This article was originally published in May 2018 and has been updated to reflect 2019 tax laws.
I recently helped my two children through the college planning process. I learned a great deal and had a lot of help from friends who were a few years ahead of me in the process. If you're like me, hoping that your kids will find their dream school, get accepted and get great scholarships, then I think this information will be helpful to you. Here we go:
when to begin the college search:
Timing; how early is too early and how late is too late? My son started his search near the end of his junior year, my daughter near the end of her sophomore year. Each person is different, and it will depend on how many schools you want to visit and your family's schedule. We were also more organized with he second child; you learn as you go. I do think you have to find a balance. If you are missing out on what high school has to offer because you are focused on a college search, maybe you should take a step back.
how to search for the perfect college:
1. use the internet
Start your search on www.collegeboard.org. Your children will know this site because it is where they log in to sign up for SATs and PSATs and where they get their scores for those and for AP tests. The site has a great search engine, where you can search for the perfect college. You are able to sort by big and small criteria. “Within how many miles of home do you want to be?” and “cars allowed for freshman” are samples. You start with 3700 colleges and my daughter got down to 15 using the filters. It can make an overwhelming process seem possible and can motivate a teenager to really look at their options in a way they understand. I must admit I spent hours on this site and it is definitely an upgrade from the huge book of colleges I had to look through back in the dark ages.
2. use the high school's tools
Often your high school will also have a program that will help with your search; our school had Naviance. It allows you to enter the colleges your child is looking at and you can see if anyone else from your high school has attended and how your child’s grades compare to those that were accepted. It will give you an idea if the school is anywhere from a safety to a reach school.
It is important to manage expectations, your child’s and yours. You don’t want to visit and fall in love with a school that is out of reach either scholastically or financially. Programs like Naviance will help with the scholastic expectations and the net price calculators (see Tuition price tags) can help with the financial expectations. Collegeboard.org also has a filter for SAT and ACT scores and school selectivity. You can enter your child’s scores and filter out any school that would be out of reach. No reason to look at Harvard, Princeton or Yale unless you have almost perfect SAT scores.
3. use an independent college search consultant
Some families will choose to use independent college search consultants. I don’t have any personal experience with these services and have heard both glowing reviews and horrible anecdotes. My best advice would be to do your research before hiring anyone to help with the process. Asking the guidance office at your high school if they have any experience with the company, would be a great start.
4. use the high school's guidance office
Depending on your school, they can be an amazing asset or something much less helpful. It is a great place to start and often the school will mandate that all juniors meet with their guidance counselors to create a post-graduation plan. My son’s guidance counselor was a huge help both with information and encouragement. There was a new guidance counselor when it was time for my daughter to go through the process and even though she was a lovely woman, she wasn’t much help. Luckily as I said, we had learned a lot the first time around.
schedule College visits:
Visit the schools if you can. Make your children go if you must. Take the tour. Each school has a different feel and if your child visits the school they will be more invested in their decision. My daughter and I visited 6 schools. She had already been to three schools with her high school which brings all students on tours of 3 in-state colleges. If your high school doesn’t do this, ask why. It is important and very helpful. She had also visited her brother’s school and has been to the University of Southern Maine and the University of Maine with extracurricular activities while in high school. So, she has seen multiple colleges.
On our college road trip, we took the tours, listened to admissions speeches and drove around campus and the town/city the school was in. After each visit, we would rate the school, the tour, the tour guide, the speech, the campus – everything we could think of to compare the schools, so she would know how to choose. What I didn’t know is that even though this was all helpful, it was not necessary.
We visited one school, it was the fifth of the six schools, and I knew before we got back to the car that it was her school. I kept my mouth shut, which is hard for me, but she needed to make the decision. She told me that it was the first school that she could see herself attending – she could visualize herself on this campus. We still rated the school on all our criteria factors and this school didn't rate the highest for the tour, the tour guide or the speech, but something about the entire package spoke to her. And that is why you visit!
figure out the total cost of colleges:
1. merit and financial needs-based aid
College tuition is crazy at first glance. But many schools have financial aid, both merit and financial needs based. All college websites will have a net price calculator where you can enter your information and the calculator will give you a rough estimate of what you will pay. This can be very helpful especially when comparing different schools. Don’t look just at the price tag. Some schools give great scholarships and grants and sometimes the school with the most expensive price tag ends up being the least expensive to attend.
