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College Planning: The Truth About the Financial Aid Process

Peter Lampert, CPA, Tax Attorney, Financial Advisor | Lampert & Associates LLC

The truth about how the financial aid process works and the options to pay for college with FREE money—scholarships, grants, and tuition reductions,

or in other words …

… How to afford a great-fit college regardless of cost AND qualify for tens of thousands of dollars in scholarships, grants, and tuition reductions without bankrupting your retirement even if you earn too much to qualify for aid, but earn too little to pay tuition at top schools.

What do you want for your college-bound child?

As parents, we have a dilemma: paying for college, one of the most stressful and expensive experiences in your life, all while planning for retirement, one of the most amorphous and long-ranging experiences in your life.

As you consider how you pay for college, you must fundamentally decide what you want for your child -- a diploma or an education?

Are you a parent who believes the MYTH that “anyone can get a great education, because it’s what you put into your college experience that really counts”?

Don’t believe it—your child needs ample opportunities as well as motivation!

Often, large colleges do not have enough internships or research opportunities available for all students. If there is only one research opportunity and 200 applicants, 199 will be rejected. At large institutions, it’s not unusual for a student to graduate with only one internship or research experience.

Many private colleges, on the other hand, immerse even first-year students in these crucial hands-on experiences.

This difference in experiences is incredibly important—not only in education itself, but because it relates directly to future employment and acceptance into graduate school.

As a parent of a college-bound student, ask yourself: “What do I want for my child: a diploma or an education?”

Essentially, you have two paths to choose between:

Diploma Only: Are you a parent who chooses to focus on the money first, while the quality of your child’s education is placed second?

This might be the right approach for the average college-bound student, but it is less relevant for the “true learner.” In other words, get a degree by hook or by crook and as cheaply as possible to get out of college and start achieving your real goal, which is making money.

Does this sound like you? Then your child should absolutely go in-state to Big State U, zip through in three years, skip classes, and take the easiest major that will get them the highest GPA. The diploma is all that counts; education itself is discounted as a necessary evil. Pay for College Without Blowing Up Retirement is of no use to you; please pass it on to a friend.

Education: OR are you the parent encouraging your child to discover their great-fit college and then tackle the hardest subjects, learning as much as they can, leaving the money part to sort itself out? Do you place a high value on education and feel that learning is never wasted?

It is not a waste of your student’s time to be in college. It’s the exciting beginning of a lifetime of learning. You feel that there is tremendous “value-added” to real education that cannot be measured in money.

The question I always get is “But Peter, private colleges are so much more expensive than my local state college or university.” And I always answer “Absolutely not! Private colleges are often cheaper than your local state college or university.”

Colleges are Priced Like Airline Tickets

After 9/11, my wife was mobilized by the Department of Defense. Eventually, she worked at the Defense Department’s U.S. European Command and my two daughters, Natalie and Katrina, attended the International School of Stuttgart (ISS). ISS turned out to be a great experience, and our daughters grew to love the diverse student body, which generally broke down into 1/3 American, 1/3 German, and 1/3 various other nationalities.

Living in Germany turned out to be a great international experience for my family. For me, though, this international experience required that I “commute” every two-to-three weeks between northern Virginia and Stuttgart—a commute I did for five years. You might expect that over those five years I’d have purchased enough round-trip tickets on United Airlines to have bought one of those 747 jets in my name! Not quite, but with careful planning and understanding of how airlines price tickets, the commute became very manageable.

Here’s how I bought a ticket. First, I focused on only one great-fit route from the major international airport in Frankfurt, Germany to our major international airport in northern Virginia (Dulles) on the great-fit airline (in this case, United). Second, I looked as far into the future as was permitted on the United website paying special attention to low-cost dates. Third, I booked round-trip tickets from Germany, paying around $600 round-trip on average.

Compare this process to buying a ticket from Northern Virginia to Stuttgart with two days’ notice—the cost would balloon into thousands of dollars. The airlines charge this way because they can; their job is to maximize income from every seat sold!

