Do You Have to Decline Admission to Colleges? 

by Melissa Brock | Nov 18, 2022 | Ask the admission office | 0 comments

Your child may be wondering, “Do you have to decline admission to colleges?” 

It may not be something that they feel comfortable doing, but yes, it is customary (and thoughtful!) to let a college know that they do not plan to attend that particular school. Your child should communicate with every college and university they don’t plan to attend. 

In this article, we’ll discuss what it means to decline college admissions, why you should do so and how to decline a college acceptance. We’ll even include a couple of examples of how to communicate so your child doesn’t have to think twice about how to do it.  

What Does it Mean to Decline College Admissions? 

Figuring out how to decide what college to go to is not easy. It’s a huge deal. That’s why it’s easy to focus on which college you say “yes” to rather than the other colleges on the “thanks, but no thanks” list.

When you decline college admissions, it means that your child tells colleges and universities that they plan not to attend their institution. It can involve an email to an admissions counselor or a phone call to the admissions office. In some way, your child should communicate to the college or university that they plan to go elsewhere. 

When you decline admission, colleges may ask you for some information for their own research purposes, including the college you plan to attend and why you plan to attend that other institution.   

Do you need to decline college admissions? Yes, your child should make sure colleges understand that they will not attend their institution. It helps both the colleges and your child (and you!) get reoriented on the next step in the process. 

It’s important to note that it’s not an absolute requirement to let colleges know that your child won’t attend for the semester for which they are applying. However, declining admissions officially reflects well on your character. It gives your child an opportunity to thank the college despite the fact that they will not attend.

For example, the college can focus on individuals who do want to attend their institution and you and your child can focus on your next step. Think of declining college admission as clearing space in your calendar, cleaning out a stuffed closet or a cluttered desk. 

Ultimately, it’s really rude to not decline admission and allow the college to keep contacting your student when your child knows they aren’t planning to attend. It can save lots of time and energy on everyone’s part — it can help everyone save on emails, mailings, phone calls, personalized messages, trips, etc.

Read more: Wondering how long admissions officers read applications? Find out.

Reasons to Decline Admissions to Colleges 

Let’s expand on the previous paragraph a bit and look at several reasons to decline admissions to colleges, including from the college’s perspective as well as yours.

Reason 1: It helps the college understand their incoming class.

Colleges want to get a sense of how their classes are shaping up. The earlier your child can provide that information, the better. If your daughter knows for sure that she won’t attend University X in November, encourage your child to communicate with the college. 

They need to shape the incoming class as much as they possibly can, and if you decline admissions, you might even open up a spot in the class for the next person. Why not pay it forward by making the next person in line extremely happy?

Reason 2: Colleges stop sending unwanted information. 

This may be one of the best reasons to tell colleges that your child doesn’t want to attend! You stop getting mail, emails and more. Your child can even communicate the information prior to beginning the application process with a school. 

For example, let’s say College A begins sending information, unprompted, to your child. If your child has no interest in College A, she can send a quick message letting the college know that there’s no chance of her attending that school.

If your student is still managing multiple applications, finding a reliable solution for any “write my research paper” request can help them stay organized and focused on making the right choice.

Reason 3: Colleges stop personally contacting your child.

Some colleges have robust texting and phone call communication processes, particularly small colleges and universities that must distinguish themselves among large amounts of competition. 

Coaches and other individuals who have been recruiting your child for a specific program will also stop contacting them. Kindly communicating a child’s disinterest in the program can help coaches and other recruiters focus on the new class of incoming students.

Reason 4: You can move forward. 

Both you and your child can move forward with the admission process. That may mean focusing on visiting other colleges, applying at other schools, writing supplemental essays and applying to scholarships at the schools in which your child is interested.

Do you know how to reject a college acceptance, exactly? It’s totally understandable if you don’t have a roadmap for how to help your child let a college know that they don’t want to attend.

So, how exactly should your child do so? First of all, I encourage your child to reach out — not you, as the parent. It’s a good lesson in growing up and taking on more responsibility in making life decisions.

Let’s take a look at the next steps.

