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New ways to pay for college

Monday, June 25th, 2018

Jun 23, 2018 @ 6:00 am

By Ryan W. Neal

Everything was going according to plan, at first.

Rosemary was investing in a diversified portfolio and saving for retirement. Over several years her adviser helped her negotiate pay raises, buy a home and pay for her dream wedding. In just a few years, she had 529 college savings plans for two newborns.

But life’s unexpected expenses come at you fast, and 18 years later she was facing tuition costs she hadn’t dreamed of when she began college planning.

“I think for some clients, it’s a see-saw battle,” said Ken Mahoney, president of Mahoney Asset Management. “If I save enough for retirement, it’s not enough for college. And if I save enough for college, am I saving enough for retirement?”

College planning is as essential for families as saving for retirement today, but the rising price of higher education is making it challenging to afford college, even for wealthy clients.

Four years at a private university will cost $303,000 by 2036, nearly double what it is today, according to CNBC. Public college could reach as much $184,000, forcing many students to take on student-loan debt that can impact their ability to start a family or start investing.

Multiple goals

Even though investments in 529 plans are at an all-time high of $319 billion, according to the College Savings Plan Network, financial advisers are increasingly tasked with finding new strategies to help families fund higher education without sacrificing other financial goals. Sometimes that strategy means giving up the expensive private university and sending kids to an affordable public option instead.

“Hopefully we as advisers can bring it out in a delicate manner,” Mr. Mahoney said. “If I just don’t see it, don’t see how its going to work, you have to have a frank conversation.”

To find out how advisers are tackling the issue, InvestmentNews reached out to people grappling with how to afford higher education for their children. We presented their case studies to college-planning experts and asked for ideas to help the families beyond the basic tenet of saving more in a 529 plan. Here are their solutions.

Though these are real-life stories, names have been changed to protect the families’ privacy.

Juggling responsibilities

Carolyn and Kevin are both 46 and have three children. The oldest is in his second year at a university for which the family is paying $15,000 annually. In the fall, their middle child will begin freshman year at a much more expensive school. She secured a grant of $35,000 per year, but she still faces $40,000 for each of the next four years in total costs. Their youngest child is 13, so while he doesn’t yet know what school he wants to attend, college is only five years away.

In recent years, the family has focused more on saving for college than contributing to retirement, amassing $57,000 in CDs and savings accounts with plans to continue saving $15,000 per year. They have $1.2 million in retirement accounts that they don’t want to use paying the full college costs, nor do they want to borrow against their home, which is valued at $475,000.

Finding a way: Carolyn and Kevin are saving for what will be three children’s college expenses.

“We’d like to help our kids as much as we can, but we need to pace ourselves so that there is still money in the college fund for our youngest son. We also expect our kids to contribute to the cost of their education — especially if they choose a more expensive option — but we also hate the idea of them amassing a large student debt,” Carolyn said. “Are we doing the right thing in putting money towards the college savings fund rather than our retirement at this time?”



Brock Jolly, managing partner at The College Funding Coach, classified this as a case of “late-stage college planning.”

Without much time and with no state tax advantage, a 529 plan is a less attractive option for the two oldest children. One strategy the family could consider is some form of cash-value life insurance, Mr. Jolly said.

“Life insurance is probably one of the most misunderstood financial products in the world today,” he said. “However, when used appropriately, it can be a tremendous college-funding tool.”

The asset would not count toward the family’s Expected Family Contribution when considering financial aid, and the money grows on a tax-deferred basis and all distributions up to the policy basis are generally tax-free as long as the life insurance policy remains in force. While Carolyn and Kevin wouldn’t be able to build up cash value quickly enough to use it right away, they could take out student loans to pay tuition, then accumulate enough money in the insurance policy to pay off the loans following graduation.

“Permanent life insurance — the right type and designed the right way — is the only asset that continues to grow even after withdrawals are taken,” Mr. Jolly said. “If structured properly, a family can fund a life insurance policy, take out low interest rate student loans to pay for college without any impact on the ability to qualify for needs-based aid, and ultimately receive back most if not all the money that they spend on college.”

