Many of my prior college funding articles were saving strategies for parents with children in middle school or younger (get my Top 10 College Planning Tips and related articles here). But what if your son or daughter is a junior or senior in high school? This article teaches you how to prepare for college costs while your child is in high school.
Guidelines for Seniors in High School
If your child is a college-bound senior, application deadlines have passed and you’re awaiting admission decisions from universities. Below are three common questions wet get from parents at this stage.
1. What if my child is waitlisted?
Deposits for many universities are due May 1. The student has a small window of opportunity to show that he’s interested in moving off the waitlist and getting on the “accepted” list. There are a couple of ways to proceed.
First, you could pull the financial aid application and pay full sticker price. Unless money is not a concern, we do NOT recommend this strategy.
Secondly, and the strategy we suggest, is to have your child reach out directly to the university. Ask the college if they can provide another essay, additional letters of recommendation, or an in-person interview. Be vocal in letting a particular college know they are the student’s #1 choice and not simply a back-up school.
Be wary, though, if your student is successful in moving from the waitlist to accepted list. Some schools may pull financial aid for your child if all of the financial aid packages were awarded to previously admitted students.
2. Should we appeal a financial aid award?
It depends on the package. Certain universities offer very generous financial aid packages right away (particularly to lure sought-after students), while other colleges want to see commitment from the student before they’ll award a generous aid package. For example, your son or daughter may want to stick with three financial aid packages as presented and appeal one if accepted to four universities. Weigh the cost and benefit of an appeal process. Only consider an appeal if it’s worth the extra effort or if you feel unfairly disadvantaged.
Top students should also keep in mind that Ivy League schools rarely award merit aid, but they are generous with need-based aid for those who qualify. Second-tier schools are more likely to offer merit-based aid to students who would otherwise be accepted to a top-tier school.
3. I’m the custodial parent, but my ex refuses to provide his or her financial information. Any suggestions?
You can file a Noncustodial Parent Waiver petition. Understand that each college has a different process to qualify for non-custodial waiver, and the school ultimately makes a judgment call on issuing the waiver. Typically, it must be an extreme case for the university to issue a waiver, such as a restraining order. Custodial parents, students, or a third party (i.e. clergy, guidance counselor, or therapist) could each bolster the case if the waiver is initially denied.
Guidelines for Juniors in High School
In the midst of ACT and/or SAT prep, the fun part begins: college tours. But before you step foot on campus with your son or daughter, wouldn’t it be nice to know the sticker price?
Come up with a solid plan now to pay for college, even if your child isn’t starting college until August 2020. Here are some possible funding sources:
1. Parent’s wages
2. Student’s earnings
3. Parent’s investments, including 529 plans
4. Student investments (if any)
5. Financial assistance from other family members (e.g. grandparents)
6. Student loans
The first five items are self-explanatory, but there is a lot of confusion surrounding student loans. Federal Direct Loans offer competitive interest rates. Students with demonstrated financial need can take subsidized loans, and the federal government pays interest on the loans while the student is in school with a six-month grace period thereafter. Unsubsidized Federal Direct Loans are available to all students who complete the FAFSA, regardless of financial need, but interest accrues while in school.
Presently, dependent students may take a maximum of $31,000 in federal loans, of which $23,000 can be subsidized. Independent graduate or professional students have much higher federal loan limits. Once you’ve maxed out Federal Direct Loans, don’t pursue private loans unless you have a clear plan to eradicate them after graduation.
Also consider the type of position your child plans to pursue after college. A teacher whose starting salary is $30,000 shouldn’t take out more than $30,000 in undergraduate student loans. A future doctor may be able to take out more in student loans but should be cautious and factor in post-graduate costs.
Seeking Outside Assistance
Preparing for college costs is a big undertaking, and some families decide that they don’t want to do it alone. Let’s chat if you’re looking for specific guidance to fund four years of undergraduate college for your junior in high school. Using the College Pre-ApprovalTM process, I sit one-on-one with your family and create a comprehensive college funding plan for $600. We’ll uncover ways to maximize financial aid and minimize taxes without robbing your retirement.
Recognize that not all college funding specialists are the same. As a fee-only fiduciary, I always put my clients’ best interests first, and my only compensation is a transparent fee (no commissions). This is an important distinction because many college funding specialists are also insurance agents, as highlighted in this Money article. Please let me know if I can be a resource to your family; I’d be honored.
Deborah L. Meyer, CPA/PFS, CFP®is a fee-only financial planner and investment advisor based in St. Charles, Missouri who works with clients nationally. As the owner of WorthyNest, Deb helps parents build wealth in a way that aligns with their values and is a 2018 recipient of the AICPA’s Standing Ovation award.