Step 1: Check the acceptance letter for exact steps.

Many schools include the exact steps your child needs to take to decline acceptance. Dig out the acceptance email or letter to find out whether those steps are listed. This process may end up as filling out a super easy form to decline the offer of admission. If that’s the case, great! 

However, this approach is a very transactional experience and fully ignores any relationships built throughout the process. Individuals who work with your child throughout the process may feel slighted if all they get is a form in the mail that states that your child will not attend the school.

Step 2: Locate the contact information for the admissions office.

Every college or university admissions office has a section on their website that outlines the contact information for your child’s particular area. After all, you want to make sure your child’s email or letter gets to the right person! 

For example, the University of Tennessee has a section of its website dedicated to finding your child’s admissions counselor based on your area of the country. Similarly, Purdue has a similar portion of its website dedicated to helping your high schooler find their admissions counselor.

If your child worked one-on-one with someone in an admissions department at a particular college, locate that person’s contact information. Ultimately, having your child contact the admissions department is the best place to start.

Step 3: Talk to your child about politeness and courtesy. 

Learning how to decline a college acceptance may not feel intuitive to your child at all. However, it’s important to talk about clarity, conciseness and being kind. Your child should offer thanks for the offer, but clearly note that you plan to decline the college’s offer. 

Warn your child to steer clear of rudeness, snideness or condescension in their communication, even if your child had a negative experience with the college that changed their mind about the institution. Declining a college acceptance politely keeps the door wide open for later — remind your child that they may not like the college they end up choosing and may want to transfer later on.

Step 4: Have your child send an email or letter.

Your child has a few different avenues to pursue an admissions decline. Encourage your high schooler to send a formal letter or email, and if they have a personal connection with someone at the college, they may want to make a phone call instead for a personal touch. 

If your child has been working with a particular coach or another individual at a college over the course of a few months, the coach likely deserves the courtesy of personalized communication with your child.

Step 5: Decline admission by May 1. 

May 1 is National Decision Day, which is the cutoff date for making a college decision. Does this mean you have to wait till May 1 to notify a school you won’t attend?

Absolutely not. The sooner you know, the better. However, don’t rush the decision. You want to make absolutely sure that you weigh all the pros and cons. You will have to submit an enrollment deposit once you make a final decision about which college to attend. 

Example of How to Decline College Acceptance

Let’s take a quick look at an example of how to reject a college acceptance through an email or snail mail. 

Your child’s name

Your child’s address

City, State ZIP 

November 18, 2022

College name

College address

City, State ZIP 

To whom it may concern (or name of admissions professional):

Thank you so much for the offer of admission at University Y. However, I plan to accept an offer from a different institution. 

Thank you for the ongoing communication, personal notes and phone calls that assisted me in making my final decision. 

All the best,

Your child’s name

Your child can eliminate the address information to turn it into an email. As you can see, it doesn’t have to be long — it can be short and sweet and to the point.

Will Colleges Continue to Get in Touch?

Colleges and universities should stop contacting your child after an email or letter gets sent once you know they are no longer interested.

Declining College Offers is Polite

If your child asks, “Do I have to decline college offers?” say yes. Have your child send a letter to the college or admissions department thanking them for their offer and declining. Encourage your senior to send a personalized letter if they have a personal connection with someone on campus.

How Long Do Admissions Officers Read Applications?

by Melissa Brock | Nov 10, 2022 | Ask the admission office | 0 comments

How long do admissions officers read applications? More specifically, how much time do admissions officers spend on each application? You may wonder who sees your child’s application, how long they look at it and how they make a final decision. 

The short answer is that it depends on the school, and a lot depends on the selectivity of the institution. All schools take a look at the application, but the rigor of the institution can dictate the amount of time spent reviewing it. For example, if your child applies to a highly selective institution, the application may go through at least two readers and a final committee. All told, between the first round of readers and the final committee, the application might get 15 minutes of attention from each round.

Admissions readers have a lot of applications to read and a finite amount of time to do it in, which is why your child’s application has to be a slam dunk. 