As for building a college savings for their high school freshman, Mr. Jolly recommended the family begin funding a 529 plan and have the child start applying for scholarships in addition to taking advantage of an insurance policy.

Single-parent conundrum

















Hannah is a 30-year-old single mother raising two daughters, ages eight and 11. She earns a commission-based salary that can fluctuate between $45,000 and $50,000 per year, owns a home in Northern California worth $575,000 and has a $100,000 investment portfolio.

She doesn’t currently have anything saved toward college education.

Looming debt

With a single income and no grandparents of her kids to count on for help, Hannah worries about finding enough money for her daughters to go to school without going into debt.

“I would hate for the girls to take out student loans,” she said.

The good news for Hannah is there is still plenty of time before either of her daughters attend college, so that’s many years for her to contribute to a 529 plan.

Wayne Zussman, principal and senior wealth adviser at The Colony Group, recommended that Hannah consider taking a job at a college or university that offers free, or at least subsidized, education for family members. She could also get involved with local organizations that offer scholarships, such as Rotary Clubs.

Mr. Zussman also suggested the daughters start building an early resume for scholarships and financial aid by volunteering their after-school time.

“Have the children become involved in organizations that offer scholarships, such as 4-H, Girl Scouts, Junior Achievement, etc.,” he said. “Although still young, there are also various school clubs such as debate teams. Make sure there is the possibility of an ROTC program in her school district.”

Living in the city

















Alex, 18, is heading to New York University in the fall on a $40,000 scholarship. He is the first among his siblings to go to a private university. His two older sisters, 25 and 26, graduated debt-free by enrolling in public universities and taking on full-time jobs.

Alex’s mother, 54, works as a teacher and saved up money for each of them to help with college costs. But even with what she has saved for Alex, she will need to take out a loan to cover the cost of his room and board, which will be the main expense after applying scholarships and savings.

The estimated total cost for one year at NYU is $76,000. Housing will cost an estimated $18,000 per year.

Because this is a case where the student is just weeks away from starting college, Ken Mahoney, president of Mahoney Asset Management, said the options for earning and saving are limited.

Extended family

One option to consider is asking his mother to open a 529 plan and enlist other family members, like an aunt or an uncle, to help contribute. Regardless of how much she saves, money in a 529 plan is generally not taxed by state governments when used for qualified education expenses such as tuition, fees and books.

In the meantime, Alex and his mother can research different federal and private loan options and assess their benefits and risks. Mr. Mahoney said he strongly recommends she be cautious about simply choosing the loan plan that gives her the lowest monthly payment, because she’ll likely pay more in interest in the long term.

Also, while maybe not a popular choice, Alex can live off-campus with roommates and split the rent to reduce what on-campus boarding would cost.

Mr. Mahoney also recommended that Alex and his mother consider a home-equity line of credit, work-study jobs, grants or private scholarships as other ways to tackle the costs.

Full-house planning
















Alice and Dan are a young, married couple expecting their second child, a daughter, in September. They want a large family, which is why they started having children early.

Dan is 27 and earns $85,000 a year working as an engineer for Lockheed Martin in Upstate New York. Alice, 26, mostly stays at home with their first child, Neil, who is 20 months old.

“I do think a lot about how family size will affect the monetary size of any gifts we are able to give our children,” Alice said.

Currently, they have a mortgage, 401(k) and two sedans.

While they have a 529 college savings account for their son Neil, they don’t have a set amount they deposit every month. Currently they have $1,200 saved.

Given that they are planning to have a large family, Mark Kantrowitz, publisher and vice president of research at, said the couple should start saving for their son’s college education, as well as any future children, now. Time is their greatest asset.

Switch Beneficiaries

While Alice and Dan can’t open a 529 plan in their daughter’s name until after she is born and has a Social Security number, they can open one by listing one of themselves as both account owner and beneficiary. The beneficiary name can be changed to their daughter’s later on.

While the $1,200 they have saved for Neil is a good start, Alice and Dan should immediately increase the amount they’re saving per month for him. At the current rate, they will barely have enough to cover one year’s room and board.

