4 things parents should know before paying for college
Financial
specialist shares ways to help your child while protecting your
retirement
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[May
28, 2013]
From $20,000 to $65,000 a year -- that's the
tuition cost for one year of college, says John McDonough, a money
expert who helps retirees and parents plan for their families'
futures.
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"For the 2012-2013 academic year, the average cost for an in-state
public college is $22,261. A moderate budget for a private college
averaged $43,289," says McDonough, CEO of Studemont Group College
Funding Solutions. "But for elite schools, we're talking about three
times the cost of your local state school. Either way, your kid's
higher education can easily shoot into six figures after four
years."
Along with worrying about rising tuition prices, parents also
fear for their own futures if their retirement savings are drained
by children's college costs, McDonough says. Only 14 percent, for
example, are very confident they'll have the money to live
comfortably in retirement, he says, citing a 2012 survey by the
Employee Benefit Research Institute.
"Families feel they're faced with conflicting goals, but there
are numerous ways to pay for college while investing in your future
retirement," says McDonough, who offers insights for parents to keep
in mind while planning for their child's education:
At a time when so many
American families are financially strapped, college is an
especially stressful topic because parents know higher learning
will help their kids succeed. College graduates earn 84 percent
more than those with only a high school diploma, according to
Georgetown's Center on Education and the Workforce. Here is how
earning breaks down over a lifetime, based on education: A
doctoral degree-holder will earn $3.3 million over a lifetime;
$2.3 million is estimated for a college graduate; and those with
only a high school diploma can expect $1.3 million.
Move retirement assets to qualify for
grants: Most parents know about the 529 savings account, but
that's not necessarily the best or only option. Reallocating
your retirement assets, such as 401(k) plans, can better
position a child to qualify for grants and scholarships. This
legal and ethical maneuvering may be the single most important
factor when considering how to pay for college.
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Know your
student's strengths and weaknesses: Consider independent and
objective analysis of your future college student. Assessment
might include a personality profile and a detailed search for a
future career. Also think about a more nuts-and-bolts approach,
including scholarship eligibility, SAT and ACT prep courses,
review of admissions essays, and an in-depth analysis of chances
for enrollment in a student's top four choices of colleges.
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Make a checklist of financial aid
forms: In order to maximize a fair price of higher
education, remember there is plenty of data to review. McDonough
recommends a checklist with a timeline and notable deadlines. Be
ready to troubleshoot the "alphabet soup" of data forms: FAFSA,
the Free Application for Federal Student Aid; CSS profile, with
the College Scholarship Service; SAR, a student aid report; and
more. Think about this process as a second job, or find
professional help you can trust.
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John McDonough is the managing member at Studemont Group, which
is primarily focused on helping retirees gain peace of mind with
unique market rescue and recovery programs. He is also founder,
president and CEO of Studemont Group College Funding Solutions. His
experience in the financial services industry includes being
managing partner at Granite Harbor Advisors in Houston and
divisional vice president of AXA Equitable/AXA Advisors, the
third-largest insurance company in the world.
McDonough is a member of the prestigious Forum 400, a qualifier
at the Court of the Table qualifier for Million Dollar Round Table,
an active member in the National Association of Insurance and
Financial Advisors and Society of Financial Service Professionals,
as well as American Association of Life Underwriters. He has
completed the course work to sit for the Certified Financial Planner
professional designation exam from Rice University.
[Text from file received from
News and Experts] |