by Melissa Brock | Sep 22, 2020 | Ask the admission office, Build relationships, Financial aid and scholarships |
I’m in awe of the things my parents say to my kids: “Sure, you can do/have/play with/buy that! And here’s an ice cream cone. And $50. Oh, and a kitten.”
Whaaaaa…?
I find myself wondering, “Where was that generosity when I was a kid?”
Then I remember: Oh, yeah, at my grandparents’ house.
Your parents (your kids’ grandparents) may want to help you save for college.
Bravo for them! The only thing is, they may have very specific ideas on how they want to do it — which might not be the most advantageous to your child or the best option, tax-wise.
Let’s go through a few ways grandparents can help!
How Grandparents Can Help Save for College
Your parents may be in a perfect position to help for college — they may have plenty of money saved up and have plenty of ideas! But first… tamp down the excitement! College funds for grandchildren (and alternative options!) can go lots of directions.
1: Start a conversation.
The first step: Always start with a family conversation.
I remember working with this family in admission, the Larsons, who wanted their son to pitch in for some college costs. However, the grandparents wanted to pay the whole bill! (Tempers ran high, especially when the grandparents went behind the Larsons’ back and paid for a whole year of college up front.)
Your parents can tap into a number of strategies. Throughout these conversations, consider how college savings might impact the whole family:
- Maybe you want your child to shoulder some of the cost so he takes college more seriously.
- You want to cover the majority of the costs with your own money. (“My kid, my responsibility.”)
- You want to make sure your parents keep their own needs at the helm. Maybe they may live on a fixed income in retirement and shouldn’t pay for college.
- Certain savings vehicles might affect the financial aid your child receives.
2: Discuss specific vehicles.
Your parents may have it in their head exactly how they want to help your child pay for college. But is it the best option for your family? Here are some great topics to launch your conversations.
Talk About 529 Plans
What’s a 529 plan? Many people herald them as the grandpappy of all college savings plans. Here’s why: Your parents won’t pay taxes on earnings and withdrawals as long as your child uses them for qualified education expenses. (Your parents can also save $10,000 of tuition expenses for elementary, middle, or high school education and to repay qualified student loans and expenses for apprenticeship programs.)
Your child can use 529 savings at accredited institutions for:
- Tuition
- Room
- Board
- Fees
- Other educational expenses
Appeal factor: 529 plans must be used for educational purposes and nothing else. For estate tax purposes: The money is no longer considered part of the parents’ or grandparents’ estate.
Your parents might wonder whether to use these options if your child is in high school. They sure can! For example, they can put in five years of annual gifts — up to $15,000 (up to $75,000 per person, per beneficiary) at once without messing with gift tax or scraping away at the lifetime gift tax exclusion.
Consider UGMAs or UTMAs
Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts, also called custodial accounts, let the grandchild take control of assets in the account as soon as they reach a specified age. What age? That depends on your state laws.
The custodian (who can be anyone — it doesn’t have to be your parents) controls the account until your child reaches (usually) 18 or 21. After that, he can spend the money on whatever he wants, even a brand-new Corvette. You may want to have a conversation with your parents about skipping this option if your kid’s liable to say, “I’m rich, I’m rich! Never mind going to college, let’s all go to the south of France!” And then he rents a house on the beach for his friend for a month and the money’s gone.
Another issue: You can’t transfer UGMAs or UTMAs to another beneficiary. For example, let’s say it becomes super apparent that your child will goof off with the money. Your parents can’t switch and give money to a more studious sibling.
Also — talk to your parents about the possibility that your child will get less financial aid if your parents opt for a UGMA or UTMA because they count as student assets and factor in at 20 percent, more than the 2.6 percent to 5.6 percent for parent assets. (Yikes!)
Warn them that they won’t see as many tax benefits. The interest, dividends and earnings is the child’s income and taxed at the child’s tax rate once the child reaches age 18. The first $1,100 is untaxed if the child is under 18 and the next $1,100 is taxed at the child’s rate. Anything over $2,100 is taxed at the grandparent’s rate. Visit IRS.gov for more information.
Appeal factor: You can contribute virtually any type of asset toward both UGMAs and UTMAs. You can even contribute real estate to an UTMA. Your path is much less limited and your parents may like the larger number of investment options in a custodial account compared to a 529 plan.
Talk about Coverdell ESAs
A Coverdell education savings account (Coverdell ESA) is a trust or custodial account for paying qualified education expenses. You can pay qualified higher education expenses (and elementary and secondary education expenses) with a Coverdell ESA. Note: The designated beneficiary must be under the age of 18 or be a special needs beneficiary.
Your parents can contribute to a Coverdell ESA with cash but they’re not deductible. The downside is that the total contribution to all accounts on behalf of a beneficiary in any year can’t exceed $2,000 with a modified adjusted gross income (MAGI) up to $190,000. The amount reduces incrementally for MAGI between $190,000 and $220,000. If your parents’ incomes rise above $220,000, they’re ineligible to contribute to a Coverdell ESA.
Whew, that was kind of boring. Sorry! Let’s up the excitement in the appeal factor section.
Appeal factor: Tax-free withdrawals! More investment flexibility than 529s! No withdrawal cap like the 529’s $10,000 tax-free withdrawal cap for qualified expenses to an elementary or secondary public, private or religious school! Also, your parents can transfer money from one grandchild to another.
3: What if they prefer to pay the bill directly? Talk through it.
“We’re not interested in all that,” your parents may say, with a wave of a hand. “Taxes, shmaxes.”
You may reply (with a hint of exasperation in your voice), “But a savings vehicle makes the most sense, tax-wise!”
Paying directly is not considered a gift. Your parents could still use their annual gift exclusion to give up to $15,000 to one grandchild. However, direct tuition payments do affect financial aid. The other downside is that money doesn’t grow tax-free in an account — your child doesn’t have interest working in his favor.
4: Discuss a tuition payment plan.
The tuition payment plan is one of the secrets of breaking up college payments into tinier chunks. It simply means you pay for an item in fixed amounts at specified intervals — you make small payments over time. A tuition installment plan means you can reduce a remaining balance by splitting it up into a specified number of months. You’ll pay that amount over a typical nine- to 12-month period.