One easy idea from Mr. Kantrowitz is for the couple to shift the money they were spending on diapers to his 529 plan once Neil is potty-trained.

And if someone throws a baby shower for their future daughter, the couple can ask friends and family to contribute to a college-savings plan for her.

Such contributions also can be made in the future in lieu of holiday and birthday presents.

If Alice and Dan remain in New York until their children are college age, they also can apply for New York’s Excelsior scholarship, which provides free tuition at SUNY and CUNY colleges for families making up to $110,000 a year. (The income threshold will increase to $125,000 by the time their children enroll in college.)

Mr. Kantrowitz said the family could also consider moving to Pennsylvania to take advantage of the lower taxes there, and contributing what they save toward a college plan.

Are You Preparing for College, or Retirement?

Thursday, June 7th, 2018

We all have a tendency to compartmentalize different areas of our life, and this is no different when it comes to financial planning.  Most of us think that paying for college and planning for retirement are our two biggest financial goals; and logically, we prepare for each one of these individually knowing this fact.

However, college planning and retirement planning are directly linked.  Even if we prepare for these two major goals in silos, the fact remains that they are directly tied to each other.  Think of it this way – if we didn’t have to pay for college, then our retirement income could be bigger, right?  Seems simple, but this is often forgotten or overlooked.  In fact, the underlying principle remains that money is a limited resource and so the more efficiencies we can create with our dollars, the more our dollars can actually do for us (in this instance, pay for college and spend/enjoy in retirement).

Now that we have a fundamental understanding that college planning and retirement planning are directly linked, here are 4 guidelines we can follow to help put us on the most efficient path to reaching both of these goals.

Start Your Accumulation Cycle as Early as Possible:

Ok, this is not rocket science.  The earlier we start saving the longer we have for total savings contributions to increase and for compounding to occur.  Below is a chart of a 40-year accumulation cycle, and you can see the impact compounding has on the back end.

Avoid Having to Start Your Accumulation Cycle Over:

Everyone has a growth / accumulation cycle that is about 30-40 years long.  If we deplete our savings at any point in the process for large expenses (down payment on a home, nice cars, home renovation, etc.), then we lose our position on the accumulation cycle.  As you can see above, the overwhelming majority of growth happens at the end of the accumulation cycle.  So, starting over at any point can compromise our ability to actually reach the end and reap the rewards of those final years.  When we pay for college — and deplete a significant amount of savings by sending money off to a college or university — we must start that accumulation cycle once again.  Said differently, we have fewer dollars compounding for us, and therefore, must save more or save longer to accomplish the same result.  See Below.  This is a chart of someone who saved the exact same amount of money as the chart above but had to start their cycle over halfway through.

Build a Strategy That Will Accumulate AND Distribute Your Money Efficiently:

Most financial strategies focus only on the accumulation of money and not the distribution.  However, getting cash from your financial products easily, efficiently, while minimizing risk, expenses and taxes is of critical importance.   Ask your advisor how well any product will accumulate and how well it will distribute.

Have a Volatility Buffer in Your Strategy.  This Will Serve You Well Both While College Payments Are Occurring and While You Are Creating Retirement Income.

One of the most difficult risks for which to prepare is called sequence of return risk.  Meaning, we don’t know what returns our portfolios are going to achieve until after the fact.  This unknown makes ANY strategy more complex. The market will go up and the market will go down.  During the distribution phase—whether distributing for college or during retirement—for any down years that occur, having a bucket of money that is not tied to the market becomes a very powerful tool.  A “volatility buffer” enables us to use another bucket of money without touching our market linked investments; and therefore, allowing our market linked investments time to recover and likely to last longer.

If you’d like a question answered about this blog post, please send an email to  Call Erik directly at (727) 417-3400.


5/29 only comes once a year but there are two types of 529 Plans!

Thursday, May 31st, 2018

Question:  We are starting an account to eventually fund our child’s education, and we have heard that the 529 Savings Plan and the Prepaid College Tuition Plan are the two best options.  Is that true and which one is better?