We have had several clients with nicely funded 529 accounts have their children receive grants from smaller schools. These schools like diversity and that includes wanting students from as many states as possible. If you are from Maine or New Hampshire, your child may be offered a grant just for being from a smaller state. The school doesn’t tell you why you received the grant, but they are pushing to be able to print on their marketing material that they have students from all or most of the 50 states. Sorry NY and CA clients, bigger states usually won’t get this benefit. You can’t count on getting grants, but it is a nice surprise when they happen.
3. College endowments
Small private colleges sometimes have great endowments. We always hear about the endowment that Harvard has – in case you were wondering it is $36.4 billion. Yes, that is a B. But many of the smaller private colleges have nice size endowments they share with their students. It might surprise you that sometimes it can cost less to go to one of the higher priced small liberal arts colleges than to go to an in-state public school – it worked out that way for both of my two kids.
4. FAFSA and EFC
There are colleges that commit to meeting 100% of the family need. What this means is that you complete the FAFSA (Free Application for Federal Student Aid) and the amount that it calculates is the Expected Family Contribution (EFC). This is what the school will charge you. The school covers the remaining bills with grants. If the student is full time this will cover tuition plus room and board. The tricky part is that most of the schools that make this commitment are difficult to get into. Most students accepted into these schools will have graduated high school with an A or A- GPA.
I told both my children when they started high school that school was their job. They both were active in extracurricular activities and at times had part-time jobs, but school was their focus. There isn't any part-time job that could have earned them the amount that good grades earned them in grants. In the www.collegeboard.org search, you can search by the criteria for the schools that commit to meeting the family need. Look under the tab “Paying” one of the items is “% of financial need a school can meet.” Swing the bar all the way to 100%.
5. Other expenses
Parents often forget about “other expenses." By this, I don't mean extra fees and books. We all seem to understand that there are always a few extra fees that will be added to the tuition bill and we understand buying books. The extras I am referring to are travel expenses and extracurricular activities. Between Fall break, Thanksgiving break, Winter break, Spring Break and getting your child to school in the Fall and home in the Spring, there are 5 round trips. If your child is more than 10 hours away, driving home for a four-day break seems like cruel and unusual punishment and this is if they have a car at school. If not, do you really want to drive back and forth twice in 4 days? So, do you tell your homesick freshman that they can’t come home because the break is too short – no, you fly them home. At least that is what I did. Travel costs add up quickly, especially if you want to visit for Parents’ Weekend or if you are me, and you want to see your son play John Proctor in “The Crucible.” It was worth it, but it adds up.
When my son went to college, we told him that his spending money was on him. He has a part-time job at school and his fun is his responsibility. Some families wouldn't agree with this approach, so there could be extra spending on extracurriculars and just plain fun. All of these extra expenses cannot be covered by 529 account funds. You can pay for tuition, fees, room and board, books, and computers with 529 account funds but, not travel or other miscellaneous expenses. Sorry, fun is not a 529 qualified expense.
Going back to books, the world has changed since I was in college in the dark ages before the internet and Amazon. I went to the school bookstore, hoped to find some used books on the shelf, and paid high prices for books I would use for 3 months. Now there is Amazon. You usually get the list of books required a week or so before the semester begins, and you can look up the books by the ISBN (International Standard Book Number). This will ensure that you are buying the accurate book and edition. You will be able to purchase the books, new or used, or rent a book. Often buying used will save you enough money that renting won't be your choice, but my son took physics and the textbook was very expensive. He knew he would never want to keep the book and this book was a new addition, so the used options were limited. We tried renting. He received the book, used it, and at the end of the semester mailed it back all for a fraction of the original price. My son keeps any book he finds interesting and sells back all the rest. This keeps the cost down each semester and keeps the clutter down too. He has chosen to keep most of the books from his major classes, and because we are saving money by buying used, he doesn’t feel the need to sell everything back.
One more tip, have Amazon ship the books directly to the school. You will be purchasing the books before the semester begins while your child is still home for the Summer or for Winter break. Ship the books directly to school so your child won’t have to worry about fitting them in a suitcase. Most schools will hold packages at the school post office for 5 days.
Applying for college:
The application process is another step that has changed. Many colleges now accept the common application which you can access at http://www.commonapp.org/. This means that you can complete one application and digitally submit to the colleges of your choice. The site states that 773 colleges accept the application. Some schools will request an additional essay specifically for their school. This is in part to reduce the number of applicants that are not really interested but just throwing everything at the wall and seeing what will stick.
Most high schools will offer assistance with writing college essays and have even it included as part of the junior English curriculum. The essay is important as it can help the student stand out. Polishing the essay is imperative, you don’t want to stand out for poor spelling or bad grammar. Many English teachers will offer to meet after school to help edit and proofread the essays. Take them up on this, it can make a difference.
