PRACTICE SPECIALTIES College Funding: Helping Clients Evaluate What’s Best

much is being borrowed to pay for a college education.

While saving for college in tax-advantaged vehicles such as 529 plans and Coverdell Education Savings Accounts is important, so is being educated on how financial aid is awarded. Perhaps surprisingly, schools can vary greatly as to how much “non-loan” aid is offered to a prospective applicant.

The good news is that information is now available in the form of publications, websites and online calculators to help families become educated on the nuances of how financial aid is awarded by different schools. These tools can help families minimize the need for excessive loans.

As parents, your clients must look out for the well-being of their children, not only in the short run, but in the long run as well. Your clients may look to you as a resource when navigating these issues. Before their college search process gets too far along, recommend they follow three simple steps.

First, they must recognize that the “best” college choice for a child may mean more than just attending the most prestigious school at which he or she was accepted. Second, they should hit the books to understand how various college options can be financed without impacting their own retirement plans. Finally, if needed, they should be courageous and have what may prove to be difficult conversations with their children.

James (Jim) Mahaney, CLU, CFC, is a vice president with the Strategic Initiatives

Unit of Prudential, where he has recently authored retirement-related research papers on Social Security, financial planning for same-sex couples, and college debt. Mahaney holds a Bachelor’s degree from Denison University and Masters of Science degrees in Financial Services and in Management from The American College.

Endnotes:

1. The Federal Reserve Bank of New York, “The Graying of American Debt”, February, 2016, http:// libertystreeteconomics.newyorkfed.org/2016/02/ the-graying-of-american-debt.html#.Vt7missUXcs

2. Ibid.

3. The Center for Retirement Research at Boston College, “Will the Explosion of Student Debt Widen the Retirement Security Gap?” February, 2016.

4. Ibid.

5. U.S. Bureau of Labor Statistics, http://data.bls.gov/ cgi-bin/print.pl/emp/ep_table_001.htm

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