Likewise, a college can and will charge as much as it can for every student’s “seat” because its job is to maximize income. However, just as with airlines, with careful planning and selection of the great-fit college, you can minimize the cost of your student’s college education “ticket.”

Minimize the Cost of the College Education “Ticket”

Attending your local in-state college is equivalent to buying an airline’s economy ticket. Like going to a public in-state college, flying economy is comfortable, familiar, and seems like a good deal. People often have good experiences flying Southwest, as they imagine they will with a public in-state college—neither is luxurious, but both “fit the bill.”

But the bottom line—what you really need to understand—if you choose the economy ticket path you likely are looking at the cost of the college first before everything else. This leads you to the least cost public in-state college or university.

However, there is also a first-class approach to paying for college. Like going to a well-known national private university, flying first class is upscale, desirable, and seems like a good choice. People often have good experiences flying first class, as they imagine they will enjoy on Virgin Atlantic.

Likewise, your child will enjoy attending a great-fit private college or university. There, your child receives a superior education. At a private college or university, your child will excel, “kick ass,” shine, and stand out! Private colleges are a place of learning and personal growth. The kind of place where your child will develop a life-long love of learning!

Again, the bottom line—what you really need to understand—if you choose the first-class approach, is that families on the first-class-ticket path tend to look at the name and reputation of the college or university first before everything else.

This leads them to some of the most expensive private colleges or universities. Going to an expensive national private college or university is terrific. It’s like flying Virgin Atlantic first class. It's luxurious and makes for a great trip. It's just so expensive—upwards of $70,000 each year, or $280,000 for four years.

Is it possible to choose a first-class experience but at an economy price approach to paying for college? Absolutely!

Each college has an advertised sticker price for the cost of a year of attendance. While this doesn’t change based on the day you submit your deposit or how far in advance your student sends in their application, there are other ways colleges can adjust this sticker price for certain circumstances.

You may think that only students who face financial hardship or get a perfect score on the SAT or ACT are the ones who receive price reductions on the cost of college education. Happily, this is not the case. Most colleges, especially private ones, have money to allocate to students they wish to attract.

The Business of Higher Education

Colleges Are Businesses. Just like Ford, Google, Mcdonald's, and Bank of America, colleges, both public and private, have a bottom line. They charge for their services, they have expenses, and they have a “production line.” In the end, the college president and the Board are held accountable for the net profit or “bottom line.”

The #1 Goal of Colleges and Universities is to Look Out for Themselves. Sorry, but they don’t have your back. Let’s be clear: First and foremost, colleges and universities intend to meet their needs and, secondarily, you and your student’s needs.

Now, colleges aren’t hiring students like other companies hire employees, at least not in the traditional sense. Colleges are, however, looking at your child’s resume, transcripts, and application, comparing that information to other applicants, and predicting how successful your student is likely to be at their college.

If your child has done their research and applied to colleges where they are extremely competitive compared to the rest of the applicant pool, your child stands to benefit greatly from the bottom-line business approach of colleges.

Students predicted to do well in college based on their application materials are much more desirable to colleges nationwide. Colleges want students who are likely to graduate within four years, improve their college’s ranking, and successfully enter the workforce singing the praises of their alma mater.

FREE Money

And what’s the best way for a college to convince a desirable student to attend their college?

By offering them FREE gift aid – scholarships, grants, and tuition reductions.

So, how can your student know if they’re desirable to colleges? If your student is in the top 25% of applicants for a particular college, your student’s likelihood of receiving a package of merit aid dramatically increases. Therefore, as you and your college-bound student create a list of possible colleges, investigate the academic profile of last year’s incoming freshman class.

Using your student’s GPA and standardized test scores as a measuring stick, your student can get a good sense of their chances for acceptance from the get-go. With this information, your student can make necessary adjustments to either become more desirable to a specific college or research other colleges where their chances of being accepted fare better.

More money for college leads to less money out-of-pocket for you, and, therefore, more money remaining for retirement.

So, yes you can…

Afford a great-fit college regardless of cost AND qualify for tens of thousands of dollars in scholarships, grants, and tuition reductions without bankrupting your retirement even if you earn too much to qualify for aid, but earn too little to pay tuition at top schools.



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