Planned Assets Planning Blog

Since college cost continues to increase, faster than the economy or inflation, paying for college has become and is challenging.  As a result, college educations for you student can wind up costing 20-30% more than you plan.

Once you student enters high school you have only three years to make financial arrangements to reduce your expected family contribution (EFC) for the first year of college for your student.  During your students senior year second semester you and he/she will complete a FAFAS form and send it in to the government.  The earlier this form is completed (any time after January 1^st) the better.  This form provides financial information which defines your EFC. (The minimum you are to pay out of pocket for your students first year.) If you hope to receive any help from the school of your students choice this form must be completed and sent.  Funding from schools and the government is based on a first come bases, even though your student is deserving there may not be funds available if you send the form too late.

The FAFSA is quite explicit and incorrect or false data can have tragic consequence.  However, there are many things you can do to improve your opportunity to receive a lower EFC award and improve your chance of obtaining increase funding from the school of choice.  You may have heard myths about financial aid: that you can’t get it if you own a home, have savings in the bank, make more than a certain amount of money, or even not working.  But none of this is necessarily true. Parents and students who understand how and are prepared to apply for financial aid get more. It’s that simple.  I’m talking about understanding the system and rules and having your financial house prepared for the examination it is about to receive.  Little things, like your student having savings in his/her name can increase your EFC.  Lying, cheating or trying to beat the system by fraud is not a good idea and can cost you more than you hope to save, but taking certain practical steps may save you a good deal.

However, the most important consideration is how you will to meet your EFC and any part of the other costs your choice of schools cannot or will not provide.  The idea here is to meet the cost of educating your student or students without going broke, dipping into your retirement fund or reducing your life style.

Many people find working with a financial advisor knowledgeable about preparing for college funding is an effective solution.  Educating your student may cost more than you planned. In trying to meet this cost on your own, you may over look significant areas of savings or finding less expensive money.

Today, the most critical year for college planning is usually the student’s junior year. During this year, parents can do serious planning that help to plan expenses, eliminate unpleasant surprises, and maximize planning and preparation for financial aid and federal tax credits. Of course starting in the freshman year or before would be even better.

Is now the time to have a conversation concerning your plans for financing higher education for your student and how you can develop a financial program that will not eat into or destroy your retirement income plan?  Time is not on your side concerning planning for your student or retirement planning; regardless of how far in advance both may be the need will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

As I have written before, student loan debt (debt contracted to attend higher education) has surged above credit card and auto-loan debt to over $1 trillion, in 2011.  The average student loan debt recently topped $25,000, up 25% in 10 years and 8 in10 of these loans are government-issued or guaranteed.  It will come as no surprise that nearly 3 in 10 student loans are past due 30 days or more.  The current student debt problem is not unlike the housing problem we have been and are going through, with the same probability of damaging the economy.

While it is hard to be sympathetic for students that have racked up loans of $90 to $100,000 or more the untold story is effect on parents who co-signed for these loans.  It may be news, but student loans are protected from bankruptcy and very difficult, not often forgiven.  By co-signing, parents put themselves in the position of having only two options when their wayward child can’t or won’t pay the debt; pay it for them or see your credit destroyed.  Often by the time it reaches the parent they are now responsible for the loan, fees, interest and penalties have increased the cost beyond all reason.  Not paying it is not an option for most, for some a loss of credit worthiness can mean loss of employment or being hounded by collectors and the government for the rest of your life.

Most people do not realize in order to encourage the financial market to make loans to individual who by no means could qualify otherwise the government made sure they would be able to collect their money.  So parent who cosigned are reaching into funds saved for retirement or having funds garnished from their Social Security to pay the loans off.

Students that did not have co-signers with unpaid loans are shackled to the loan even into their 80’s with the government, as with Medicaid, collecting from their estate even after death.  Today Americans age 60 and older owe about $36 billion for student loans, and more than 10% of the debt is delinquent.  Debt collectors routinely pursue borrowers older than 80 for loans that are decades old, and Social Security benefits have been and are garnished.

