeguards: Establish thoughtful protections and guidelines for your child as they transition to college life, ensuring they have the right support to manage their finances responsibly. Consider a separate reserve account to quarantine and easily track expected and unexpected costs.
11. Embrace the Transition: Prepare emotionally for the "empty nest" stage while celebrating your child's growing independence. This pivotal moment is not just about letting go, but about taking pride in the exceptional upbringing you've provided. Embrace this journey with confidence and joy.