Most colleges’ installment plans cover only the direct costs billed by and paid to the college, which includes:
- Tuition
- Fees
- Room and board (only applicable if your child lives on campus)
- Books, supplies, equipment and transportation to and from school are not covered.
A tuition payment plan does not include things like transportation, school supplies and other outside expenses.
Talk about a specific monthly amount they want to help with — and make sure you agree.
5: Discuss money they’ve already ferreted away.
Do your parents have money ripe for plucking in traditional and/or Roth IRA accounts? Why not use it to pay for their grandchild’s college education — particularly if they’ll have plenty of money left in it for themselves?
As long as your parents are 59½ and older, they can withdraw money from a traditional IRA to pay for college without paying a 10 percent penalty on distributions. Traditional IRA owners do pay federal income tax on the amount withdrawn.
If your parents are under 59½, it’s better to take money from a Roth IRA. Your parents won’t suffer a 10 percent penalty on distributions used for qualified education expenses as long as the account as long as they’ve had the account for five years.
A Sweet Gesture
Even when you disagree on the vehicle to pay for it (or, like the Larsons’ parents, paid for the whole thing without permission) you’ve got to recognize the effort your parents are putting in.
The best thing you can do is talk as a family to discover which option fits your child best.
by Melissa Brock | Aug 30, 2020 | College Money Tips, Financial aid and scholarships |
September is College Savings Month! Saving for college can seem like one of those long, arduous tasks that never ends… like figuring out what to make for dinner for the rest of your life, perpetual laundry, etc.
I know there are a couple of fears out there when it comes to saving for college. They’re super real, and it would be silly not to address them.
Some common fears stop us from saving for college. Let’s address these so you can jump right in and start saving.
1. The Fear of Believing You Won’t Save Enough
Are you worried that you’ll never be able to save enough? Do your eyes get wider and wider every year as college costs rise? Worries about not being able to save enough may be enough to stop you before you even get going.
Here’s the deal. You may not be able to save enough money to pay for every penny of your child’s college education — I get how it can get you down before you even start.
However, here are some quick reminders:
- Your child may qualify for merit-based scholarships.
- You can take advantage of a tuition installment plan. (Don’t forget how much purchasing power your monthly income has!)
- The sticker price is just a starting point. I don’t know a single student who paid the full sticker price to attend our institution when I worked in admission.
- Price transparency may continue over time. A handful of schools have started to reduce their costs using something called a tuition reset. It attempts to offer more transparency in the college cost landscape. Check out an article I wrote about tuition resets for the “Journal of College Admission” and what they mean.
- Colleges may be getting more creative in the pandemic’s wake. For example, check out Unity College’s new Distance Education and Hybrid Learning plan, where students can choose to take only one or two courses per term to be full-time and can choose online, in-person or a combination of both.
- Federal financial aid is usually easy to get.
Bottom line, try to save as much as you can, even if it’s just a little bit.
2. The Fear of Getting it Wrong
It’s hard to start something new. It’s even tougher when you think you might get it all wrong. So what do we sometimes do? That’s right — never even start.
How do you get over the fear of doing something big in your life?
That’s right — you just take a deep breath and do it.
For the longest time, I was afraid of planting a garden. I wasn’t sure how to do it, despite the fact that I grew up helping my parents pick green beans. My parents always planted a vegetable garden (they still do!) — full of delicious zucchini, tomatoes, green beans, sweet corn and more. You know, though, when you’re a kid, you don’t really pay attention to allll the details — how to plant the seeds, when to plant them, how to make the rows and more. Plus, I was worried about whether or not I’d have time to keep up with the weeds.
But one spring, I said, “Enough is enough. We’re going to have a garden!” My husband and I took the plunge, tried it, and we’ve had a garden for two years now. No more excuses!
Did we fail? Yeah — our tomatoes didn’t grow the first year. I think we ended up with only six pea pods. But we got better the next year! Our tomatoes are flourishing right now and we have more than we could ever eat. We’ve had to give oodles away to the neighbors!
Even if you don’t get quite started the way you want on your college savings plan, you can pivot. The point is, get started and go from there.
Fortunately, many college savings plans (like 529s) you can enter your risk tolerance, child’s age and your investment gets more conservative naturally. In most cases, it’s impossible to mess it up!
3. The Fear of Thinking You’re Behind
Has your best friend been saving for college for 18 years — before her child was even born? And you haven’t been able to save that much all?
Your child is more likely to go to college if you’ve saved just a little bit. Even with savings of less than $500, a child is 25% more likely to enroll in college and 64% more likely to graduate compared to a student with no savings, according to a study from the Center for Social Development at Washington University in St. Louis (WUSTL).
4. Thinking You Don’t Have Enough on Hand to Save
Worried about not having extra cash to plump up a college savings account? What if, instead of agonizing over this, think of it as the fun part. How creative can you get?
Can you manipulate your budget?
Sit down and divide your expenses into “needs” and “wants.” “Needs” should only include those necessary items, like rent, utilities, groceries and school supplies.
Anything else that isn’t an essential expense should be put into your “want” category. “Wants” include coffee runs, entertainment and nice clothes that aren’t required for a job.
Can you make more money?
What if you made some spare cash every month and vowed to dedicate this to college savings? Do you have a specific talent or skillset?
What is the best thing that you can charge $10 for? Do that, then do it 10 more times! Can you make crochet hats? Can you sell your PR skills? Make birthday cakes? Babysit? Serve as a sales consultant? Figure out what it is that you can do so well that someone else will pay you money to do it.
My friend Angela makes these gorgeous signs for her company, Touch of Twine Design. They are so beautiful. They’re white with a beautiful script font — and can say anything. Her customers order inspirational quotes, poem snippets, Bible verses — whatever they want. The money she makes goes into a college account for her two boys.
Another couple I know scavenged pallets on the side of the road, at work at a manufacturing facility and more to make furniture, sold it online and made a lot of money.
The sky’s the limit. What talent can you offer the world?
5. Not Knowing How to Save
It’s a case of too many options, isn’t it? You can invest in regular savings accounts, CDs, 529 plans, UTMA/UGMAs, Roth IRAs, custodial accounts, and on and on.
Can you invest in stocks for college? Sure! Just like you can invest in regular mutual funds, bonds and more investing options we’ve listed.
Is this your only option? Of course not!