Answer:  This is a very frequent question that parents ask when they are taking the first steps towards college planning.  These two options do in fact vary quite a bit from each other, and so in order to determine which one is most appropriate for your situation we should start with a few baseline assumptions:

  • All financial products (whether for college planning or not) have positives and negatives. Therefore, there is no silver bullet for college planning.
  • College planning does not happen in a vacuum. What I mean by this, is that the most successful college plans occur when the planning is coordinated with other components of your financial plan (for example retirement planning, tax planning and access to cash).
  • Did you know that both plans fall under Section 529 of the tax code? We will refer to them throughout this article as “529 Savings” and “529 Prepaid.”
  • Objectively speaking, one is not superior to the other, especially when the specific college is unknown.
  • In order to make a judgement on which is more appropriate for your planning, we first need to understand their definitions. Let’s start there:

529 Savings Definition: A tax-advantaged method of saving for future college expenses. The plan allows an account holder to establish a college savings account for a beneficiary and use the money to pay for tuition, room and board, mandatory fees and required books and computers. The money contributed to the account can be invested in stock or bond mutual funds or in money market funds, and the earnings are not subject to federal tax (or state tax, in most cases) as long as the money is used only for qualified college expenses. (Source: Investopedia)

In plain English this means: a tax advantaged tool to save, accumulate and pay for educational expenses

529 Prepaid Definition: Prepaid tuition plans allow donors to lock in the future cost of tuition in today’s dollars. Because the cost of tuition is increasing faster than the rate of inflation, the rate of return on these plans is generally greater than that of guaranteed instruments such as bonds or CDs. But these plans are also guaranteed by the financial backing power of each state.  (Source: Investopedia)

In plain English this means: a tool that locks in today’s tuition rates for your future tuition payments.

Comparing the Products:  There are many ways that financial products can compared.  When consulting with your financial planner, please ask them to explain the differences in these areas: risk of investment, tax advantages, upside potential, flexibility, liquidity/control, ease of management, potential penalties, effect on the financial aid formula, and effectiveness at actually paying for educational expenses.  Knowing which of these criteria are more important to you and which ones are less important can be an indicator in your planning.

A Few Key Takeaways:

Both Products Are Good However, There Are Limitations That Can Affect The “Effectiveness at Actually Paying for Educational  Expenses.”  Here is Why:  

In 529 Savings Plans, you must pay for a “qualified educational expense in the year that the expense is incurred” in order to avoid penalty and taxation.  Putting a definition and timeline around what you can actually use the money for without penalty introduces some complexity and limitations.  The 529 Prepaid version takes it a step further – these plans generally cover tuition only and cannot be used for other expenses.

The 529 Savings’ Best Attribute Is Typically Its Upside Potential.  Its Worst Attribute is Typically Its Risk Level (100% of principal at risk)

529 Savings Plans offer strong tax advantages, great upside potential and can be very easy to manage and administer.  These plans can also be transferred from sibling to sibling without taxation, which is a nice level of flexibility.  However, as a market linked investment, it takes on a much higher level of risk compared to other tools.  For example, you could lose 10-30% of the account balance right before any year of college if the market has had a down year.  In the last 20 years, we have had 4 down years (1 in 5) and each down year the S&P lost at least 9% (Source: YCharts).  If you choose to use a 529 Savings you must plan around this risk.

The 529 Prepaid’s Best Attribute Is Typically Its Ease of Management. Its Worst Attribute Is Typically Its Lack of Flexibility, Control, and Liquidity.

529 Prepaid Plans are “set it and forget it.”  There’s no portfolio to rebalance and you can create a plan to have the same contribution level every month.  Also, these plans can be set up for public or private schools.  Anytime you can automate a financial process is a huge plus.  However, Prepaid Plans can be very inflexible if your circumstances change over time.  If your child gets a scholarship, joins the military or does not go to college, you could be forced to forfeit most of the gains inside your plan.  Also, there is no liquidity in this type of plan for other child related expenses, emergencies or opportunities that might happen in your life while you are planning for college.


If you’d like a question answered about this blog post, please send an email to  Call Erik directly at (727) 417-3400.

