Parents

Counting Down

The last summer home can be especially trying for parents with rising freshmen. Ideas of some special bonding time, family vacations, and special dinners are wonderful but often not shared by the kids. They are more interested in being with their friends, the friends they will be leaving in a few weeks. Mom and Dad aren’t going anywhere after all!

These differing perspectives are fine unless Mom and Dad fail to see where their teen is coming from and push too hard to do the things they want to do. Talk to your son or daughter now and get them to commit to one or two family activities that you feel are important. Then let them have the rest of their time. Maybe they’ll spend some of it with you if they don’t feel like they have to. Also, there will be time hanging out when they are just around home or running errands with you that can count as quality time too. Value it.

The best part is that a couple of summers from now they likely will be more interested in spending time with you than they are this summer!

And for those of you who just can’t wait, parents or teens, you might want to Google “countdown timer”.

Saving for College with Young Children

Parents of young children often ask what the best way is to save for college.  With so many choices out there, it can be confusing to consider 529s, IRAs, Savings Bonds, Coverdells, UGMAs,  Zero Coupon Bonds, Insurance policies and a number of others.  But you don’t need to make it complicated, you need to start setting some money aside.  The specific instrument you invest in is not the important point, it is that you are saving at all.  We suggest opening an account (in your name, not your kid’s) with a good mutual fund and making regular deposits.

The reason is simple:  you can always change the fund or tweak the amount, but you cannot get the time back, and time is your biggest ally when you have a financial goal to save for.

Once you’ve started your college fund, you can take some time to investigate the particulars of college savings:  what the options are, how they affect taxes and financial aid, what the dollar goal should be, and make appropriate adjustments.  Those are complex questions and we are happy to help you figure them out, but please don’t delay getting started.

Sewanee and Randolph-Macon Make News

It’s rare that we hear some good news on tuition, but the last couple of weeks have had two noteworthy items.  First, The University of the South announced a decrease in tuition for next year by 10%, or about $4,600.  It will be interesting to watch what the peer institutions do.  Second, Randolph-Macon announced a four year degree guarantee.  If you follow the (relatively basic) requirements but don’t get a degree in four years, the school will waive tuition until you are finished.

These schools are directly addressing financial concerns that families have.  Let’s hope that this is just the beginning of a new type of competition to reduce college costs.

Free Online FAFSA Tutorial Video

We are happy to announce that Fox College Funding has posted a series of video tutorials called My FAFSA Assistant – and it is available to you absolutely free.  The videos walk you through the entire FAFSA filing process, and include answers to common questions as well as lesser known tips.  You’ll be learning from Deborah Fox, one of the nation’s leading experts in college planning.  We are proud to be an affiliate of Fox College Funding.

Every family should file a FAFSA.  There is no reason to be put off by the form – the answers are here!  Unless you earn more than $350,000 per year and are not interested in 6.8% education loans, and will have only one child in college, you may qualify for need-based aid.  The only way to know for sure is to complete the FAFSA.  Visit www.MyFAFSAAssistant.org to register for the tutorial.

Whose FAFSA Is It Anyway?

One of the first things you have to consider before starting the FAFSA financial aid form is “who is going to be in charge?” Here’s what you need to keep in mind.

The FAFSA is for the student, and is under the student’s name and social security number. However, much of the information–in fact, most of the important financial information–pertains to the parents (questions about income and assets.) This type of information is generally not something the kids have ready access to, so parents will need to supply it. Finally, parents have more familiarity with financial forms, and the FAFSA is an important form with a high follow-up verification rate. You don’t want to make a mistake.

One of the most important aspects of the college process is how you can involve you teenagers in the jobs that need to be done. But the FAFSA might not be one that falls into that category for your family. So give that question some thought before you get started and the FAFSA will go more smoothly.

If you decide that you want to retain control, here are some tips.

a. Apply for PINs for you and for your teenager. You each will need a PIN as your official signature on the FAFSA.

b. Use your email address anytime an email address is asked for. This is how communication is handled and you want to be sure you see what is being communicated.

c. You (Mom or Dad) sit down and start the FAFSA, getting through the initial screens of Student’s name, SSN and birthday, and you use your email address and you select the password.

d. Print out a blank copy of either the FAFSA On the Web Worksheet or the Printable FAFSA (both on the FAFSA website) and show your teenager what it looks like. If you want him or her to supply information about his or her own income and assets, that can be a good way to get them involved (but be sure to double check.) If you want to share your own financial information, that’s fine too, that’s your call as Mom or Dad. But you don’t have to if you don’t want to.

e. The EFC will come in the form of a Student Aid Report (SAR) in a week or two, by email. The SAR lists all of the financial information used to calculate the EFC so if you didn’t want to share your financial information, you probably won’t want to share the copy of the SAR. However, you can share what the EFC is so your teenager knows where they stand in the financial aid game.

The FAFSA can be confusing to complete, but you want to get the basics right before you start. There is no right or wrong answer here, but how you handle it will reflect your values, so give it some thought up front.

Divorced Parents and College Costs

A new study by researchers from the University of Wisconsin and Rice University looks at the relative contributions of divorced and married parents to their children’s college costs and comes up with some surprising findings.   One of the more interesting ones:

• Middle income divorced parents contribute significantly more than married parents.

Yes, you read that correctly.  The authors find that in lower incomes, the situation is reversed, with lower income married parents contributing more than those divorced.  But once you move above an  income of  $40,000, it flip-flops.  (The income figures come from 1995.)