Stocks
A stock is an investment in a specific company. You buy one share of a company’s earnings and assets when you buy a stock. Companies sell shares of stock in their businesses to raise cash. You can sell stocks when they increase in value and this method can also result in high returns.
Bonds
You lend money to a company or government when you buy a bond. Your bond purchase allows the bond issuer to borrow your money and pay you back with interest.
Bonds offer lower returns but do come with the risk that the bond issuer could default on its payments. (However, bonds are typically very safe investments.) Government bonds are the safest investment because they’re backed by the “full faith and credit” of the U.S. government.
Mutual Funds
Mutual funds are bundles of stocks, bonds and other investments. You can purchase a large number of these types of investments in one transaction. You pay a professional manager to invest your money. It’s typically more expensive to buy mutual funds than stocks or bonds because you pay a middleman to manage that money.
Index Funds
An index fund is a type of mutual fund — but there’s a difference. An index fund passively tracks an index. This means you don’t pay a money manager to pick and choose investments for you. For example, all S&P 500 index funds follow the performance of the S&P 500 by holding company stock within that index.
Exchange-Traded Funds
Exchange-traded funds (ETFs) are also a type of index fund because they also track an index. Like index funds, they are not actively managed and less expensive than mutual funds.
The difference between index funds and ETFs is that ETFs trade on an exchange like a stock — you can buy or sell throughout the trading day as the price fluctuates. Mutual funds and index funds, on the other hand, are priced once at the end of each trading day.
Certificates of Deposit (CDs)
When you buy a certificate of deposit (CD), you give your financial institution money for a specific time period. When that time period is over, you get the amount you originally invested, plus a prespecified amount of interest. The longer the loan period, the higher your interest rate. Note that you’ll have to pay penalties if you take your money out sooner.
How do you invest in any one of these types of investments?
- Go to an insured financial institution like a bank or credit union for a CD or government bond.
- You can go to a financial advisor for a mutual fund.
- You can find mutual funds, index funds or ETFs through a discount broker like Robinhood or a large broker like Vanguard.
Just remember, investing in a 529 plan offers more tax benefits for approved educational expenses — but a 529 plan isn’t your only option.
6. Fear of Future College Costs
Ahhhh… This is a tough one. Use a college calculator like the College Board’s College Cost Calculator to determine how much it may cost to send your child to college for four years. I plugged in some numbers and it informed me that in 11 years, it’ll cost me over $311,000 to send my child to college.
I understand the the numbers look scary. However, I still come back to this:
- Merit-based scholarships take care of a chunk of the costs.
- A tuition installment plan can help with month-to-month costs.
- The sticker price is just a starting point and in no way says that you’ll pay the full price.
- You can use creativity to save. (What’s that talent, again?)
Take Advantage of College Savings Month!
If you’re ready to save for college, now’s the time! You have so many options at your fingertips, so take advantage of it.
Don’t forget to get the start-of-school checklist for the college search!
by Melissa Brock | Aug 27, 2020 | Ask the admission office, Financial aid and scholarships |
Move over, Yale and Harvard.
Not everyone needs to (or should) shop for a top-name school. You can still find lots of high-quality colleges and universities among the elites.
Gems glisten everywhere. Don’t discount the liberal arts college down the street because it may be able to offer a connection that you can’t find anywhere else.
A Stanford study says “fit” is more important than rankings. I really do believe too many students and families rely on college rankings published by well-known organizations to define quality. The higher the ranking doesn’t mean it’s the best fit for your child. The study found that the “metrics used in these rankings are weighted arbitrarily and are not accurate indicators of a college’s quality or positive outcomes for students.”
Do I even need to write any more?
Quick Story
I chatted with Laurie Kopp Weingarten, president and chief educational consultant at One-Stop College Counseling, and she told me a great story.
“Several years ago I had a straight-A student with strong test scores and interesting extracurricular activities who was a bit lacking in self-confidence. She felt strongly that she should attend a college where she would be the ‘big fish in a little pond’ instead of the ‘little fish in a big pond.’ It was very important to her that she choose an institution where she would be at the top and be recognized as a superstar.
She set her sights on a public university with a 70% acceptance rate. She did apply to other colleges, including those that are much more selective, and was actually accepted into every school she applied to. However, she stuck with her plan to attend the public university.
She SOARED there. She was at the top of her class, where she won all sorts of awards. She is well-known at the school, and they’ve asked her to assume all sorts of leadership roles. She has made mini-promotional films for the school, and now, as a recent alumna, they’ve asked her back to speak multiple times.
In this case, she didn’t feel up to attending a highly selective university where the competition would be fierce. Instead, she decided to choose a school that isn’t overly competitive and where she would stand out. It paid off with lots of internships and job offers, and it built her confidence.”
Yessss! This is exactly what I’m talking about.
Best Reasons to Look for a Non-Selective or Moderately Selective College
Most people think the only reason your child would want to look for a non-selective college is because you couldn’t hack it due to poor academic achievement. Not so. There are lots of great reasons to opt for a less-selective institution.
1. Your Child May Be More Likely to Get In
Obviously, the fact that your child can get in is one of the reasons to apply to non-selective colleges.
How do you find out whether a college is selective or not? Take a look at its admission requirements. Most colleges list their admission requirements, which may look something like this:
- Graduate from an accredited high school or equivalent by the time of enrollment.
- Rank in the upper half of your high school graduating class.
- Have ACT or SAT-I scores high enough to predict probable success. Note: ACT and SAT test scores may not be required if you’re applying for admission right now. Many colleges do not want to place undue hardships on students who cannot take the ACT or SAT due to closed testing locations.
- English: Four years, including literature
- Math: Two or more years, including algebra, advanced algebra and geometry
- Social studies: Three or more years, including American and European history
- Sciences: Two or more years of lab science
- Foreign language: Two or more years
That may be the extent of a college’s requirements! You can also call an admission counselor for more information about specific college selectivity.
2. Your Child Will Still Take Rigorous Classes
Make no mistake — it’s a challenge to get through organic chemistry at just about any college or university. Lower selectivity institutions definitely offer rigorous coursework.
Just because your child’s valedictorian of her high school class or achieved a 34 ACT doesn’t mean that she won’t feel challenged at a lower selectivity institution.