In addition to answering the question, “how much time do admission readers spend on each application?”, we’ll also walk through where the application “goes” after it enters the college admissions process “tunnel.” 

What is Admissions Reading?

First of all, what exactly is admissions reading? During the admissions process, students apply for admissions at their top choice schools.

They may apply using the Common Application, the Coalition for College application, the Universal College Application, the college’s own application or another type of application process. 

Once the application has been submitted, people take the time to review applications. Colleges often hire seasonal readers to work up to full time during what admissions professionals call “the reading season.” These admissions readers review prospective student test scores, transcripts, essays and other relevant admissions criteria to help make decisions about admissions candidates. Readers use a customer relationship management (CRM) system to manage the process. Students get admitted based on that particular college or university’s enrollment goals.

Let’s take a look at the college admissions reading process, step by step, so you know what to expect. We’ll answer the question, “How do admissions officers read applications?” We’ll also touch on the amount of time admission readers take a look at the application.

Step 1: The college screens and sorts applications.

When the college receives a senior’s application, each college likely has a specific process for handling them. Many colleges import the information on the application and input it directly into the college’s CRM system. 

(Fun fact: When I first started in admissions, our data team printed out the applications and checked them against the computer system — yes, we were still using physical files! Once our data team checked them over and ensured that the CRM matched the application, the file was ready to go onto the next step.)

The appropriate admissions officer will then receive the application. Admissions counselors have a region that they handle. For example, one admissions counselor will handle applications from the state of Colorado. If your student lives in Colorado, that admission counselor will handle your high schooler’s application. 

Step 2: Admissions readers read applications.

Admissions readers then take on the process from there, usually in collaboration with the regional admissions counselor. How many admissions officers are there? It depends on the school, but admissions readers often work in pairs.

On the first pass, a new application may get a 10- to 15-minute review from that part-time hired application reader or another individual at the college or university. This leads to an understanding of the competitiveness of a candidate. Based on this first pass, they will give a recommendation about each candidate, entering in detailed information into the college’s CRM for each applicant. Admission readers may read 50 applications per day, moving methodically through a laid-out process.

Do admissions officers read all essays? The truth of the matter is that some schools have the application go directly to the final committee, whereas other (selective) colleges might read an applicant’s application again before it goes through the final phase. 

Is this process subjective? Of course. Admission readers, while they have been trained in the requirements for admission to that particular institution, they obviously have biases and preferences when reviewing candidates for admission. A second or third round can offer another analysis and offer a more diversified view of the applicant. However, some universities, which have more qualitative processes, may push the applicant through to the “acceptance” stage without going through another round of reviews.

Step 3: A committee takes a look at applications.

Depending on the school, the college or university may not send applications to the “committee.” For colleges and universities that do send applicants to a committee, an official committee group may include a senior admissions official or two, an academic representative and other committee readers designated by the college or university. They will take a look at a rubric or notes in the CRM created by the reading process prior to the committee review. 

This process will take about 15 minutes or so and a final decision will come out of the final committee meeting.

Step 4: The final decision occurs.

Once the process concludes, naturally, your student will get a final decision. 

How long does it take to get a final decision? It depends on the type of admission at a particular college or university. Check out the eight different application types as well as a basic summary below:

• Regular admission: Regular admission deadlines typically occur in early January and admission offers are sent in late March or early April. Students will have to decide by May 1, the National Candidate Reply Day. 
• Rolling admission: Students get an admission decision quickly, typically within two weeks, instead of sending out acceptances all on one date. Like regular admission, your student will need to decide whether to attend a “rolling admission” school by May 1.  
• Open admission: Colleges accept high school graduates in the incoming class until all spaces fill up. Community colleges typically use this type of admission and you get a decision quickly.
• Early action: Early action, which is nonbinding, means your student has the option to submit an application before the regular deadline and you get a decision earlier than usual, typically in January or February.
• Early decision: Early decision is binding, which means you must attend that college. You typically apply early (usually in November) and usually get a decision by December.
• Single-choice early action or restrictive early action: This nonbinding option requires you to not apply to other schools during the early action period. You’ll apply early and hear back in December. 