Two possible theories are put forward (and other common ideas dismissed.)  First is that non-custodial parents often have something of a “financial role” in their child’s life, and that role continues into the college years.  The custodial parent, on the other hand, may feel the need to “keep up with the ex” once college starts, and they do this by writing a check for college costs.  The students benefit from this parental “competition.”

The second theory, though, is more relevant to college funding planning.  Settlement and support agreements often require ex-spouses to confront future college costs in some fashion.  Because of that, children of divorce may get something that children of married parents do not–a specific plan that addresses paying for college.  The children benefit from their parents’ planning.

Divorce is stressful enough.  A college funding plan that is customized for your family’s needs can reduce that stress and save you money for all the other important things in life.

The Government is Here to Help?

Most people know that there are some tax benefits for higher education expenses, and they are correct.  In fact, the Economic Recovery Advisory Board found 18 “education provisions” for higher education!  What’s more, they have different eligibility requirements, income limitations and phase-outs, and apply to different years of school.  They have different definitions of income and qualified expenses.  Oh and they also overlap–you have to be sure you don’t use the same expenses for more than one provision.

Sound complicated?  It is.  The best example of this is that one of the biggest and best publicized provisions, the American Opportunity Tax Credit, was only claimed on 38% of eligible tax returns, according to a report released last week by the U.S. Treasury.  That says it all.

Make sure your college funding plan includes all the tax breaks you are entitled to.

The College Jobs Gap

The Wall Street Journal reports today that as bleak as the job picture is in America right now, those faring best are college graduates:

The unemployment rate for workers 25-and-older with a bachelor’s degree or higher was 4.6% in August, for example, compared with 10.3% for those with just a high-school diploma. That’s a 5.7-percentage-point gap, compared with a gap of only 2.6 percentage points in December 2007 when the recession began.

Clearly the current economic malaise has increased the relative value of a college degree.  But let’s look at some other numbers.  A recent survey found that the number of people that thought college was a good investment dropped from 79% to 64% over the last year, a reflection on the rising costs.  Also, a diploma no longer guarantees a wage that rises faster than inflation, as the WSJ story mentions.  Quite a contradiction:  if you want to increase your chances of getting a job, go to college; but, the job you get might not give you the earnings you need to offset the huge cost.

Maybe there’s something else going on here.  Maybe there are more variables than simple summary statistics can measure.  Are the students that make the most of their college years doing better than those that slide through?  Are responsible, hard-working kids doing better in the employment world than those with entitlement syndrome?  The numbers won’t say, but parents probably know the answers.

What can you do, other than worry?  (1) Make sure your college costs are as low as possible, following a good college funding plan can help with that.  (2) Realize that behind all these statistics are real students and what is “right” for your son’s best friend might not be right for your son.  By being proactive, you can resist the pressure of getting caught up in what everyone else is doing.  Investigate the options, keep an open mind, and continue to communicate with your teenager.  (3) Don’t get too locked-in to numbers like those reported above, they’ll be different in a year.  What you should get locked-in to though are the principles and values that you are teaching your kids as you take on the college process.

The Importance of The List

Many high school sophomores and juniors and their parents are spending time working on the list of possible colleges to attend.  Input is being sought from guidance counselors and guide books.  It seems that another new ranking of “the best” colleges comes out weekly.  The mail is filled with glossy viewbooks.  Factor in the silent network of friends’ opinions and  Facebook comments and before you know it a list starts to form.

The list matters, maybe more than you know.  Schools that are left off the early editions are hard to add later.  The focus is on winnowing, not expanding.  Perhaps that’s a practical necessity, but that also means you need to start with a good foundation.  Don’t worry about being selective initially; in fact, be inclusive.  Make it a point to add schools that you have to research to find, ones that don’t come immediately to mind.

This is especially true for parents.  Our impressions of schools might be based on more years of life than our teens but that does not mean they are more accurate if we are relying on ideas we’ve held for years.  Colleges change, often dramatically, and if we think we know exactly what a school is like because that’s how it was when we were teenagers we are sorely mistaken.

This is a two-part challenge. To students, keep your mind open.  Don’t get locked in to big name schools, or to one rating system, or to one counselor’s suggestions.   To parents, don’t rely on stale opinions.  Do your own, new research.  Make a point to find at least five schools that surprise you as possible places for your son or daughter.  They are out there, you just need to look.

Our College Match helps your family do just that.

When does your teenager become an adult?

A recent spate of articles on “Letting Go” and “Helicopter Parenting” surrounding the difficult event of parents dropping teenagers off at college included one about parents who choose to stay around after the drop-off for a couple days.  Why would they do that?  “Just in case Junior needs something.”  Maybe that’s not the real reason.

Colleges are seeing this more and more and some are scheduling specific times to say goodbye.  Some have workshops on transitions.  Some suggest parents rediscover their romantic lives.  Expensive therapy!

This brings up the question, when does your child become an adult?  Is it 4pm on drop-off day? Is it his 18th birthday; her 21st?  Obviously there is no one answer, but the reality is that when you leave them at school, as far as everyone else is concerned, they are adults.  The challenges that start from that moment are huge:  coed dorms, roommates, parties, homework, varied schedules, group activities, a new town to drive around in.  How your teenager handles these has nothing to do with the definition of when they become an adult and everything to do with where they are on the maturity spectrum.

Our job as parents is to start early, giving our teens pieces of freedom while they are in high school, seeing what their choices are, and talking about them.  The more we do that, the better they can handle what college life throws at them.  So parents, talk to each other about how you are doing.  How much freedom does your son or daughter have to make choices, including ones you don’t agree with?  After drop-off time, you won’t even know the choices they make.  Start preparing them for that now, at home, where you can help.