Phone: (408) 813-3162 Email: bill.collegesmart@gmail.com

Simple 3-Step Approach to College Affordability

 

Our Simple 3-Step Approach

 

Step 1: Educate families on the best strategies to save for college and get the most free money

Step 2: Suggest ways families could improve cash flow and reduce their EFC

Step 3: Match high gifting colleges with the student’s career path

 

 

Step 1: Example of a better strategy to save for college than the highly advertised 529 plans

In most cases, agents who sell 529 plans are not aware, or choose not to disclose, that the funds in a 529 plan are "assessed" by FAFSA at a rate of 5.64% per year (more than 22.5% over 4 years) when it comes time to apply for financial aid. In other words, their clients will get up to 22.5% less financial aid than if they were aware of and chose a more suitable plan. The following chart shows one such option which mirrors most or all of the benefits of a 529 plan without the drawbacks of: 1) lower financial aid; 2) market volatility risk; 3) tax penalty exposure; and 4) lack of life event coverage:

 

 

ADVANTAGES 529 Plan Better Option
     

State Tax Deduction

X (not CA)

 

After-Tax Contribution

X

X

Tax Deferred Growth

X

X

Tax & Penalty Free Distribution for Education

X

X

Owner Maintains Control

X

X

Can Change Beneficiary

X

X

Earns Market Returns

X

X

Free of Market Risk

 

X

Tax & Penalty Free Distribution for Whatever You Want

 (vacation, car, wedding, retirement, etc.)

 

X

Avoids Negative Impact on Financial Aid

 

X

Kids College Education Paid for if You Die

 

X

Kids College Education Paid for if You Get Terminally Ill

 

X

Kids College Education Paid for if You Get Critically Ill

 

X

Kids College Education Paid for if You Get Chronically Ill

 

X

Remaining Funds Can Be Converted to a Pension

 

X

 

 

Step 2: Examples of ways families can improve cash flow and reduce their EFC

Our College Funding Coaches, who are certified College Planners with a wealth of experience in college planning, admissions, financial aid, loans, finance, trusts, estates, taxes and accounting, use a variety of strategies to help families improve cash flow and reduce their EFC during the college years. Our typical client is presented with suggestions that could save them between $30,000 and $100,000 per student over and above what they would have received before talking to us. Some of those strategies include:

 

  • Positioning Strategies
  • Graduate On-Time Strategies
  • High, Middle & Low Income Strategies
  • EFC Optimization Strategies
  • College Gifting Comparisons
  • Scholarship Strategies
  • Loan Strategies
  • Cash Flow Strategies
  • Risk Management Strategies
  • Financial Aid Appeals Strategies
  • CPA/Tax Planning Strategies
  • Business Owner Strategies

 

 

Step 3: Match high gifting colleges with the student’s career path

Most people don't realize that by using the right strategy, they might be able to send their children to a private college at a much lower out of pocket cost than a public college. That is because some colleges are generous with gifts and scholarships and other aren't.

Here is a hypothetical example to demonstrate the potential cost savings:

 

Private College

 

 

Public College

 

   College "Sticker Price"

$63,193 

 

   College "Sticker Price"

$21,019 

   Less: Expected Family Contribution

$5,000 

 

   Less: Expected Family Contribution

$5,000 

   Equals: Financial Need

$58,193 

 

   Equals: Financial Need

$16,019 

   School Meets 100% of Need

$58,193 

 

   School Meets 70% of Need

$11,213 

   Unmet Need

$0 

 

   Unmet Need

$4,806 

   School Gifting 88% of Need Met

$51,381 

 

   School Gifting 30% of Need Met

$3,364 

   Self Help (Loans & Work Study)

$6,812 

 

   Self Help (Loans & Work Study)

$7,849 

   True Cost to Parents/Student

$11,812 

 

   True Cost to Parents/Student

$17,655 


 

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Whether you are ready to move forward with a free customized plan, or you need more information, click one of the links below