Plan and Finance Your Family's College Dreams

Praise for

Plan & Finance Your Family’s College Dreams

Plan and Finance Your Family’s College Dreams is a well-written, comprehensive road map simplifying complex financial strategies to saving and paying for higher education. Build the best personal college savings plan, navigate student loans to your advantage, get admitted to the best university possible—it is all here, and more, in one volume. This book is an essential reference for families of all income levels, with children of all ages, to secure a financially stress-free college admissions experience. In my thirty years in the industry, I have never seen a better guide for financing and preparing for college. This book is a must have.

William W. Montjoy, Honorary Chairman and Senior Counsel

Global Education Group

Plan and Finance Your Family’s College Dreams is a wonderfully comprehensive guide to college admissions and financial aid from two professionals who know this world inside and out. It is especially helpful in the long-range perspective, as the book offers guidance to parents who want to be certain that their children have the best opportunity to achieve their higher education goals.

William Fitzsimmons, Dean of Admissions and Financial Aid, Harvard College

Sally Donahue, Griffin Director of Financial Aid, Harvard College

This book is chock full of comprehensive information, tips, and grade-specific direction and action items. This book is a great resource for parents interested in how best to save, pay, and successfully help their children prepare for and navigate the college admissions process. It’s an easy read with practical answers to questions that cause families to be very anxious about their children’s college prospects.

William D. Hansen, President & CEO, USA Funds

Former Deputy Secretary, U.S. Department of Education

Hupalo and Mazareas pull together the complex financial and college planning issues facing families and make them easy to understand. Their explanation of why it is important to start saving early—even small amounts—is straightforward and compelling, as is the discussion of ways to save for college, including the benefits of 529 Plans. This step-by-step guide will greatly benefit both parents and students, with great practical advice for all situations. The focus on age-appropriate financial education for children of all ages is an added treat. This comprehensive resource demystifies the college planning and application process and shows that with planning and teamwork, families can make their college dreams come true.

Mary Morris, CEO, Virginia529

Chair, College Savings Foundation

This book is a must read for families and financial advisors focusing on paying and planning for college. As a founder and manager of an investment firm, I will recommend this book to my financial advisors and their clients. A truly comprehensive and valuable book and resource for all engaged in college planning.

Larry Glazer, Founder Mayflower Advisors, LLC

Top 250 Wealth Advisors Award Recipient

We all want our children to succeed in life. Education is one of the most important elements in the path to success. This step-by-step guide is an excellent resource to navigate this path.

Jack L. Kopnisky, President and CEO

Sterling National Bank

Dr. Peter Mazareas and John Hupalo’s book provides students, parents, and family members an excellent resource that is very thorough and easy to understand. Plan and Finance Your Family’s College Dreams offers families the extensive (wide-ranging) information about the financial aid process and the guidance needed to establish effective savings and financing plans for a college education at any stage in the student’s life.

Bernard (Bernie) Pekala, Director of Student Financial Strategies

Boston College

Two things keep parents, students, and grads from properly and responsibly managing their debt: easy access and accurate information. John Hupalo and Dr. Peter Mazareas adroitly address both at a time when rumors of a crisis loom and young borrowers and their parents need to be more educated on financing, now more than ever before.

Vince Passione, CEO and Founder

LendKey Technologies

The high cost of college and the ensuing student debt has derailed dreams for young people today and, in many cases, led to devastating consequences. That’s why this book is such a worthwhile investment—it empowers families to become smart shoppers about their college choices and plot saving strategies that realistically fit their financial circumstances. I highly recommend it.

Bob Carr, Founder and President

Give Something Back Foundation

Plan and Finance Your Family’s

College Dreams

A Parent’s Step-By-Step Guide from Pre-K to Senior Year

John A. Hupalo and

Peter Mazareas, Ph.D.

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e-ISBN: 978-0-7689-4138-8

First Edition

Table of Contents

Foreword

The Challenge All Families Face

As Parents, We’ve Been There

Introduction

How This Book Will Help You

Part 1: Financing College

Part 2: Preparing for and Applying to College

Part 3: Pulling It All Together

Help Your Child Plan, Prepare, and Succeed

PART 1: Financing College

Chapter 1: Saving for College—Start Now!

The Power of Compounding—Start Saving Today

Savings Vehicles: Your Mileage May Vary

Investment Choices: Cash Accounts, Debt, Equity, or Some of Each?