So, how long do colleges look at applications? Let’s take a look at it this way: How can you get an admission reader’s attention quickly? Consider that they may only spend 30 minutes total with your application from start to finish. 

Get their attention by personalizing your application. Tell your own unique story in an engaging way. Many colleges request you to write supplemental essays. You can add intricate details about yourself through these supplementals. Here are a few examples: 

Describe how you plan to pursue your academic interests and why you want to explore them at University X specifically. Please feel free to address your first- and second-choice major selections.

To tell us more about yourself, please complete the following sentences using only the space provided: 

• If I could travel anywhere, I would go to… 
• The most interesting fact I ever learned from research was… 
• In addition to my major, my academic interests include… 
• My favorite thing about last Wednesday was… 
• When I think of diversity, I think of… 

Something you might not know about me is… Describe the unique qualities that attract you to the specific undergraduate College or School (including preferred admission and dual degree programs) to which you are applying to University X. How would that curriculum support your interests?

Everyone belongs to many different communities and/or groups defined by (among other things) shared geography, religion, ethnicity, income, cuisine, interest, race, ideology or intellectual heritage. Choose one of the communities to which you belong, and describe that community and your place within it.

Prior to applying, it’s important to know the answer to “how long do colleges spend on each application?” It’s also important to figure out how to communicate your unique qualifications. Take every opportunity to convey exceptional talents, alumni legacies, how you will fit into the academic department that you are applying to and more. 

If you’re curious about the admissions process at a particular college or university, you can ask. They may offer a detailed explanation or may also just give you a general explanation of how the admission process works.

FAQs

Do admissions officers read applications?

Yes, admissions officers do read applications. The admission office of a particular college or university may also hire remote or in-office seasonal readers to read applications during the admissions “reading season.”

That’s why it’s important for your student to put their best foot forward with the application — they should do the best they can to personalize the application, particularly with any supplemental essays required by the institution. This gives them an opportunity to showcase their unique personality and qualifications.

How many essays do admissions officers read a day?

Every admissions office has a goal for the number of essays that must be read during any given week. However, college admissions officers and admission readers may read approximately 50 applications per day, spending approximately 15 minutes per application.

Do admissions officers actually read essays?

Yes, admissions officers do actually read essays, but they might have already screened candidates first in a preliminary round. Every admissions office has a different process and it’s impossible to sum up the exact step-by-step process for each admission office in one blog post.

What Does Room and Board Include in College and What Will it Cost? 

by Melissa Brock | Nov 4, 2022 | Ask the admission office | 0 comments

When you’re taking a look at the full costs of college, room and board happens to be part of the cost of attendance. But what is room and board, exactly? What does room and board include in college? How does it fit into the overall costs? 

These are great questions. Taking care of college costs may be one of the most expensive (and one of the most important!) experiences you’ve ever paid for, and in this situation, you may feel as if you have to take an X-Acto knife to your budget to pare as much as possible from it to make room and board payments. 

In this article, we’ll dive right into room and board meaning as well as answer the question, “What does room and board include in college?” We’ll also cover how to learn the cost of room and board, whether you have to pay room and board (and how to pay for it!). We’ll also walk through steps to make it less expensive. 

What is Room and Board? 

Room and board: Quite simply, it refers to the roof over a student’s head (room) in the residence hall and the food a student eats at college (board). Besides that, what are the fringe benefits? What is included in room and board?

“Room” Definition 

As you might imagine after taking visits to colleges, your child will encounter a wide variety of types of residence halls or “dorm living” — large rooms, small rooms, residence halls for solely first-year students, others that are more apartment-style living. Some schools have required residential living on campus. 

College rooms typically come furnished with beds, desks, chairs, bookshelves, dressers and closets, not to mention lounge spaces, restrooms, electricity, heat, and internet access. You may have to pay more for fancier on-campus digs, which might include flashier apartment-style living and amenities like fitness centers.

Check the differences between costs of various housing options on campus. The admission office or financial aid office should be able to help you and your child iron out those specific costs.

“Board” Definition

What is the “board” in room and board? 