- Some less selective colleges let academically talented students work with faculty on research projects as well.
- Students at lower selectivity institutions may also receive more personalized attention from staff.
- Some lower selectivity institutions smaller classroom size with hands-on teaching may be more conducive to learning than a large lecture hall format.
- You may get to know classmates and faculty closely and form lasting personal or professional relationships.
- You child may get more opportunities to work on projects, connect to internships through faculty and gain valuable job experience.
3. Your Family May Experience More Personalization During the Admission Process
Less selective schools must work a little harder for their students. That means you and your child reap the benefits. In other words, highly selective colleges and universities don’t have to work nearly as hard to recruit students — they naturally come to them. That means that less selective institutions must do the hard work of calling, emailing, texting and even engaging students on social media.
You’re more likely to get one-on-one attention from an admission counselor who must carefully work through an application list. As an admission counselor, it was my job to personalize the admission process as much as possible. I would try to learn:
- Students’ goals
- Other schools on their list
- Their favorite things (we once sent a box of Wheaties to a student because we knew it was his favorite cereal!)
- Connections they’d already made with others at the college
- About their families and friends
- Anything else I could think of!
We made the college search process a personalized experience — and that might just happen if you’re looking into a less selective institution.
4. The College Application Process is Less Strenuous
Chances are, your child won’t have to worry about a complicated application process if he or she is looking at a less selective institution. Here’s a quick overview.
Regular Admission
Regular admission means your child can apply to as many colleges as possible. An application submission deadline varies between institutions. Regular admission deadlines typically fall in early January and admission offers get sent out in late March or early April. Your student has until May 1 to either accept or decline admission offers. (Your child may not encounter this type of admission, either.)
Rolling Admission
When I was an admission counselor, our college used rolling admission. Rolling admission means a college releases admission decisions regularly instead of sending them all out on one target date.
An admission committee will only review your child’s application as soon as all required information is in. Colleges that use a rolling admission policy usually notify applicants of admission decisions quickly. (Students learned of an admission decision within two weeks at our college!)
Rolling admission decisions are non-binding. This means that your child will not be required to attend that school and will not need to make a decision until May 1, which is National Candidate Reply Day.
Open Admission
Open admission means a college accepts any high school graduate (no matter what those grades look like) until all spaces in the incoming class are filled. Two-year community colleges immediately come to mind — most community colleges have a two-year open admission policy. Note that a college with a general open admission policy may have certain admission requirements for specific programs.
Your child probably won’t encounter these types of admission at lower selectivity institutions:
- Early Action (EA), which means your student has the option to submit an application before the regular deadline. Early action plans are not binding, which means that your child is not required to attend.
- Early Decision (ED) means your child can submit an application to his or her first-choice college before the regular deadline and get an admission decision earlier than usual. Early decision plans are binding, which means your child must attend that institution.
- Single-Choice Early Action or Restrictive Early Action means your child is not required to attend if accepted. However, if using this method, your child may not apply to any other school during the early action period only.
5. Lower Costs
You’ll typically find lower selectivity institutions in areas that also include lower costs of living (not big urban areas). The savings on rent and tuition might be worth it.
Your child may be able to get an academic scholarship. Many colleges give half or full-tuition academic scholarships to students who have a very good high school GPA, ACT or SAT scores and class rank. The most selective colleges will not award your child a merit scholarship.
“We had a student who wanted to study business. Although she was accepted at multiple selective programs, she chose to study at Bentley University (45-50% acceptance rate), where they placed her into the honors program, provided her with a large scholarship, and of course, she received all the perks that came along with the honors program. She loved feeling like she was the top of the class!” says Kopp Weingarten.
Kopp Weingarten also said, “We also had a student who chose a large public university in the Midwest where she could use her AP credits to get advanced standing, basically entering as a sophomore. She graduated in three years, saved tons of money and was accepted into a top-tier Ph.D. program.”
6. College Selectivity is Not a Reliable Indicator of Learning, Job Satisfaction or Well-Being
The Stanford study found no significant relationship between a school’s selectivity and student learning, future job satisfaction or well-being. Furthermore, the study found only modest financial benefits of attending more selective colleges — and that applied to first-generation and other underserved students.
Individual student characteristics (background, major, ambition) may make more of a difference in terms of post-college outcomes than the institutions themselves.
7. Learning Engagement is Most Important
Students’ learning among a campus community may offer the key to positive outcomes after college, according to the Stanford study. For instance:
- Students participate in service learning and thrive when they apply what they learn in the classroom to real life settings.
- Students are successful when mentors at the college encourage them to pursue personal goals.
- Those who are successful after college engage in multi-semester projects.
8. Grades May Be Higher
Your child may be more likely to graduate with honors at a less selective institution.
“When students apply to medical school, the two most important aspects of their applications are their GPA and their MCATs,” says Kopp Weingarten. “We had a student who felt it might be difficult to maintain a high GPA at a highly competitive college where everyone was aiming for ‘A’ grades. He chose to attend a college where he felt he could keep his GPA high due to the lower competition at the school. Due to the fact that he was at the top of their admit pile, he received a huge scholarship and only paid about $10,000 a year for a private college. It worked out for him because he graduated with a near-perfect GPA and was accepted into medical school. He then had the money he saved to put toward paying for medical school.”
Great example.
Think Carefully About College Selectivity
The main drawback of graduating from a less selective college is brand recognition. However, there are other things to think about, such as whether your child actually ends up graduating. Plus, if your child plans to go to graduate school, nobody cares where he or she goes for an undergraduate education.
Colleges with higher selectivity are also much more likely to graduate students than those with lower selectivity. However, once your child does graduate, there’s little difference in life outcomes, as the Stanford study suggests.
“Sometimes, the most highly selective schools can open the door for a candidate (job or graduate school). But what really matters is how well the student performs at the school they are at. The school doesn’t make the student successful — it’s up to the student to do that on their own,” says Kopp Weingarten.
Tip: Check the financial solvency of institutions your child is interested in (particularly those small private colleges that were already in trouble before the pandemic). Some have already closed. Attending a lower selectivity public school is less of a risk because if those institutions close, students will still be a part of the state system.
by Melissa Brock | Aug 1, 2020 | Financial aid and scholarships |
This post may contain affiliate links.