Chapter 1 Takeaways

Chapter 2: 529 Plans—An Excellent College Savings Vehicle

The Uniqueness of Section 529

College Financing Crisis in the 1980s and 529 Plans

Section 529 Becomes Law in 1996

The College-Financing Crisis Continues

Section 529 Plans Today

Finding the Right 529 Plan for You

Constructing Your Family’s Savings Plan

Section 529 Plans: Commonly Asked Questions

Chapter 2 Takeaways

Chapter 3: Financial Aid Primer—The Basics

Introduction to Financial Aid: Make Sure Your Aid Is Actually Aid

Your Financial Aid Package

College Discretion in Adjusting the Aid Package

Education Benefits for Members of the Military

Chapter 3 Takeaways

Chapter 4: Scholarships—Get Free Money

Outside or Third-Party Scholarship Providers

Chapter 4 Takeaways

Chapter 5: Student Loans—Finding the Right Balance

Some Background Information

The Good, the Bad, and the Ugly of College Loans

Federal Loan Program Options

Smart Borrowing Best Practices for Parents and Students

Defaulting on Student Loans

Create Your Family’s Loan Plan

Chapter 5 Takeaways

Chapter 6: Tax Benefits for Higher Education—Tax Credits and Deductions

Tax Consequences of Scholarships

Chapter 6 Takeaways

PART 2: Preparing for and Applying to College

Chapter 7: The College Admissions Process—Prepare, Prepare,

Prepare

Selecting Colleges

Early Planning Pays Off

How Colleges Evaluate Applicants

Chapter 7 Takeaways

Chapter 8: The College Application—Pulling It All Together

The College Essay or Personal Statement

Letters of Recommendation

The Application Is Ready: What’s Next?

The Interview

Decision Time—and What to Do

After the Decision: Plenty to Do

Chapter 8 Takeaways

Chapter 9: Financial Aid—The Second College Application Process

Don’t Mess with Deadlines

File the Forms: The First Step on the Road to Receiving Need-Based Financial Aid

The Base Year is Very Important

Strategies to Maximize Financial Aid

Negotiating the Best Possible Financial Aid Package

Chapter 9 Takeaways

Chapter 10: Filing Financial Aid Forms—It’s Worth the Effort

No FAFSA®: No Federal Aid For You

About the Federal FSA ID

Filing the FAFSA®

CSS/Financial Aid PROFILE®

Chapter 10 Takeaways

PART 3: Pulling It All Together

Chapter 11: Financial Literacy—For High School and College Students

Budgeting

Credit Scoring

College Loan Refinancing and Consolidation

Chapter 11 Takeaways

Chapter 12: Create a Family College Plan—You’ll Be Glad You Did!

Here’s What You Need to Do

Acknowledgments

Appendixes

Appendix A: 529 Programs by State

Appendix B: Invite Education: College Planning Center

What You Will Find at www.InviteEducation.com

More About www.InviteEducation.com

Index

Foreword

Fortunately, there are only two questions that students and families have to answer when it comes to college:

•

Can the student get into the school they want?

• How can we pay for it?

Those fifteen simple words sure cause a lot of anxiety for families.

College planning can be a stressful and confusing process and is particularly overwhelming for those who start—or think they start—too late. Many parents feel ill-prepared to deal with the complexities of saving for college and then successfully navigate the college admissions process. The result: Many families simply wait and defer to high school guidance counselors and begin to focus in the child’s junior year. Other parents—some in panic mode—employ expensive college coaches or college consultants to help them with the college process. Either way, the die has already been cast by then, and meaningfully affecting a more positive outcome is quite difficult.

This book is designed for parents with newborns to high school seniors. The primary goal is to demystify the process by providing age-appropriate guidance and information to help you understand how to plan and save for college for children of any age. As parents, we want to increase our child’s college options and ensure their success when it is time to select, apply to, and attend the college of their dreams. Starting a savings plan as early as possible contributes to the attainment of that dream by providing increased college options, while minimizing burdensome college loans for you and your child.

Here’s what we believe:

• You will be significantly better off if you start planning and saving now—no matter how old your children are or what grade they are in. Even minimal attention or small amounts of savings will compound and produce larger gains in the future.

• You can take control of the college admission process to minimize the emotional toll on you and your children. This process is not pre-ordained to be an emotionally gut-wrenching, knockdown, drag-out fight. It can actually bring your family closer together at a critical time in the life of all families: when teenagers are spreading their wings to become young adults.

• Planning and paying for college is a family affair. The decisions you make for your first child are likely to have a significant impact on the children that follow, unless, of course, you have just one child.

• The right college fit means selecting a school that you can afford, that is a good value, and that offers students an environment in which they can thrive and be successful—socially and academically.

The Challenge All Families Face

As a parent, you don’t need fancy marketing firms with focus groups to tell you that saving for college and then matching your child with the college of their dreams can be confusing and overwhelming. Why? Because it hits two of our top hot button emotional issues: our kids and our finances. It’s the daily double of parental fragility and raises all kinds of ancillary questions—not the least of which is: Whose decision is it? Yours or your student’s? We know a few things about this:

• There is no correct answer. The final decision maker varies from family to family—and sometimes it’s different with each child in the family. There is no one size fits all model.

