People ask me all the time “what does a college financial counselor do”?
My business involves helping families determine how they will pay for college. This begins with helping them prepare a college budget so they know the maximum amount they can afford to pay for college. Based on this, I tell them which colleges will fit within their budget (including community college) and explain the expected earnings and careers based on their choice of major. I help many families who have plenty of money to pay for college. I help them make sure they strategically use their resources to maximize their amount of financial aid while minimizing their income, gift, and estate taxes.
But based on my background as a C.P.A., I believe that most families cannot afford to send their children to their top choices of colleges. Many of my clients get accepted to elite colleges but cannot afford them. When I help my families prepare their CSS Profile financial aid form, I make sure we put the actual amount the family can afford to pay for one year of college. I am shocked that the colleges, knowing this information, continue to provide acceptance letters with high prices after grants and scholarships. I had a family yesterday, who put on their CSS that they could only pay $10,000 a year for college. An elite college sent them a package with the net annual cost of over $55,000. Where do they expect the family to get the other $45,000 each year? This is becoming more of the norm. Part of my job is to tell families what the long-term cost will be from taking on such large amounts of debt to pay for college.
I know that I am an anomaly, but I believe someone has to inform families of the consequences of their choices.
This is what I do.
College Finance Guy
We have a crisis in the America and it is getting worse. For at least the past decade families have been spending substantially more money on a college education than they can actually afford. I call this the “silent crisis”. This is because the crisis is caused by a lack of communication. Many parents and students do not discuss how much they can actually afford to pay for college. This crisis is exacerbated because families do not discuss with other families the cost of college and how they plan on paying for college. Therefore, families choose the best “fit” college for their student and worry about how to pay for it later.
This is causing families to take on a great deal of debt to pay for a college education. Parents are having to delay their plans for retirement, and students are delaying everything from marriage, home ownership, starting a family, to starting a business of their own. To make this worse between 35 to 40 million Americans have dropped out of college without receive a degree. I’m sure many of these families have taken out loans for this. Nationally, about 70% of U.S. high-school graduates enroll in higher education, but only 37% of those have graduated eight years later.
Because of the student debt loads, 79% of parents still provide financial help to their adult children. Parents spend $500 billion annually on their adult children, ages 18 to 34. This includes help with food and groceries, cell phones, car expenses, rent, and student loans. In the meantime, many adult children are also hoping to tap their parents for graduate school, weddings, and down payments for a home. Add to this that thirty-one percent of early adults also live with their parents today.
How do we solve this Crisis? Have families prepare a College Budget before they apply for college. They will then know the sources they will use to pay for college and the amount of debt each family member has agreed to take on. Based on this budget they will know which colleges they can afford. This hopefully will lead them to look at all the college options including attending a community college first before transferring to a four-year college.
I have given financial aid presentations to many high schools in the San Francisco/Bay Area. I always end my presentation discussing the importance of having families prepare a college budget together. I’ve noticed over the last few years high school counselors are realizing the importance of having this included in my presentation.
As a country we need to start encouraging families to discuss their college budget before the student’s senior year.