If possible, schedule an interview. Many colleges have traveling admissions personnel who will come to your area. My daughter’s school is in Pennsylvania, and one of the admissions deans came to Portland for interviews. It gave my daughter someone to personally ask questions. She emailed him multiple times over the application process, and he even called her to let her know she had been accepted. Again, it helps you stand out which can make a difference.
If your child has a clear first choice in schools, encourage them to apply early decision or early action. Early decision is binding, you are telling the school that if they accept you, you will attend. You can only apply early decision to one school. They will give you a financial aid estimate to help with the decision process. Early action is not binding. Most early decision or action applications are due on either November 1st or 15th. With both, you usually receive your application response in December. Most regular decision applications are due by January 1st or sometimes January 15th and you will get your decision back in March or April.
Why is applying early a good idea? In most cases, you will increase the chances of being admitted. You also know before Christmas and you and your child can sit back while everyone else stresses about deadlines and decisions. The downside is giving up the ability to compare the financial aid packages of different schools. If you are applying to a school that meets 100% of family need, the offers should be similar but other school offers can be very different. Early decision schools will let you out of the commitment if the financial aid is not enough for your family. But they are very serious about the rule of only applying early decision to one college.
save for college using 529 Accounts:
What are 529 accounts? They are qualified tuition plans that are authorized by Section 529 of the Internal Revenue Code. More simply, they are tax-advantaged savings accounts for college. You deposit funds into the account, invest them and allow them to grow. If you use the funds for college, the growth is never taxed.
There are some great advantages to 529 accounts. The IRS hasn’t set a specific contribution maximum, you can contribute what is necessary to pay for qualified educational expenses. Many 529 programs will set a maximum balance for the account at $300,000. There are no income restrictions on contributions. Anyone can contribute to the account. As a parent or grandparent, you can open a 529 account for your child or grandchild. Or one of you can open the account and have both parents and grandparents contribute to the same account. The account owner retains ownership of the funds. Unlike a custodial account, it does not become the child’s asset at 21. The beneficiary can be changed. If one of your children or grandchildren receives a full scholarship, the funds you saved for college can be used for the next child. The beneficiary can be changed to any family member and the definition of family member is very broad.
The funds are still yours if you must withdraw the funds for a non-education related expense you can. The earnings would be taxed and assessed a 10% penalty. The principal is yours, the tax and penalty are only on the earnings. If your child earns a scholarship, you can withdraw the amount up to the scholarship without penalty, but again the earnings will be taxed.
We have many parents and grandparents who have opened 529 accounts to save for college. Often, they will gift up to the gift tax annual exclusion which for 2019 is $15,000. But you can also front load a 529 account. This means that you can give up to 5 years of gifts in one year. So, for one person this would be $15,000 times 5 or $75,000. You would then not be able to gift to that same person until the 5 years had passed. But this is a way to put a large sum into a 529 and let it grow tax-free. The 529 account does not have a contribution limit but to stay within the gift tax exclusion, you would need to stay under $15,000 per individual per year, unless you are frontloading.
be smart about Student loans:
Any day of the week, you can read a news story about the student loan crisis. With some careful planning, your child doesn’t have to become part of the story. There are different types of student loans:
Often federal loans will be part of the financial aid package offered by your college. If you are a dependent student, the maximum you can borrow from a federal student loan is $27,000 over 4 years. Students get into trouble when they add together private and federal loans. I am not suggesting that $27,000 is a small amount, but it isn’t the $100,000 and above, that every news story is touting. My advice would be to borrow only what you absolutely need and to consider the cost/benefit of the education. If you are planning on being a social worker or a teacher, both wonderful career choices, should you start out with more than a year’s salary in debt? There are other options. In-state tuition is a beautiful thing. Not everyone can complete college in 4 years, sometimes you take longer and work to help cover the cost. With determination and a plan, you can earn your college degree.
Preparing for college can be an overwhelming process but if you break it down into chunks it can be more manageable. Start with an honest discussion concerning what your family can budget for what can be a very large investment. Next, start your search on Collegeboard.org. Visit, take the tour and enjoy the experience. Talk about the process with your child. Ask questions when you have them. Admissions officers, teachers, guidance counselors, other parents and RSWA are all good resources. You aren’t the only one who is sending their child off to college, so lean on others who have been there. It really does help.
Tell me what you think. This is the first of what may become a series of articles that I will be writing. They will be about planning topics, which I have had personal experiences with. I hope to help, inform and maybe entertain and would love to hear what you think. Feel free to reply to this email or you can email me directly at email@example.com.
My article next will be “Things I Have Learned: Losing a Family Member.”