Reality Check | Luanne Lee | YOUR COLLEGE PLANNING COACH

LWM_MJ15_web_Page_29Spring! The time of year we all look forward to. It’s the end of winter with warmer weather, longer days, green grass and flowers blooming. Spring is also the time of year I start getting “the phone calls.” The calls I dread each year that start out with “Hi Luanne, so-and-so said if anyone can help us you can.” These calls all start out with the same stressful tone and I’m left to deliver the unfortunate reality of college-planning-gone-wrong to a range of parental emotions that include disbelief, dismay, and ultimately anger.

Allow me to share:

My 4.2 GPA, 2080 SAT, all AP classes, son/daughter didn’t get accepted at UVA/Tech/JMU…WHY?? Or…They got accepted, but the Financial Aid Award only offers loans! Where is the aid? Where are the scholarships we expected for our bright child? Or…We only applied to state schools because the privates are SO expensive!

Reality: The competition is fierce! In the 2014/15 school year UVA received 31,021 applications, 8997 were accepted, 3706 enrolled. At Virginia Tech 20,744 applied, 15,067 were accepted, 5,474 enrolled. At James Madison 22,550 applied, 14,823 were accepted, 4,358 enrolled. Approximately 30% of enrolled students were international or out of state students.

Reality: At most state schools the largest piece of the Financial Aid pie is in Federal Loans. The only Grant Aid received is when there is financial need and that is when you have an AGI of less than $35K.

Reality: Private schools had a 47% average discount rate in 2014. Private schools offer Merit Scholarships. Private school students graduate in 4 years 62% more than state schools.

The school says since we didn’t file the FAFSA we will pay full price. We didn’t file because our guidance counselor/CPA/Financial Advisor/ work buddy/neighbor told us we make too much money to qualify so why bother.

Reality: Make sure the advice you take is coming from someone who specializes in college planning. Everyone should file the FAFSA, no matter what their income. The FAFSA is the gateway to all Financial Aid, both Need and Merit Aid.

My star athlete (soccer/lacrosse/baseball/football/track, etc.) didn’t receive any athletic scholarships!

Reality: Athletic scholarships are highly misunderstood. Most athletic scholarships are shared amongst many and nowhere near your expectations.

I have a 529 plan. Isn’t that supposed to cover everything?

Reality: Many parents confuse 529 plans and the state prepaid tuition plan. The prepaid tuition plan ONLY covers tuition and mandatory fees at a state school. Room, board, books, transportation and other fees are not covered. Plus, if a 529 plan loses 20% in stock market volatility, it can be very
underfunded. Unfortunately, I find this very common.

The ultimate heart breaker: Luanne, we have a junior and sophomore in college. We have had a job loss/medical emergency/ lost money in the market/ death of a parent or some unprepared for life event. We have continued to overfund our retirement, pay extra to our mortgage, used up our savings and have run out of resources. How can we tell our children they have to drop out?

Reality: Too often I find these parents turned down the student Stafford Subsidized loans that carry a 0% interest rate with no payments while the kids are in school because “We didn’t want our children to have college debt” The mortgage lender won’t let them access the extra equity in their mortgage because now they can’t qualify (to get their own money). They can’t/shouldn’t borrow from the 401K. They have given all of their extra money, and control, to bankers who can say NO! Life happens! Plan for the worst, look at the reality of your finances and plan strategically.  When money is tight, 2 years at Community College can save many families $40,000 or more per student on a 4 year degree. The most expensive part about college? Starting and not being able to finish!

There are plenty of other situations I have encountered, especially during this time of the year when college expenses hit home, literally. Be sure to follow the advice of a person who specializes in college planning and you can avoid many of these pitfalls in your childrens’ educations.

By Luanne Lee, CCPRS

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