Did you know your child can earn scholarships as a kindergartener? Yeah! Unbelievable, right?
It cracks me up to think of my son sitting down at a computer next year, typing away at a computer to fill out a scholarship application. (He’s four.)
I checked in with Michaela Schieffer, an independent college counselor with MoonPrep.com. She says, “While starting a separate savings account for college is the solid solution, you also have creative options to grow that account. I recommend beginning the search for external scholarships as early as possible. External scholarships can be used at any college, and are available as early as age 10 through graduate school. Since most of these early scholarship awards are dispersed in a check rather than directly to a college, this is a great way to augment your savings in a college account.”
Such solid advice! Here’s a deep dive into scholarships — at any age.
What if My Child’s a Senior?
Now, most people’s energy doesn’t turn toward thinking about scholarships until their kids get close to high school — and most students even wait till senior year to start thinking about scholarships.
Is it too late to apply for scholarships when your student is a senior? No, of course not! Start looking at whatever age your child is right now and start looking, whether you’re starting as a rising senior, eighth-grader or sixth-grader. (And if your child is a rising senior, start now!) You can also look into how to help your senior combat scholarship overwhelm.
Don’t forget, your child can still look for and apply for scholarships during college as well. There are opportunities everywhere.
Here are some ways to get started on the scholarship search, no matter your child’s age.
Start Searching Now
Whatever age your child is right now, start looking for scholarships.
What’s the first thing you do when you’re looking for information? Sure, you Google it. Check out FinAid’s Scholarship List as an example.
Don’t forget to check out scholarships in your community. These are lower-hanging fruit because the community you live in is more likely to award scholarships to one of their community members. Here’s how to look.
- Ask your child’s school counselor. School counselors are the heroes of community scholarship knowledge. Your child’s school counselor should be able to hand you a list of scholarships available in the community. If your child’s not in high school yet, ask in the school office at your child’s school for any information about scholarships.
- Tap into your own local connections. Ask wherever you go — the dentist, the chiropractor — to find out whether scholarships exist, even for younger kids.
- Research past scholarships. Ask for old scholarship programs or scholarship awards night programs from local high schools. Don’t be afraid to ask for several going back a few years.
- Branch out and ask about scholarships in another local area — or two. Don’t stick to your neck of the woods. Ask for scholarship programs at other high schools in your county or area. A local business might be willing to branch out, particularly if students in that area aren’t taking advantage of a particular scholarship. The business also might be willing to offer a county-wide or area-wide scholarship.
- Watch out for scholarship scams. Nothing is scarier, right? Don’t miss this post about avoiding scholarship scams.
Gear Your Child Toward Scholarship Types
First, let’s consider the ways scholarship committees award scholarships. They want to see your child do a few things.
Develop Specific Skills
Put yourself in a scholarship committee’s point of view. You’ll notice that lots of scholarships awarded are based on entrepreneurial skills, art skills and more. Has your child worked to develop a specific talent or interest? Whatever it is, nurture it, then use those skills to his advantage when you’re looking for scholarships.
Here a few skills your child can develop over time:
- Fine arts prowess
- Athletic talent
- Leadership skills
- Academic excellence
- Team player skills
- Analytical skills
- Communication skills
Consider Ways to Serve
Wouldn’t that committee rather give a scholarship to a kid who actively provides value to a specific cause or organization? It’s one thing to be in clubs and hold leadership positions. But what if your child can make a serious impact? Doing something that makes an impact can make your child extremely valuable in the eyes of the scholarship committee.
Does your child have a hankering to serve others? Here’s an example. Annie Wignall Foskett was 11 when she created the Care Bags Foundation. She began collecting essentials (soap and shampoo, etc.) for kids in foster care and crisis situations. Foskett jumped into action by creating fabric care bags filled with these essentials. Fast forward 20 years later. The foundation now serves displaced, abused and disadvantaged children all over the world!
Obviously, it’s better to develop a child’s burgeoning desire to serve organically, rather than trying to do it just for scholarships or personal gain. However, if your child has a great idea, nurture it. You never know how much a great idea can take off!
Here are some ideas you and your child can think about developing:
- Help disadvantaged children
- Assist senior citizens
- Raise awareness and help for animals
- Take care of the environment
- Help the hungry
- Assist the homeless
- Reduce crime and promote safety
- Enhance the local community or state
- Help disadvantaged schools
It’s a great idea to do some research to find out what the needs are. A great way to launch a major project is to start by volunteering. Encourage your child to check at school, at your family’s place of worship or city council to determine what type of help is needed. Encourage your child to just get started wherever he or she gravitates toward, such as a homeless shelter or nursing home, and ask whether it takes volunteers.
Does your child have to build his own nonprofit or create an amazing foundation like Care Bags? No. Showing extraordinary compassion toward a particular cause is also a phenomenal way to gather scholarships
Develop a Vision or Trajectory
Help your child develop a vision for his or her life. I know, it can seem impossible for most young people. How can they possibly know everything that’s available to them? Most kids have a limited worldview because they haven’t had the life experience that comes with age. However, it’s a great idea to have some sort of idea of what that could look like. Does your student gravitate toward social justice issues? Writing? Entrepreneurship? What does that life look like?
My aunt knew at a very early age that she wanted to be a teacher. She was probably in second grade when she declared she wanted to influence children for the rest of her life. Guess what? She became a first grade teacher and taught for years! I’m amazed by that story and like to share it because you might not be too young to figure it out.
Build on Other Traits
What other characteristics does your child have? Is your child a minority or have a disability? Is your child left-handed? You already know there’s a scholarship for just about everything you can think of. I have a personal example that applies to this. My school counselor knew that I’m deaf in my left ear and partially deaf in my right ear (yes, it’s true!) and got me in touch with our local vocational rehabilitation office. The organization gave me some extra scholarship money over the course of my four years at college. (State vocational rehabilitation (VR) offices help people with disabilities prepare for, obtain and retain employment.)
I wouldn’t have even known it was a possibility if she hadn’t mentioned it. Sometimes it’s about talking to everyone you know — and searching online for that information.
The University of Washington has a great list of scholarships for those with disabilities if your child qualifies.