5 Common Myths About Paying for College

Thursday, April 12th, 2018

With the help of financial advisors from, we’re going to debunk the most common myths about applying for student aid and paying for college. We’ll also talk about the point when investment returns outweigh your…

Even Warren Buffett should file the FAFSA

Tuesday, March 13th, 2018

“I don’t want any financial aid”…said no one ever.

Well that is the path you’ll go down if you don’t file the Free Application for Federal Student Aid, commonly known as FAFSA. It is estimated that $2.3 billion in federal aid was left on the table in 2017 by students who did not file. Many parents think they make too much money to get any aid and choose not to file the FAFSA. Actually, anyone making $250,000 or less can qualify for aid, and that’s 95% of Americans. I’m not suggesting that a household making $150,000 a year is going to get their tuition fully funded, but they will be offered a Federal Direct Loan. You probably remember these as the Stafford loan, and that the interest rates are much lower than private student loans. On some of these loans, the interest doesn’t start until after you graduate. Saving money on high interest loans is like a mini scholarship in and of itself.

It is a good idea to file even if you aren’t going to take any loans. Many schools will look at a student’s FAFSA before awarding any aid including merit aid. Some admissions departments are even more likely to accept a student who has completed the FAFSA because it shows the student is more likely to attend college. Financial aid officers may be more likely to award a school-specific scholarship to a student who is just outside the need-based financial aid formula, but still could use some assistance with tuition. Some states even award aid that is not based on need at all, but will not award the aid without a FAFSA on file.

Things Change

It’s a good idea to file the FAFSA even if you end up not qualifying for aid, because a year may come where circumstances find you in a different financial position.  Some common reasons a FAFSA award can change are:

  • Parental Separation
  • Parental Death
  • Sibling Attendance
  • Loss of Job
  • Selling of an asset like a business or property

These changes could have big effects on your need for aid, but if you don’t have a previous FAFSA on file, these circumstances may be hard to prove.

Bottom Line: There is no downside to filing the FAFSA!

Authored by PJ Horan

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What if you could name your own price for college?

Friday, March 9th, 2018

Have you seen the Progressive Insurance commercial with the “Name Your Price” tool? If you haven’t, the premise is that Flo (the spokeswoman) gives the price scanning gun to the customer to let them name their price for insurance. In actuality, when a customer approaches Progressive about getting Insurance coverage, they get to pick and choose certain features of their policy until the price is where they want it. What if I told you that you can use the “Name Your Price” tool when you are shopping for college? Okay, not exactly, but the price that any college or university advertises is very rarely the price that you will pay. Don’t let sticker shock deter you from researching a college.











In 2016, the average discount rate for an incoming Freshman was 48.6%! That is like a Black Friday sale! So why do the schools advertise such high costs if they aren’t going to collect it? Because some families still have to pay full price (but I’m writing this to make sure you are NOT one of those families). At first glance, private college A might have double the sticker price of state university B, but things aren’t always what they seem. Many private schools have large endowments and lots of money to give, while most state schools are funded entirely by their state government. Some state schools do have large endowments, but they have a lot more students to financially support, almost 3-1 on average. A big state school may not be able to meet as much of your need as a small private college. Another thing to remember is that there are two types of aid: gift aid and self-help. Gift aid is just that, a gift. It is in the form of a grant or a scholarship and you don’t pay it back. Self-help is student loans and work study programs. Self help will factor in to your “net price” because technically you’re still paying.











So what can you do to figure out how much a school will cost your family?

  • Start by figuring out your E.F.C. That’s your Expected Family Contribution. There are tons of calculators out there like this one.
  • Once you know your EFC, head over to and start your research. You can determine what a school charges, how much need they meet, what % of each type of aid it is (and almost any other financial data you’d like to collect).

Just remember that picking the right school should always be the first goal. A student at the right school is more likely to graduate in 4 years with a degree which will save a lot more money than gift aid or self-help! 

Authored by PJ Horan

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10 Options To Consider If You Can’t Pay Your Student Loan Bills

Saturday, January 7th, 2017

If you are a high school senior who will attend college in the fall, you need to understand the pressure and burden that follows when you take out massive student loans to pay for college. If you are a college grad and currently staring down the barrel of an overwhelming student loan repayment, you already feel this pressure and burden.