It’s difficult to tell your child no when he or she ask you to cosign a loan to attend college.  Everyone thinks a child obtaining a college education will or should make enough after they graduate to pay the loans off easily, but now we know the truth.  Statistically only about 25% will work in the field they studied for and graduated in.  Another problem is many of the courses of study and classes having no relevance are hawked by almost every college and university in the land. We may believe colleges and universities are mostly concerned in providing higher education but they are big business focused on netting  more money to grow larger and hire more professors who very often are more concerned about gaining political influence through our children than education.

Part of the answer to the problem is parents must take a more pro-active stance with their child.  As much as we would like some of our children to go on with their education at college, many would be much better off in a trade school or working for a while after high school and maturing.  Because a child at 18 is an adult, grades and course selection is private the college/university by law cannot provide you information, but your child is still answerable to you because it is your money. 

For the many that will have higher requirements of family contribution from results due to the FAFSA form or the inability or unwillingness of the school selected to fully fund cost above the family contribution working with a financial advisor may bring about a solution.  Working with a financial advisor knowledgeable about college funding and financing, may be able to help you meet the ever rising cost of higher education for your student.

Warning, you do not need to work with or hire an individual to help you find grants and scholarships. You or your student are quite capable of researching this subject as well as anyone marketing themselves as able to find little known money for your student.

Is now the time to have a conversation concerning your plans for financing higher education for your student and how you can develop a financial program that will not eat into or destroy your retirement income plan?  Time is not on your side concerning planning for your student or retirement planning; regardless of how far in advance both may be the need will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

As recently reported by the National Association of Consumer Bankruptcy Attorneys, “Student loan debt may pose the next mortgage-style economic crisis.”

It may be hard to believe but student loan debt is now higher than total U.S. credit card debt and there is no where to get help.  This is the one debt with little opportunity for relief even if you file for bankruptcy; the debt can’t be forgiven in a bankruptcy.  When Congress put together the student loan program they made sure lenders would not be under undue risk by making loans to a group as risky as students.  Therefore private lenders and the government have broad collection powers, much greater than for other loans such as mortgages or even credit cards.

Students and workers seeking retraining are borrowing at an extraordinary rate with loans last year exceeding the $100 billion mark (this is not a mistake), with total loans exceeding an unbelievable $1 trillion for the first time this year. (Federal Reserve Bank of New York, U.S. Department of Education and others)

With few or no hardship options available students and parents who co-signed for these loans face continuing financial problem that will not go away.  Again according to the National Association of Consumer Bankruptcy Attorneys, parents who co-signed face loss of retirement assets, homes and other assets.  Parents have an average of $34,000 in student loans and that figure increases to about $50,000 over a standard 10-year loan repayment period.  But this is only the average and generally it’s per student.  When you consider cost at public universities like Texas, A&M even Houston can run to more than $100,000 for a four and often five year degree, cost become more than just a concern.  Then factoring in post graduate cost and cost of most law schools, MBA programs or prestigious schools like MIT the cost over load will affect all but the most affluent.

Although much of the problem is today’s high cost of ‘required’ education for our children we, the parents, also bear some responsibility.  We know we want our child to get the education needed to compete in today’s economy, but we do not start planning until the last moment if we plan at all.  If this is you, contact us, there is hope even at the last moment, but we prefer planning 4 or 5 years before the problem starts.

I’m sure no one reading these blogs knows (I didn’t) or cares that food cooks in oil slower than water, even when both liquids are exactly the same temperature.  According to Cook’s Illustrated (March-April 2012)-Kitchen Notes, “This is true….  But how can this be? Isn’t temperature what determines speed of cooking?”  Actually, “equally critical is the liquid’s thermal capacity, or how much energy is needed to change its temperature by 1 degree centigrade.  Oil has roughly half the thermal capacity of water, which means it requires half the amount of energy to reach the same temperature as an equal volume of water.  This, in turn, means it has less energy to transfer to food and will cook it more slowly.

Don’t believe it?  Heat equal amount of water and oil to 135 degrees and then stick your finger in.  They will come out of the water faster than the oil.

Sounds like a science project!