Get in the Habit of Looking Often and Take Action
It’s never too early to start looking for scholarships, but it’s important to also look for them all the time. Be on a constant search for scholarships that fit your child’s profile. Encourage your child to look, too. Here’s a quick example of what you could do:
- Look for scholarships on the first and 15th of every month. (Set a calendar alert so you remember to do it.)
- Select at least two scholarships to apply for every month. (Your child can do this!)
- Create a Trello board to keep track of scholarships researched, applied for and received. It’s really helpful so I stay organized. I do this for my blog and align my editorial calendar with the following:
- Articles to Write
- In Writing
- Editing
- Ready to Input
- Inputted
- Review in Six Months/One Year, etc.
- Create an account for the scholarship money. (But learn the scholarship rules — some scholarships don’t allow you to just “take” the money. Some may have specific requirements, like a preference to pay the school directly.) However, if a scholarship committee allows you to cash a scholarship check, consider whether you want to invest the money in a diversified fund — particularly if your child wins the scholarship years before the start of college. Consider contributing your own money to that account as well (regularly and often!) so there’s a robust amount earmarked for college.
- Constantly review what’s going well during the scholarship search. If a process needs to change, make that change early on.
Don’t Get Discouraged
Not getting results? Keep going. Keep moving forward!
I know I already mentioned this, but don’t wait till high school to start looking for scholarships, particularly if your child is truly doing some exceptional things. If he’s creating his own app to feed the homeless in Africa, you bet scholarship committees will want to hear about it — even if your child’s only eight.
When it comes down to it, it’s a very generous world we live in — and people want to help promising kids go to college!
Make an Impact on the World
Here are a list of scholarships your child can apply for, divided by age. Check out this list of best scholarship websites as well.
Starting from Kindergarten
Starting from Middle Elementary
Starting from Middle School
Starting from Early High School
Notice that the bulk of these are for younger students! Good luck with your own child’s scholarship search!
by Melissa Brock | Jul 1, 2020 | Financial aid and scholarships |
Two kids (or more) in college at the same time.
What are your immediate thoughts and feelings when you think about this?
Do you feel excitement for the years ahead? Sad at the idea of being an empty nester? Do you feel a deep spike of fear when you consider how you’ll pay for it? Maybe you feel all of the above!
Hang in there — it’s normal to feel a rollercoaster of emotions.
I’ll always remember the unforgettable Andriuskevicius triplets. (That last name! Three times!) The three high schoolers came through the admission office looking so identical. It was so fun talking with them. Two of the kids ended up enrolling at the private college I worked for. One enrolled at a state university.
Their parents got slightly nervous when the conversation turned to paying for college. “You know, we knew this was coming,” Mrs. Andriuskevicius said. “But when they say, ‘Enjoy it, they grow so fast,’ they really mean it,” she added.
She was a fun mom (she had to be, to raise triplets!) and asked how much it would cost immediately. She listened to the financial aid spiel and did some fast math. Mrs. Andriuskevicius totaled up a pretty accurate figure in her head about much it would cost for all three kids to go to college — after grants and scholarships.
According to College Board, the average published yearly tuition and fees (not including room, board, housing or supplies) are:
- Two-year public colleges (in-district students): $3,440
- Four-year public colleges (in-state students): $9,410
- Four-year public colleges (out-of-state students): $23,890
- Private four-year colleges: $32,410
Multiply these amounts by two (or three or four!) kids and you could be looking at quite a chunk of change, as Mrs. Andriuskevicius deduced in about one minute flat. (I was really impressed.)
Hang on, there’s good news coming!
There’s Good News!
Did you know that it having two kids in college can work to your advantage?
“In my experience, the FAFSA’s expected family contribution (EFC) takes a significant drop when the second and third child enter college,” says Pam Rambo, former financial aid director in a community college, four-year college and a 5-city college access organization training counselors in financial aid. She now owns Rambo Research and Consulting.
The EFC is based on household income and assets. It’s the minimum amount that a household is expected to contribute toward the cost of college.
The financial aid office at each college uses the EFC for each student to determine how much aid your student gets. “That is a simple subtraction problem in which they take the official cost of attendance (COA) for their school and subtract the EFC,” Rambo says.
In other words, let’s say your student is attending a college that costs $30,000 per year and your child’s EFC is $15,000. The amount of need for your oldest child is $15,000.
Now, that doesn’t mean that all financial aid offices try to meet the full $15,000. Each financial aid office uses a financial aid formula that they use to distribute aid. Some colleges try to meet 100 percent of need. Others might meet 50 percent to 80 percent of need.
Check for a Sibling Discount
Have your kids considered going to the same college?
Whenever I think about this topic, Michelle, Maye and Rachael all come to mind — three sisters who attended the college I worked for — all at the same time. Michelle was a senior, Maye was a junior and Rachael was a freshman! They always said their dad (jokingly) refused to move three girls to three separate colleges each fall. It worked out really well that they all went to the same college.
I Know What You’re Thinking: “There’s No Way My Kids Will Go to the Same School!”
You might think there’s no way your kids will go to the same school: “They’re like oil and water! There’s no way they’ll end up on the same campus!” But the reality is that older siblings do have an influence on younger siblings, according to a working paper released by the National Bureau of Economic Research.
In addition, a study by Joshua Goodman of Brandeis University, Michael Hurwitz of the College Board, Christine Mulhern of Harvard University and Jonathan Smith of Georgia State University found that when older siblings enroll at a target college, it “nearly quadruples” the probability that younger siblings will apply to that same school. In addition, 13 percent of younger siblings follow their older sibling to the target college only because their older sibling enrolled there.
The benefit? Cost reductions.
“If the children are entering the same college, I have seen very favorable treatment in terms of the financial aid package offered,” Rambo adds. She says there’s no fixed dollar amount for the reduction because the reduction depends on financial information from each family.
“I like to address the fear of parents of freshmen, sophomores and juniors with a plan to apply where their aid awards will be greatest in relation to the cost of the colleges. Looking at whether colleges collect even more data about a family by requiring the CSS Profile is another strategy,” she says.
The CSS Profile, short for the College Scholarship Service Profile, is an online application created and maintained by the College Board. It allows college students to apply for non-federal financial aid and requires a much more comprehensive overview than the FAFSA. Nearly 400 colleges and scholarship programs use it to award non-federal aid. Check with the admission office of the schools your chid is applying to to determine whether your child needs to fill out the CSS Profile.