While putting off payments and hiding from bill collectors may seem like the only immediate solution, falling behind on your student loans can have a serious financial impact, especially since the IRS is the collection agent for student loans.

However, there are options that can help you to make your student loan repayment more manageable, and here are ten of those options listed by the Boston Globe:

1. Know What You Owe

The first step in getting your student loans under control is understanding how much you owe, what the monthly payments are, and where to send them. You should always hang on to all your loan paperwork, but if you didn’t, your college financial aid office should have provided you with a complete breakdown during your student loan “exit interview.” If you didn’t hang on to your exit interview folder, visit the National Student Loan Data System for a complete list of all your federal student loans. Your private student loans can be located by requesting a copy of your credit report.

2. Know What You’re Working With

The two major types of student loans are federal (government-backed Direct Stafford Loans, or Perkins Loans) and private (non-government-backed, issued from a private lender). Federal student loans usually have fixed interest rates and offer flexible repayment plans. Private student loans often carry variable rates and less flexible payment options.

If your loans are federal, there are a variety of options to help you lower or postpone your monthly payment. If your loans are private, though, all is not lost – contact your lender immediately and let them know you can’t make the monthly payment.

3. Postpone Payment With A Deferment

Unemployment, extreme economic hardship, enrolling in school at least half-time, or active military duty may qualify you to temporarily postpone payment on federal student loans with a deferment. If your loans are not subsidized, you may be responsible for the interest that accrues during the deferment, increasing the total amount you owe.

There are many different types of deferments and each one has terms and conditions. To qualify for the unemployment deferments, you be must be working 30 hours a week or less and actively seeking full-time employment. You must renew this deferment every six months and can receive it for a lifetime maximum of 36 months. If you do not qualify for the unemployment deferment, talk to the company that collects your student loan payment or check out for a complete list of other deferment types and their requirements.

4. Extend Your Payments

If you took out your oldest federal student loan on or after October 7, 1998, and you have at least $30,000 in loans, you can extend your repayment period from 10 years to as long as 25 years. This lowers your payments, but it increases the total interest you pay over the life of the loan-making your loan more expensive. You may want to consider extending your repayment by only a few years, instead of the maximum time available, to save money in the long run.

5. Choose A Graduated Repayment Plan

If you don’t make a lot of money currently, but think you will in the future, you can lower your federal student loan payments for a while – without extending your repayment period – with graduated repayment. Graduated repayment lets you pay just the interest on your loan for two-to-four years. Payments then increase gradually so the loan is repaid in the standard 10 years. When choosing this schedule, make sure to plan for those larger payments. Graduated repayment can increase the total amount of interest you pay.

6. Base Your Payment On Your Income

If you have high student loan debt but low income, there are two different repayment plans that may help: income-contingent for Direct Stafford Loans, and income-based for Direct Stafford Loans. While the details of each plan vary slightly, basically your monthly payment is based on some percentage of your discretionary income and/or family size.

In general, you must display partial financial hardship to qualify and your repayment amount could change annually based on your financial situation. You are still responsible for interest that builds up over the length of your payment period. The Income-Based and Income Contingent Repayment options allow any outstanding balances to be forgiven after 20 years of payments.

7. Consolidate Your Loans

If you are having trouble keeping track of multiple student loan payments, consolidation could help. Consolidation loans combine one or more federal student loans into one new loan. Federal Family Education Loans and Direct Loans can be consolidated together. Standard repayment is set at 10 years but you may be able to extend to a maximum of 30 years. Consolidation loans can’t be reversed but can be reconsolidated to add additional eligible education loans. From now until June 30, 2013, you may be eligible to consolidate your loans even if you’re still in school – talk to your financial aid office to see if it’s right for you.

8. Postpone Payment With A Forbearance

If you don’t meet the criteria for a deferment, you may qualify for forbearance. In most cases, forbearance is granted solely at the discretion of the company you make payment to. Forbearances are usually reserved for cases of financial hardship or illness. You will be responsible for all interest that accrues and at the end of the forbearance, the interest is capitalized (added to the principal balance of the loan).