• Preparing for and selecting a college comes at a time when our kids are quickly transitioning to young adulthood and increasingly exercising their will to be free of parental control.

Choosing a college may well be a young person’s first major life decision—and is likely to be the most expensive one for a decade or more to come! As parents, we want to be supportive but often struggle to determine how best to help. For many, it is also a reality that hard-earned savings are now at risk—savings often resulting from significant sacrifices made over many years. So we have a vested interest not only in wanting our children to be happy and successful but also in knowing there will be a tangible return on that investment.

Notice that we have not talked about the large elephant in the room over which none of us has control: the runaway cost of college. This book is written to provide some navigation tools to deal with issues you can control from the time your child is born through senior year in high school. This book offers concrete steps you can take to best position your children individually and your family as a whole to plan and save for college no matter what happens with the variables we can’t control.

As Parents, We’ve Been There

Planning and paying for college is an innately emotional process. However, by following our guidance, you can have much more control over the process and outcomes than you may think. Understanding the cost and value of different colleges, your options to establish a consistent savings program, and how to navigate the admissions and financial aid processes early will best position your children (and your family) for personal, academic, and financial success.

Together, we have more than sixty years of professional experience planning and paying for college, including serving as an admissions interviewer for Harvard College for over thirty-six years. Nationally, we have been pioneers, innovators, and leaders in the creation of both the 529 and private credit student loan industries and have positively influenced many of the programs in place today.

With our wives, we have also successfully helped our 5 children, 2 of whom are still in college, successfully navigate the college admissions and financing process. We know firsthand, not just professionally, the real challenges and emotional issues facing both parents and children throughout the college process.

Our goal in writing this book and creating our website, www.InviteEducation.com, is to share our knowledge and experience with you. By providing straightforward information and clear guidance, we want to help you help your child achieve the best possible outcome given his or her goals, abilities, and potential. The outcome parents desire most—successful college graduates with terrific job prospects and minimal debt—can be achieved.

Good luck!

John A. Hupalo

Peter Mazareas, Ph.D.

Introduction

How This Book Will Help You

No matter the age of your child—newborn or teenager—this book will help you navigate the stressful and complex college financing, academic planning, and admissions process for your child. College planning is common for high school students, but for babies and young children? Yes, within reason. By establishing a systematic savings strategy now, you will help your child have more college options, avoid or minimize long-term student loan debt, and succeed at the school of their dreams.

We want to simplify the process and identify the issues for you by providing age-appropriate guidance and information to help you understand how to best:

• Save for and finance a college education.

• Prepare your child well in advance for the college admissions process.

In the end, we all desire a common outcome: a college graduate with a well-paying job and minimal or no student loan debt. That goal can be achieved with some good age-appropriate planning.

Although circumstances are completely different for every family, the issues that families deal with in saving for college, gaining admission to the right college, and paying for college are universal.

To help you develop a meaningful plan for your family, this book is divided into three parts:

• Part 1—Financing College

• Part 2—Preparing for and Applying to College

• Part 3—Pulling It All Together

The Appendixes include:

• A list of 529 College Savings Plans by state.

• An introduction to www.InviteEducation.com, an online, mobile accessible program that complements this book. It provides grade-by-grade guidance in even greater detail; an easy-to-use savings and college-cost financial planner; a search engine for colleges, scholarships, and 529 plans; links to important websites, and the ability to save important information and receive automated e-mail alerts for critical deadlines.

Part 1: Financing College

Chapter 1: Saving for College—Start Now!

Here you’ll find information about why and how to save for college:

• For younger children, establishing a consistent, disciplined savings plan—even small amounts—over a longer period of time is preferable to socking away a few more dollars each month over a shorter period. Learn about the Rule of 70, types of tax-advantaged college savings programs and investment vehicles, and how to identify which is best for your unique circumstances.

• For older children, recognize that it’s never too late to start saving to defray future college expenses. A dollar saved in high school will earn interest and help defray costs later in college. Saving a dollar today yields a far more favorable result for a student than borrowing a dollar tomorrow and saddling them (or you) with future interest costs and debt repayments.

Chapter 2: 529 Plans—An Excellent College Savings Vehicle

For many families, the tax-advantaged 529 College Savings Plans provide the greatest benefits for long-term college savings. This chapter identifies the important savings issues for you to consider:

• Learn about the 10 most important benefits, including the favorable tax treatments that allow you to save now without paying tax on the earnings.