Filing the FAFSA
Does it change the FAFSA with more than one student in college? Rambo says that in addition to other calculations, the FAFSA collects information on the number of minor children in the family who will also be attending an undergraduate program at the same time and figures that into the formula, which is used to calculate the EFC for each child headed to college.
A frequent surprise for families with two children in college: Each child has a different EFC number. “They ask, ‘How is this possible when we entered our same income information for both?’” Rambo says.
The answer is simple: Student income and bank balances can make a difference.
How Many FAFSAs Do You Need to Complete for Multiple Kids?
This is a great (and common!) question. You’ll need to fill out FAFSA forms for each child but can transfer the information from one form to another so you don’t have to completely start from scratch each time you work on the FAFSA.
But wait! Before you file the FAFSA, you’ll need to get separate FSA IDs for each child. An FSA ID is a username and password combination that serves as your legal electronic signature throughout the financial aid process. You and each of your children will need your own FSA ID.
Your FSA ID is associated with your Social Security number and is equivalent to your legal signature. That’s why you must have a special FSA ID per person. You’ll use the same FSA ID to sign each of your children’s FAFSA forms.
Get Excited!
Don’t forget to do a few things methodically:
- Look for lower-priced schools.
- Put an emphasis on having your child help earn money throughout school.
- Consider ways to earn more or make more money.
- Consider federal loans over private loans. The Parent Loan for Undergraduate Students (PLUS loan) is an excellent option if you’re willing to take out a little bit more for college. for the freshman year and work with the college aid and scholarship offices to find additional funds for sophomore year and beyond. Learn how to apply for the Parent PLUS loan.
- Remember that you don’t have to come up with the full amount yourself. Many colleges offer steep discounts!
“You might find that if you’re a high-income earner and your child has already been accepted at a high-dollar university which only awards need-based aid, you may not see much help with the first child who enrolls there. That will improve some when a second child goes to college,” Rambo says.
It Takes Planning
Every dollar you save is $1 less that you or your child will have to borrow. (Yep, I’ll bring out the “a penny saved…” adage. Those pennies really do add up, even after just a couple of years!)
Most families end up covering just over 40% of college costs with a combination of savings and income, according to a national study by Ipsos and Sallie Mae. Your child will likely get scholarships, grants and loans as well.
What can you do as a parent?
Don’t forget about how helpful meeting with a financial advisor can be. If you can, do it before your first child’s a senior so you can develop a comprehensive plan to determine what’s best for your family’s financial circumstances. In some cases, financial advisors can recommend how to reallocate your assets, which can be helpful before you file the FAFSA. (It can help you qualify for more aid.)
Also, don’t discount your earning power. Your earning power may be tremendous during the course of a 10-month period. Remember that you can always figure out how much your paycheck can cover and submit money (even if it’s just a little bit!) to help pay for college.
You Can Do This!
I always admire the Andriuskevicius triplets’ parents because they handled having three kids in school all at once with such grace. They took a deep breath and handled the costs through a combination of grants, scholarships, cash and loans. All three kids made it through college (and incidentally, the “oldest” triplet ended up student teaching in my daughter’s first-grade classroom. A fun connection!
Thinking about putting more than one student in college at once can feel like plopping yourself into an icy stream. But it’s doable. Jigsaw the puzzle of all the options together. Consider how you can break it down, and remember, having more than one student in school can be a benefit, not a drawback.
by Melissa Brock | Jun 23, 2020 | Financial aid and scholarships |
I vividly remember working with a student whose dad said, “Whaddya mean, it costs $XX,XXX for my daughter to go to college? I’m not giving up golf and vacations!”
He was joking, he was joking. (I think.)
At any rate, I know that on some level, just about everyone can relate. You may think, “When do I get to do what I want to do? When my kids are out of college? Uh, no thanks. I’ll be what, 70 by then?”
Of course kids are a blessing and you’re willing to sacrifice for them.
But is it possible to have it all? Is it possible to pay for college and help your kids through a very expensive part of life? Without taking out oodles of loans?
Yes, it is! Yes, it is. You can do this — even if college is coming at you at 60 miles per hour. It just might take some creativity and careful planning (and maybe a side hustle to boost your bank account). Here’s how it can be done.
Prioritize
My husband has been hankering after a garage for the better part of a decade. Actually, I take that back. He wants a shop. A place to store his tools, a car project and a boat.
Do you need a lot of things all at once? Maybe your husband wants a new car and a shop, you want a new kitchen and you want to pay for college all at once. Life is short, right? You deserve it. You’ve worked hard all your life. But have you asked yourself what you really need?
Consider these statistics, directly from fee.org:
- The average American home contains 300,000 items.
- One out of four houses with two-car garages is so stuffed a car can’t even fit in the garage. (I’m embarrassed to admit that I’m one of the four!)
- Each American throws away over 68 pounds of clothing per year.
- Americans spend about $1.2 trillion a year on nonessential items.
I’m not saying that the “things” you want aren’t essential. It’s a great exercise to decide your priorities and figure out what’s essential. I know from experience that prioritizing what you want is easier said than done.
How to Evaluate Your Priorities
My husband’s shop isn’t done and he’s getting increasingly nervous about the lack of time he has to build it. In fact, I can almost hear his train of thought: “It’s almost already July and the cement floor isn’t poured yet… When am I going to build the thing because it’s going to be December before we know it? The truck will have to go into storage somewhere else because there’s already snow on the ground… AAAH!”
Poor guy.
But in the grand scheme of things, the shop doesn’t have to be built now. In fact, he could wait another year or two if he really needed to. However, he wants it now so he has enough time to work on a car (which could take years). He wants to be able to have it ready so he can teach our son all about restoring cars as well.
So, there’s a bigger priority in the works here — son and dad time. Priorities go deeper than wants. In fact, they drive to the very heart of our most important values.
How do the things you want align with your priorities and values? Here are some examples. You may want to:
- Install a pool to spend more time with family.
- Build a bigger dining room to entertain and encourage closer friendships.
- Help your child with college so he or she’s debt free after college.
- Go on an anniversary trip to become closer to your spouse or partner.
So, what are yours? Getting clear on your priorities can often help you decide how to put your money into pieces and parts that achieve those goals.