Deferment and forbearance are both preferable to missing loan payments. But, before postponing repayment, see if it makes sense for you to lower your payments with a different repayment schedule. There are limits to how much deferment and forbearance time you can use.

9. Have Your Debt Forgiven

If you work in a profession like teaching or public service, you may be able to have all or part of your federal student loan debt forgiven. There are many different types of Teacher Loan Forgiveness available depending on when you took out your loans, where you teach and what subjects.

Public Service Loan Forgiveness forgives loan balances of eligible, full-time public service employees after they make 120 qualifying payments. Your loan must be in good standing (not defaulted) to be forgiven and only Direct Loans are eligible. If you have Federal Family Education Loans, you can gain eligibility for forgiveness by consolidating your loans into a Direct Loan.

10. Be Proactive

If you’re having a hard time making your student loan payment, the worst thing you can do is ignore the problem. There are federal programs that can help and often private lenders are willing to work with you on a solution. Contact the company that you send your student loan payment to and be frank about your situation. Ask them about all your repayment options to avoid delinquency and default. Being proactive early will allow them to provide you with the broadest number of options, without hurting your credit rating.

The author of this newsletter is Brock Jolly.

If you have any questions about the information contained in this newsletter, or any questions about college funding in general, please contact our office.

Do You Have A Game Plan For Financing College? If Not… It Could Cost You Thousands Of Dollars!

Saturday, November 5th, 2016

Each year we are amazed at the lack of planning that some families put into college, especially financing college. The proof of this lack of planning comes out when we ask these simple questions in the initial interview with the student:

  1. Why do you want to go to college?
  2. Where do you want to go to college, and why?
  3. What career (vocation) are you looking at, and why?

The lack of thought process is evident when we get answers from students such as; “I don’t know”, or “Because that’s where my friends are going to school”, or “I’ll figure that out once I get in school”. Simple answers like this not only show a terrible lack of planning, but will almost assuredly cost these families a minimum of $10,000 to $20,000.

Why is it so imperative that both students, and their parents, plan ahead?

  • With deficits in the billions of dollars, most states have little money to subsidize their state universities. As a result, the cost of these state universities are now over $25,000 per year, per student.
  • Ten years ago you could pay for college expenses with a few low-cost loans. Today, stafford (student) loan interest rates are 3.76% and it’s not uncommon today for students to graduate from college with $25,000 to $40,000 of debt.
  • The cost of college is now so high that parents must shell out a huge chunk of their own income and savings, and yet they still need to borrow as much as $100,000, or more, for education.
  • Regardless of the fact that the current unemployment is 5.1%, many students that graduate today cannot find jobs in their field of expertise and end up waiting tables at a local restaurant, or in other low-paying fields.

Today, building a game plan to pay for college is a MUST! Here’s just a few things both students and parents should consider when creating that plan:

Student To-Do List

  • Career Assessment – this could help you avoid the 5-6 year degree due to a mid-stream change in major.
  • College Selection – rework your choices to 6-8 colleges in order to create the maximum competition among colleges and increase your potential tuition discounts.
  • ACT/SAT prep – a minimum increase in your scores could boost your chance for merit scholarships.
  • Campus Visits – conduct face-to-face visits with admissions and financial aid officers so you know exactly where you stand.
  • Extracurricular Activities – maximize your resume of achievement.
  • Grade Transcript and Essay Preparation – have these ready to go for early applications and acceptance.

Parent To-Do List

  • EFC Planning – estimate your financial aid eligibility so you know exactly the amount of scholarships and loans the student can receive.
  • Loan Planning – understand exactly how much education debt you can incur without jeopardizing your current budget, or your retirement funding.
  • Tax Planning – review your 1040 tax schedules to discover potential tax savings that can be converted to funding college costs.
  • Cash Flow Planning – review your investments, health costs, insurance costs, mortgage costs, and current living expenses to discover potential areas of cash flow improvement that can be used for college costs.
  • Investment Planning – review all your investments to discover the “real rate of return” (Internal Rate of Return). Many hidden costs can be converted to cash flow that can be used for college.