• Understand the difference between types of 529 plans: Prepaid Tuition Plans and Savings Accounts, as well as in-state and out-of-state plans. Learn about the various and different investment options and portfolios available to you.

• Find answers to 30 Commonly Asked Questions on tax benefits, setting up accounts, ownership and control, beneficiaries, investments, financial aid implications, and prepaid tuition accounts.

• Gain expert tips to create your family’s college savings plan.

Chapter 3: Financial Aid Primer—The Basics

Here, you will find an overview of all you need to know about the college financial aid process. This chapter explains:

• Terms such as Cost of Attendance, Expected Family Contribution, the FAFSA® and CSS/Financial Aid PROFILE®, need- vs. merit-based aid, Federal vs. Institutional Aid Award Methodology, and more.

• Sources of financial aid and how to differentiate the types of aid available.

Chapter 4: Scholarships—Get Free Money

This chapter will help you understand the world of scholarships and grants:

• The differences among the different types of grants and scholarships.

• Third-party vs. institutional grants and scholarships.

• When to begin the search.

• How scholarships affect financial aid packages.

Chapter 5: Student Loans—Finding the Right Balance

Student loans are often a necessary evil for families to complete their financing package for a college. You’ll find the following helpful information in this chapter:

• An easy-to-follow overview of the two primary types of loan programs—the government’s Direct Loan Program and private lenders’ programs—to help you determine how best to sensibly include student loans in your college financing plan.

• Four keys to understanding borrowing for college and the basic terms associated with student loans.

• Expert tips to create your family’s loan plan.

Chapter 6: Tax Benefits for Higher Education—Tax Credits and Deductions

Here, you will find a brief overview of the most popular federal tax programs including:

• Tax credit programs, such as the American Opportunity Credit and the Lifetime Learning Credit.

• Tax deduction programs, such as the Student Loan Interest Deduction and the Tuition and Fees Deduction.

• Tax consequences of receiving a scholarship.

Part 2: Preparing for and Applying to College

Chapter 7: The College Admissions Process—Prepare, Prepare, Prepare

College admissions planning and preparation formally commences in the junior year. If you wait until then, however, you and your student will be behind and will play catch-up in the admissions process. This chapter identifies important preparation steps and admissions process issues for you to consider:

• Social Media Alert: It’s time for your student to clean up his or her social media accounts.

• Important actions your freshman, sophomore, and junior should take to set the academic and extracurricular foundation to build a successful high school record that can be the ticket to the college he or she wants to attend.

• Supporting your senior as he or she prepares and submits the very best college application. How students present their story on the application, including grades, test scores, essays, accomplishments, and letters of recommendation, will make the difference in the decision: accepted, rejected, or wait-listed.

• Detailed discussion of the standardized exams. Which test(s) should be taken? How many times?

Chapter 8: The College Application—Pulling It All Together

The big drum roll to college is now underway as the college application deadlines near. We will guide you through the steps necessary for you to help your child prepare to build their college portfolio as they enter high school to ensure that you both understand what it takes for admission to the college of their dreams. If the goal is to gain admission to a highly selective school, specific strategies can be developed and decisions made as early as freshman year to best position your child. Regardless of the type of college (public or private, large or small), know the nuts and bolts of the process that is common to all schools. By understanding the admissions process, criteria, timelines, and requirements, you can make the process less stressful and increase your student’s opportunity for success in the competitive admissions process. This chapter:

• Outlines the college application process, including Early Action and Early Decision options.

• Introduces the types of applications, including the Common Application, the Universal College Application, and others.

• Gives tips on writing college essays, having a successful college interview, maximizing the impact of letters of recommendation, and reconsideration strategies for wait-listed or rejected candidates.

Chapter 9: Financial Aid—The Second Application Process

Every family wants to know: Will we qualify for financial aid? and, if so, how much financial aid will we get? These are THE questions haunting most parents. Often, they are nearly impossible to quickly answer. The answers depend not only on your financial circumstances at time of application but also on the credentials of your student, their potential eligibility for merit-based aid, and the admissions goals and availability of financial aid funds at each particular college or university.

This chapter identifies the important financial aid issues for you to consider:

• Understand the different kinds of financial aid in the offer. Is it free money or must it be earned or repaid? Is it merit- or need-based aid?

• See the sources of aid, the key dates in the financial aid process, and key factors that colleges weigh when determining merit aid.

• Be sure to know what the Base Year is, and follow the seven steps to appeal for more financial aid to help make the college more affordable.

• Learn how your Expected Family Contribution (EFC) drives the sticker price of college for your family. What goes into it? What you can do to lower your EFC.

Chapter 10: Filing the Financial Aid Forms—It’s Worth the Effort

Government programs require