“Board” refers to a meal plan, or a pre-set number of meals you can purchase prior to the start of an academic semester in college. Colleges also have a wide variety of meal plan options that are preloaded on an ID card. Many meal plans at many colleges offer meals for seven days. For example, a student might choose from a 13-meal plan, where they get 13 meals throughout the week, or a 20-meal plan, where they get 20 meals throughout the week. This is typically called a standard/basic meal plan.  

However, students may be able to choose from a much smaller meal plan, such as seven meals per week. Note that some schools do not allow students to opt out of the meal plan, particularly if schools have a residential requirement. 

Some schools even offer unlimited meals, but most function as a per meal/swipe limit or a point plan. 

• Per meal/swipe plan: The per meal/swipe plan allows your child to swipe every time to use up their allotment. For example, your may use a “swipe” for a granola bar or a huge buffet meal — they would “give up” that swipe, no matter how little or how much they eat. 
• Point plan: Purchasing meal points means that you purchase a certain number of points ahead of time and points get deducted from the “collection of points.” For example, if your child eats that granola bar for lunch, it would “cost” them fewer points than the big buffet meal. 

Most schools list room and board right on their websites, so you don’t have to guess where the “room and board” comes in among the other costs. It is embedded in the cost of attendance at most schools. 

Schools typically list the tuition, required fees and other parts of a financial aid award very clearly and in order on their websites. Some people call this the “cost of attendance” (COA), which also includes room and board. In addition to room and board, COA estimates other educational expenses such as:

• Tuition and fees
• Books
• Supplies
• Transportation
• Personal expenses

Learn more: 6 Ways to Handle a Disappointing Financial Aid Award

Do You Have to Pay Room and Board? 

Yes, you have to pay for room and board. Naturally, the total cost of room and board depends on the type of campus housing and the food plan your child chooses. The cost of living on campus, according to the most recent data (for 2020 to 2021) from the National Center for Education Statistics, was $6,897 for all institutions. On average, the board for colleges cost $5,335 for all institutions during the same timeframe. 

How do you find out your COA? You can find out the total cost of attendance on the school’s website. However, you can drill in deeper and use a net price calculator, which gives you a more accurate cost of the college aligned with what it will cost your child based on your personal financial situation. You can find a net price calculator on every college and university website — it’s required by law. 

How to Pay for Room and Board 

Let’s take a quick look at how to pay for room and board from the standpoint of truly understanding your child’s financial aid award. We’ll also help you get an idea of the different types of financial aid opportunities available to your child, including scholarships, grants, loans and work-study.

Step 1: Understand the financial aid award.

One of the most important things you can do: Understand the financial aid award from top to bottom. It’s important to have a firm grasp on how much a particular school will cost. 

Sometimes, various types of aid get lumped together. For example, it might look like your child has received a huge financial aid award, but when you peel back each layer, you may realize that a few of those “awards” are actually loans. Some schools also work-study as part of the award calculation. I’m really not a fan of this tactic because it looks like you get a guaranteed lump sum of money, but that’s not true — your child must earn work-study money by working a job on campus. 

In addition to that, some financial aid awards do not include the total cost. When financial aid awards don’t publish the total cost right on the financial aid package, you might have to do a little digging. Look carefully at a school’s costs page online, or better yet, call, to be absolutely sure that you’re considering all costs, such as lab, orientation, athletics, campus, transportation fees, etc. You may not find out about these “nasty” surprises till later.

It’s also a good idea to consider the fees and interest rates for loans. Use an interest rate calculator to get a sense of how much it will cost you for sure. Finally, remember that colleges also implement tuition increases each year but scholarships don’t always increase as tuition increases. 

Ultimately, it’s important to really understand the full figure and what to expect.

Step 2: Apply financial aid toward room and board. 

