Editor’s note: Beth Walker is a longtime columnist for Rethinking65. Read more of her articles here.
The Trump administration is threatening to freeze several federal grant programs and dismantle the U.S. Department of Education, the Biden administration left an administrative and judicial mess related to student loans and loan repayment plans, and higher education administrators are literally paralyzed by the wrecking ball that is bearing down on “business as usual.”
Meanwhile, families are still trying to send their kids to college. And parents and students across the country are feeling the trickle-down effect of all this doubt and uncertainty,
The sensational headlines, lack of clear direction, and “deer-in-the-headlights” response of higher education is causing parents to dig in more, seek out advice and counsel, and focus on the challenge at hand in a way that we should really embrace. Never have parents been more receptive to the “college conversation” as it relates to the financial implications.
One parent told me she thought she and her spouse were doing a good job of preparing for their three kids’ college funding but had that she had recently seen some things on both TikTok and Instagram that motivated her to get on my calendar. When we revisited her plan, she left feeling confident and optimistic that it remained on track, despite all the noise to the contrary.
Recently, I’ve fielded a lot more questions about the solvency of colleges, too. Parents are legitimately concerned about their students being able to start and graduate from the same institution. Smaller private schools that lack endowment funds are at risk, with an estimated 80 colleges at risk for closure by 2029. Generally speaking, however, most of the schools our clients are likely to attend are likely to adapt and adjust.
‘We’ve Got This Backward’
This doubt and uncertainty being felt by parents and students alike serves as a great reminder that we’ve got this backward. Families are letting colleges determine their students’ educational outcomes and colleges are letting the government determine their financial outcomes.
By default, families are letting the government determine their education outcomes … crazy! [Walker shares how she’s discussing the campus turmoil with clients here.]
There has never been a better time to wrestle back control of the whole college equation and “buy college better.” Families can and should be in the driver’s seat by choosing a college that serves the needs of the student (academically, socially, emotionally) and “fits” financially for the parents. Knowing where to go and how to pay for it before the student hits submit on the applications would alleviate a lot of anxiety and put families back in control of this major purchase decision.
In addition, the continued confusion regarding FAFSA (Free Application for Federal Student Aid) filing and the new SAI (Student Aid Index) calculation also serve as a reminder that the tail is wagging the education dog for most families. Knowing where to go and how to pay for it before the student hits submit on the applications would alleviate a lot of anxiety and put families back in control of this major purchase decision.
In addition, the continued confusion regarding FAFSA (Free Application for Federal Student Aid) filing and the new SAI (Student Aid Index) calculation also serve as a reminder that the tail is wagging the education dog for most families.
Instead, by the time a family completing the FAFSA or CSS Profile, they should already know their college spending ceiling, understand how they will pay for their student to go to college, and have estimated the role merit-based aid and federal student loans will play in their funding strategy.
For most of the families we work with, the FAFSA should be viewed as their student loan application — the levels of funding available is a known. Yes, the repayment plans that will be available for these loans will likely be subjected to restructuring. But if history is any guide, these loans will still be favorable compared to financing programs available in the private sector.
The Advice We Should Be Providing
Crossing their fingers and hoping their students will get a generous financial-aid package is far too common an approach for families sending kids off to college these days. This literally give the power over to the institutions (and the government funding colleges are relying on). Instead, we need to encourage clients return to their consumer mindset when it comes to higher education. With our help, they can determine what they can afford, what they’re willing to pay, and what they must walk away from if there’s any chance of them breaking this cycle of dependency on overborrowing for college.
Fortunately, we can influence the outcome families experience when it comes to educating their kids.
A Case Study
One dad tracked me down because he wanted more certainty regarding the path his family was already on. He felt like they had done a decent job saving for college (and they had!) but he was intimidated by the sticker prices of the colleges his son was mentioning.
I was able to “pre-qualify” him for the college purchase — literally calculating his spending ceiling at $39,000 per year for four years. I also introduced my client to an independent educational consultant who worked with my client’s son to curate a list of schools that were likely to offer discounts and merit-based aid that would fit the family’s financial guardrails.
Long story short, his son was accepted at his no. 2 school choice, which was a great fit academically and socially. Although the advertised retail price was $80,000 per year, the school was willing to work with the family to get the total out-of-pocket cost down to $39,000 per year. This family saved $164,000 over four years of college ($41,000 x 4) because they were willing to “buy college like you buy a house.” In other words, they got pre-qualified in a way, by calculating how much they could afford, and they shopped in the right zip codes.
But that’s not the whole story. If that $164,000 stays on this family’s balance sheet until retirement and averages a 5.25% annual rate of return over the next 14 years, that’s another $350,000 that mom and dad have in retirement. That’s the power of using a consumer mindset when it comes to sending kids to college.
The Guardrails Families Need
Our opportunity as advisors is to remain focused on helping families find that balance between current lifestyle, future lifestyle (aka retirement), and that BIG purchase called college. If we can help families pre-qualify for buying college like they buy a house, and help them understand — before the student hits submit on the application — that the out-of-pocket cost at the colleges on their list are within their affordability guardrails, we will have effectively put parents back in the driver’s seat when it comes to higher education.
Beth V. Walker is a wealth advisor with Carson Wealth and founder of Center for College Solutions, which is based in Colorado Springs, Colo. She has published two college-related books — “Never Pay Retail for College” and “Buying College Better” (both available on Amazon). She can be reached at bwalker@carsonwealth.com or 719-522-2278.