Now is the time to take a proactive approach to college planning because most of your advantage in time, money and leverage may soon be gone.

If you have a high school student that plans to go to college in the next four years, and you have no idea how to develop a college game plan, then please contact us ASAP for a free consultation. It’s what you don’t know that will eventually cost you!

The author of this newsletter is Brock Jolly.

If you have any questions about the information contained in this newsletter, or any questions about college funding in general, please contact our office.

Financial Aid– It’s Time to Apply

Tuesday, September 6th, 2016

Jen R


It’s almost time to apply for financial aid!
Did you know the dates for the FAFSA® have changed?
For those who will go to school beginning 2017-2018, students can fill out the FAFSA® as early as October 1st.  Let’s try to get it done before the holidays!  You’ll use the 2015 tax returns, so for most, you should already have all you need.

Here are a couple of best practices:
You should fill out the FAFSA® even if you don’t think you will get need based aid.  It will give you access to federal loans that you may want to use and many merit scholar-ship programs require you to have filled out the FAFSA®.
Know which assets count and which do not and make sure you fill it out correctly.
Watch for priority dates at the schools to which you are applying and don’t miss them.
Check if the schools to which you are applying also take other forms such as the CSS Profile® or their own forms.

Fill out the FAFSA® every year, as your numbers can change, especially when you have two or more students in school at the same time.

And always consider meeting with a financial advisor to make sure you are doing eve-rything you possibly can to fund college costs efficiently!


Franklin Butler, CFP®, CLU® and Jennifer Rose, MBA®, CLU®, ChFC®, are Financial Planners and regular educators in community and professional groups on college financing, tax reduction strate-gies, and retirement planning. Their practice is dedicated to helping families implement creative long-term financial strategies to fund college and retirement with minimal out-of-pocket cost.  For additional questions, please feel free to call Jen at 804-301-2375 or Frankie Butler at 804-305-5587.

Don’t Use Your 401(K) To Pay For College!

Monday, July 18th, 2016

Piggy Bank for CollegeAs the cost of college heads for the stratosphere and student loans become more costly due to higher interest rates, many families may find themselves a bit cash-strapped and begin to look at their retirement fund (401k, 403b, IRA) to cover their education expenses.

While it’s a natural tendency to want to do all you can financially to make sure your kids get the best education possible; we highly caution against tapping your nest egg to pay for your children’s education. Why?

Consider this:

The average age of parents with college bound kids is 40-45. These parents are at the back-end of the Baby Boomer wave. Twenty years from now when these current college bound parents are approaching 65 years of age, the majority of baby boomers will be 70-80 years of age!

This huge number of older Boomers may end up draining the government’s Social Security and Medicare/Medicaid coffers. Will the government have to raise YOUR taxes to offset these older Boomer’s old age costs? If so, the amount of money you will have available for retirement could go down!

Did You Know That Your Retirement Plan Is Fully Taxable?

Since your 401k/403b/IRA is fully taxable at ordinary income tax rates, raising taxes to support these older Boomers at the time of your retirement could dramatically reduce the amount of money you’ll have to live on… when you need it the most!

In addition, if you do borrow money from your 401k to pay college expenses and then switch jobs; please be aware that the loan must be paid back right away, typically within 60 days of the time you leave. And if you don’t have the cash to pay off the 401k loan, then the loan balance may be considered a taxable distribution. This means you would owe ordinary income tax plus a 10 percent penalty if you’re under the age of 59½.

Nobody can predict whether the government will raise taxes to offset the aging costs of baby boomers. However, as a parent with college bound children, you need to look at the bigger picture. You need to plan for college by addressing your retirement first.

Before you ever consider taking money from your retirement account to finance your children’s education, please give us a call. We may have alternative strategies that can help you pay your college expenses without raiding your retirement accounts.

The author of this newsletter is Brock Jolly.

If you have any questions about the information contained in this newsletter, or any questions about college funding in general, please contact our office.