Use Your Money to Fulfill Your Priorities
Let’s say you decide your priorities are:
- Paying for college.
- Building a new shop.
- Painting your cabinets (instead of getting a new kitchen).
- The car will have to wait.
The reality is, we all have a finite supply of money and lots and lots of buckets.
When you discuss your priorities with your family, maybe you agree that your priority is to make sure your children don’t start their working years in debt and that you want to be able to help them pay for college.
Maybe you decide the full kitchen upgrade is a want, not a need. You can cook just as well and entertain friends in the kitchen you have. Furthermore, you do some research and realize that a full kitchen upgrade won’t give you a great return on your investment when you sell down the road.
You realize you can get along with the van you have. You realize your jealousy of your next-door neighbor’s shiny new van was getting the best of you. (Due to the large scrape on the front bumper from backing out of the garage too quickly. Yes, this is coming from personal experience. My van actually does have a recent large scrape and rock-chipped windshield.)
On the other hand, what if your priorities are different? Let’s say your main priority is to spend more time road tripping with your family. In that case, the van may have gone in the first priority slot and paying for college might move to the second slot on the list, like this:
- Buy a new car.
- Save for college.
- Build a shop.
- Paint the kitchen cabinets.
Determine How You’ll Juggle Various Goals
Once you determine your priorities, figure out how you’ll get them done. Have some fun with this! It can be like a fun puzzle to determine how you’ll get to those things you really want. Here are some ideas of how you can go about doing it.
- Estimate how much money you’ll need for each goal you’d like to achieve. It might cost more over time for things like college but there are lots of calculators that can help you estimate how much it will cost later on.
- Ask yourself how much of your savings you’ll need and when you’ll need it. Do you need the money soon? If so, you’ll need to organize your finances so you can save the money more quickly.
- Create an online savings schedule that aligns with your paydays. Decide how much you’ll swoop into a savings account immediately after you get paid. If you do it regularly and often, it’ll become a habit and you won’t miss that money. (Promise!)
- Don’t forget to create a separate account. You don’t want to spend the money you’ve earmarked for other goals, so make sure it goes into a different account. It also keeps you going! When you see how much money is in your “other goals” account, it’s inspiring.
- Treat this extra savings like a bill. In other words, treat money for your extra savings as if it’s a required payment like a utility bill. Make sure the payments are automatic so they come out of your paycheck right away, every time.
- Ask yourself whether you need a side hustle. You might need another source of income to float your project. What are your talents? Can you brainstorm extra ways to make money? It can help you hit your goals much faster if you place all of your extra money in your savings account to reach your goals.
Tips for College Savings
Guess what? The tips for saving for college are the same as the steps listed above for saving for other goals.
What might be a little trickier is determining how much to save. This can get confusing because you might not be sure what type of college your child will attend — community college, state university, liberal arts college, etc.
In other words, how much goes in the bucket?
The rule of thumb is to save as much as you can.
Even if your child only has two years of high school left, it’s worth saving as much as you can. You might not want to sock a lot into a regular savings account because there are other types of accounts that offer tax benefits. You can consider channeling that money into the following types of accounts:
- Education Savings Accounts (ESAs) or Education IRAs: These are tax-deferred accounts with earnings and withdrawals which may be free from federal income tax if used for qualified education expenses. Contribution limits apply.
- 529 Plan: 529 plans allow you to invest for your child’s education or even your own. You can make sizeable contributions every year and also shift portions of assets in a 529 to future generations.
- UTMA or UGMA (Uniform Gift to Minors Act): An UTMA or UGMA offers a way to transfer securities to a minor. You’ll call it an UTMA or UGMA, depending on which state your child resides.
There are various pluses and minuses with each type of plan, and it’s a great idea to consult with a financial advisor about which type of plan is best for you. Your best bet is to make it automatic, just like you do with your other savings accounts. (Who knew you could save for a kitchen just as effectively as you can saving for college?)
Staying on Track
Part of staying motivated is making sure you check your progress. Let’s say you funnel each of your savings streams into different accounts. Keep a fun tally system on the bulletin board in your office or on a spreadsheet so you know exactly how much money you’ve saved at any given time. It keeps you motivated and excited as you see those numbers climb. You can go old school with a Post-it Note and jot down all your numbers. You can also use a tool like Personal Capital or Mint to track your spending and savings. (I use both.)
You might not be able to save as much money as you want if you have several goals on your plate. You might feel like you’re getting nowhere fast if you’re saving for four different items. The buckets fill up a lot more slowly when you’re trying to funnel your finite extra income into four different streams.
So, how do you stay motivated when it seems like there are only pennies in the bottoms of four different buckets? Great question. Why not tackle your smallest payment first?
For some reason, this reminds me of the Debt Snowball method. The Debt Snowball method means you tackle your smallest debt amount first. You get an instant win by paying that off, then move on to your larger debt amounts.
In other words, save for one thing (the smallest amount), then the next largest amount, and so on. That way, you only tackle one or two things at a time and you get quick wins along the way.
How to Get Through It When You’re Over It
Sigh. Saving for things often loses its excitement really fast. I remember a long time ago, one of my friends was really gung-ho about saving for a new car and I was really excited for her. She’d mapped out a robust savings plan for how she’d have her beautiful new (used) car in a year.
A week later, I went over to her house and a new car was sitting in the driveway.
She’d caved and gotten a loan. “I just couldn’t wait anymore,” she told me. “I wanted it now.”
It’s easy to take out loans for the things you really want, isn’t it? Sometimes it’s necessary — you may need to take out a loan because you’ve got no other choice. What else do you do when you don’t have the money and your car breaks down? What else do you do when your child’s ready for college and you haven’t saved quite enough?
Anyone at any life stage can experience this. But I always encourage trying to save for the “extras.” Even the things that fulfill your priorities and values but that you don’t absolutely need right away. My husband’s shop is a great example.
You Can Do This!
So, if you want that [kitchen, boat, new bathroom, she shed] but college is coming soon, now’s a great time to start making a plan. And it’s still possible to make a plan if college is catapulting right around the corner (maybe it’s in just a few months)!
You may just need to heavily consider how you’ll make it happen more quickly. You might even need to come up with a more robust savings plan early on so you can prep for those college bills and the things you really want.