How does financial aid award actually work? You get a round COA, then apply individual situations to it. Specifically, this means that you apply scholarships, grants, work-study and loans to it. Therefore:

Cost of attendance (COA) – Financial aid = Your final costs

Filing the Free Application for Federal Student Aid (FAFSA) will get you started in the right direction. This means that your child will be considered for federal student loans, federal work-study and federal grants. I encourage every family to file the FAFSA no matter what, because you may be able to chip away at the costs using federal aid. Items such as work-study will not go on your child’s financial aid award if you don’t file the FAFSA. You must file the FAFSA in order to qualify.

Read more about how to get college paid for.

• Consider housing assistance grants. Some states offer housing expense grants for students, and it’s important to recognize that grants do not need to be repaid. Funding can depend on your state and your child’s school. Housing grants may require an application, including filing the FAFSA. Check with the financial aid office at schools, state department of higher education or more. 
• Search for scholarships (including throughout college). Your child does not need to pay scholarships back (just like grants), but they can help cover the cost of room and board. Students can find scholarships through a wide variety of means, including through a college or university, through your local community (through clubs, organizations, religious groups, etc.) Need-based and merit-based scholarships can help you pay for room and board. Your child can also apply for scholarships throughout those college years — they’re not limited to just scholarships they get during their senior year of high school.
• Consider loans: Loans can help your child pay for college. Federal student loans give your child the best bang for their buck because they have the lowest interest rates and give them opportunities for forgiveness as well as other flexible repayment options such as income-driven repayment. Here are a few types of federal student loans you may need to be aware of:
• Direct Subsidized loans: The government pays the fixed interest rate (which means the interest rate doesn’t change) on need-based Direct Subsidized loans when your undergraduate child stays enrolled in college at least part time. Your child will also receive a grace period before they need to repay their loans after graduation. 
• Direct Unsubsidized loans: The government does not pay the fixed interest rate on non-need-based Direct Unsubsidized loans, unlike in the case of Direct Subsidized loans. Unsubsidized loans go to undergraduate and graduate students.
• Direct PLUS loans: As a parent, you can take out a PLUS loan to pay for education costs when you need to pay for “the rest” of college costs. Graduate students can also take out PLUS loans for graduate school. However, you must have a decent credit score in order to qualify.
• Private student loans: If your child still needs more money to pay for college, they can tap into private student loans. They can have fixed or variable interest rates and various loan terms (which refers to the length of the payback period) but these rates may be higher than federal student loans. Your student also cannot access privileges related to forgiveness or other types of income-driven repayment plans with private loans.   

Step 3: Consider other options.

It’s possible to think outside the box here. In many situations, your child doesn’t have to live on campus. If you and your child pencil out the costs and you find out that it’s cheaper to live off campus, it might actually be a good idea to approach an off-campus living situation.

Your child may also want to look into becoming a resident advisor (RA) in their second year of college. An RA is the leader of a portion of a residence hall, which means that they might mentor a handful of first-year students and help them get used to residence hall living. They might play games with them, organize on-campus group meals and oversee the behavior of residents on that floor. RAs typically receive free or discounted room and board. The amount of the discount varies from school to school.

In many cases, student RAs must maintain a certain GPA and continue to make academic progress throughout any given semester.

Step 4: Pay the bill for room and board.

Finally, the last step involves paying the final bill for room and board. Most colleges send the first semester tuition bill prior to the start of the academic year, like in July. You may also consider opting for a monthly payment plan, which divides up the months of the year that your child will attend school or spreads them out over the course of 10 or 11 months.

Make sure the school’s financial aid award captures the correct scholarships and other aid (particularly outside scholarships) before you pay the bill.

Is it Less Expensive to Live On or Off Campus? 

At first glance, the cost of living off-campus may seem cheaper than room and board, but by the time you add up the additional costs, such as furniture you have to purchase, utilities, and purchasing your own groceries, you may get close to the cost of paying for room and board.

Iron out all the expenses between both with your child. It’s your child’s first foray into adulthood and it’s important to remember that some kids need the residence hall environment for a few years — some students are not yet ready for apartment living.

You likely have a little bit less maneuverability when saving on room and board in a residence hall because there aren’t dozens of ways to cut back. Your child’s only options may involve choosing a less expensive meal plan (which likely involves fewer meals) or a lower-cost dorm room. 

