Here’s how the real college funding process works and the integral part you play as a financial services professional …
Time is limited for the families – students are already in high school and you may be asking how can you help these families accumulate the funds needed in such a short time? These families are not necessarily looking to save for college but rather save on college. They want to save some of the money they have saved!
In short, the cost of college, and more importantly, what families actually pay, is controlled by the colleges. What other industry can you think of that bases their price on what they think they can get their customers to pay? That’s the colleges’ business model – pretty amazing isn’t it?
College is actually three things: essential and expensive, which we all know about; but thirdly, college is a business – 1,000% through and through. Families most often overlook, or are just not aware of this part (the most important part). They just report what they are supposed to report, sign what they are supposed to sign, pay what they are supposed to pay, and borrow what they are told to borrow.
Does it have to be this way? No, not at all. Families can actually pay far less than the sticker price. How? They must understand the process, devise a plan, and stay on track. Unfortunately, it’s nearly impossible for most families to do this. Why? They just don’t have the resources or the time. That’s where we come in; and, more importantly to you, where you come in!
Colleges basically discount their price to attract the students they would like most to attend. Colleges are investing in these students and are looking for a return on that investment – the student giving back to the school’s endowment fund after graduation, for example.
The best way to explain what happens next is to think of it this way: colleges are looking for excuses not to discount their price. This may be grades, test scores, a poor essay, no volunteer work, etc. The list for the student goes on and on.
For the parents there is one glaring factor: assets, how those assets are positioned, and how those assets are reported. This is where you come in! Your products – life, annuity, basically any retirement vehicle – are exempt from the formulas and are not reported by the parents as an asset on the funding application forms. Your part is actually simple, straightforward, easy to explain, and easy to implement once the family knows the process.
Your role in late stage college planning, simply put, is to assist families in sheltering assets from the funding eligibility (discounting) formulas. Few families are aware that particular assets they’ve accumulated actually disallow them from receiving funding (discounted pricing).
You may be thinking now: If we are looking to eliminate excuses colleges have to not discount, what about the student’s side?
There are three aspects to effective college planning: Academic, Social, and Financial. While you are working with the family on the financial side, we are working with the student and parents on the academic and social side. As a team we are able to guide the family through the process, keep them on track, eliminate many of the excuses colleges had not to discount, and in many cases help the family pay far less for the same, or even better education!