However, there are quite a few ways your child can reduce expenses if they choose to live off campus:

• Put together a budget to monitor daily expenses.
• Get a roommate to share expenses.
• Choose lower-cost groceries or clip coupons and limit going out to eat.
• Cancel cable and opt for lower entertainment costs.
• Save on utilities (wear a sweater instead of turning up the heat) and turn out the lights.
• Choose a lower-cost apartment with fewer amenities.
• Shop for cheaper internet.
• Use public transportation.
• Limit use of credit cards.
• Brew coffee at home.

Encourage your child to get creative about saving money — college students are notoriously creative.

It’s Possible to Save Money on Room and Board

You can save money on room and board. It’s a good idea to compare costs by considering the answer to “What are room and board expenses?” and comparing on- and off-campus options side by side.

Furthermore, encourage your child to get as many scholarships and grants as possible, money that they don’t have to pay back.

FAQs

Do college scholarships pay for room and board?

Yes, college scholarships pay for room and board. When you get a financial aid award, most money gets applied toward both tuition, room, board and fees, with the exception of certain scholarships such as full-tuition scholarships, which only apply to tuition. 

Does room and board count as tuition? 

Room and board is not the same as tuition. Tuition refers to the costs you pay for classes. Tuition varies from college to college, just as room and board varies from school to school. These costs can vary widely. For example, a liberal arts college may cost far more for tuition, room, board and fees than a community college.

Automating College Savings: The Secret Key to Education Financial Planning

by Melissa Brock | Oct 26, 2022 | Ask the admission office | 0 comments

I can count on two hands and all of my toes (and beyond) the number of people who sat in my office and said, “I wish I’d saved more for college.”

I spent 12 years in college admission, and during this time, I heard hundreds of situations — families who had regularly saved money for college, people who hadn’t saved a penny, families who had sporadically saved over the years. 

I heard, “We’re set!” to, “We were worried about the bills. We always said we’d eventually put money away for college but never did. Stuff just kept coming up — a new kitchen, a few vacations to Disney, and now, the kids are ready to go off to college. We haven’t saved a dime.” 

(Don’t feel guilty if the second example sounds like you!)

Here’s the basic secret I discovered among the people who were successful at saving for college and education planning: They’d saved a little bit and invested it every month. That cumulative effect meant that they felt comfortable paying for college. They didn’t have a master’s degree in college financial planning. They automated everything.

What is Automated Investing for Education Planning?

Automated investing is just that — you set up your child’s college savings account so money goes directly into it each month. In other words, you put your money and your savings on autopilot. It’s one of the easiest ways to save for college.

You’ve heard of this method — it’s often called the “pay yourself first” method of investing. It’s extremely effective because you learn to expect the payment (which you can set for a particular day of the month). It becomes a normal part of your monthly expenses, 12 times a year.

During my years in admission, I noticed that one of the hardest things for parents to do was to just get started investing for college. 

Families would relay to me, “I just wasn’t sure what to do. We didn’t start at all because we didn’t know where to put our money.”

Totally understandable! Here are three simple steps to get going.

Step 1: Choose an investment type. 

You can find a dizzying array of college savings plans, investment types and companies that tout that they have “better savings options” and “fewer fees” than the competition. It’s great to do your own research, but when push comes to shove, it’s best to just make a decision so you’re actually doing it. You can always move your money later!

Let’s take a look at a few popular college savings plan options. 

529 Plans

529 plans are college savings plans sponsored by a state or state agency. You can use these accounts, which grow tax-free, to pay for tuition, books and other qualified expenses. Your state often offers tax benefits for a large number of account types. When you take the money out of your 529 plan to pay for college, you won’t pay taxes as long as you use the money for qualified expenses, like tuition, room, board and school-related fees. (If you buy a car with the money, you’ll face a tax bite.) 

Custodial Accounts

Through a savings account at a financial institution or brokerage firm, you can invest money in a custodial account, a type of account set up for adults to invest for minors. Custodial accounts have longer, fancier names: the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). The state in which you live determines whether you invest in a UGMA or UTMA. The state also determines the age in which your child can take out the money — usually 18, 21 or 25. Custodial accounts offer tax advantages and have no income or contribution limits or withdrawal penalties.

The drawback to a custodial account is that your child can take the money out and spend it however he or she wishes. That means your child can use the money to buy a car or take an expensive trip.   

Coverdell ESAs

A Coverdell ESA is a tax-deferred trust that you can open at a brokerage or other financial institution. It helps families by offering tax-free earnings growth and tax-free withdrawals on qualified educational expenses. 

However, you do face some caps: You can only make annual contributions up to $2,000 for joint filers with a modified adjusted gross income (MAGI) up to $190,000. The options are reduced for a MAGI between $190,000 and $220,000. You cannot contribute to a Coverdell ESA if your income rises above $220,000.

Stocks or Mutual Funds 

You may bypass “specified” college savings accounts and invest directly in stocks or mutual funds. Stocks represent an ownership share of a company. One stock represents one share of a company. 

Mutual funds, on the other hand, refer to many investors who pool their money together to invest in bundles of securities. Mutual funds offer a more diversified investment than stocks, which offer more risk individually. Rather than putting all your eggs in one basket, mutual funds allow you to spread the risk around.

The downside to investing in stocks or mutual funds is that they don’t offer tax incentives strictly for education.

Roth IRAs 

You may recognize a Roth IRA as a retirement vehicle — just as its name indicates. (IRA stands for “individual retirement account.”) However, you can withdraw from a Roth IRA in order to pay for qualified educational expenses tax-free. 

The downsides: If you’ve had the Roth IRA for less than five years and you withdraw not just the principal amount contributed but also the earnings to pay for college, you’ll owe taxes on those earnings. In addition, pulling money from your retirement account means that you could inadvertently penalize yourself by neglecting your own retirement savings.

In order to contribute to a Roth IRA, your MAGI must be less than $129,000 if you’re single. If you’re married and filing jointly, you cannot go over $204,000. You can contribute a maximum of $6,000 to a Roth IRA if you’re younger than age 50. If you’re 50 or older, you can contribute an extra $1,000 per year in “catch-up” contributions. 

I get it: Choosing an investment type is easier said than done. However, remember that taking some action is better than doing nothing at all. 

Step 2: Set up automatic contributions.

Similar to direct deposit from your paycheck to your bank, you want to make sure money automatically goes from your bank to your investment account. 

You can swiftly set up automatic withdrawals through your brokerage account, your state’s 529 plan site or other type of financial account. Choose a dollar amount to go into your account every month. Next, set up the automated deposits based on your paydays or a monthly contribution schedule. For example, you may choose to contribute $500 every month to your child’s 529 plan on the 15th of every month — or another day you get paid. 

Some employers offer payroll direct deposit into a 529 plan account. Find out if your state’s 529 plan allows this.

Step 3: Monitor your success.

One of the best parts of automating your college savings involves watching it grow. You may want to change your action plan based on a college savings calculator, such as the college savings calculator from Fidelity. A college savings calculator can help you determine whether you’re on the right path. 

Why not start out with a college savings calculator in the first place? Well, to be honest, it’s best to get started with a monthly amount you can afford rather than giving you the heebie-jeebies about how much college might cost in 18 years or less.

It’s best to save as much as you can, as often as you can. Your child may have to get student loans, and that’s okay. Right now, feel content that you’re doing as much as you possibly can. 

One more not-so-secret secret: Many plans will let you contribute as little as $25 per month. If you can afford $25 worth of candles at Target (I’m totally guilty!) you might be able to kick $25 toward your child’s college education. 

In my experience, it’s about building up the confidence to invest and realizing that yes, you can do it. It just takes a little investigation on your part. Once you get going, setting up automatic investments and celebrating your wins becomes second nature. 

If you’re thinking, “No way can I decide alone! I need help with this stuff,” you’re not alone. 

Consider getting the advice of a local financial advisor. A fiduciary financial advisor (one who puts your best interests at heart) can also help you make your savings automatic. Trust me, you’ll feel great about taking this next step.