Episode 33 - College Funding Secrets Every Parent Needs to Know
Planning for college can feel overwhelming, but it doesn’t have to be. In this episode of Beyond Budgets, host Deb Meyer sits down with Ann Garcia, CFP®, also known as "The College Financial Lady." Ann is the author of How to Pay for College and a mom of twins who recently graduated debt-free. She combines her professional expertise with personal experience to share strategies that will help you save money and reduce stress during the college planning process.
Whether your child is years away from applying or you’re in the thick of FAFSA forms and scholarship deadlines, this episode will leave you feeling more confident and equipped to navigate the journey.
Why You Should Listen
Decode the "real cost" of college: Find out why the sticker price rarely tells the whole story.
Uncover scholarships that match your student: Learn how to focus on opportunities that fit their profile.
Master financial aid tools: Get a crash course on FAFSA, the CSS Profile, and net price calculators.
Appeal like a pro: Discover how to successfully request more financial aid and reduce tuition costs.
Learn from real-life examples: Hear Ann’s lessons from planning for her own twins—and how those lessons can help your family.
If you're ready to feel more in control of funding your child’s college education, this episode is a must-listen.
Key Moments to Tune In For
[06:20] The truth about tuition: Why most families pay far less than the listed price.
[10:23] SAT/ACT scores: Do they still matter for scholarships?
[24:55] How to appeal a financial aid package—and why 75% of appeals succeed.
Resources
Connect with Ann Garcia
College Financial Plan Masterclass
Website and Blog howtopayforcollege.com
Connect with Deb Meyer
Website: WorthyNest.com/podcast
Full transcript
Deb Meyer (00:00.302)
I can't wait to introduce today's guest, Ann Garcia. She's also known as “The College Financial Lady.” As a fee-only Certified Financial PlannerTM, Ann helps families plan for their kids' education. And her twins graduated from college in 2023, so she has been in the weeds and through this process herself. I love Ann's book, How to Pay for College, because it provides a wealth of information. And she really does share the nitty gritty details of who should go to college and how to fund it. Thank you so much for coming on Beyond Budgets podcast!
Ann (00:34.562)
Well, thank you so much for having me.
Deb Meyer (00:36.364)
Yeah, I'm really excited. Now, it wasn't too long ago when you were navigating that college planning process for your twins. What surprised you most as a parent?
Ann (00:47.92)
It would be hard to narrow it down to one thing. I do think one of the biggest surprises for me was, I expected the process to be very linear, send in the applications, get the acceptances, compare them all, make a decision. And in the case of my son, it really wasn't that way. He only applied to two schools, so I really expected it to be a pretty similar process.
He did early action to both. They were both state schools and he had everything ready. And so he was like, I'm just gonna, I just want to be done with this. And so he submitted both applications on Halloween. One school responded two days later. And it was like this drum beat of welcome, congratulations, you're a Wildcat. Here's your big scholarship!
Deb Meyer (01:36.037)
Wow! Yeah.
Ann (01:46.378)
And just almost daily emails from them. “Hey, check out all of our dorms. This one has a pool. By the way, as soon as you accept, you get your housing preference number and stuff like that.” And it was absolute crickets from the other school. And that was really tough because the school that didn't respond was our in-state school and his friends were getting acceptances and he wasn't.
Deb Meyer (02:03.613)
Wow. Mm-hmm.
Ann (02:15.696)
He wasn't a great high school student, but it wasn't like he wasn't gonna get in, but still that was really weighing heavily on him. And at the same time, this other school that by the way looked like it was gonna cost us about $7,000 a year more was really aggressively pursuing him and making him feel really special where our in-state school was kinda like, yeah, come if you want, don't come if you don't want.
Deb Meyer (02:21.528)
Sure.
Ann (02:42.296)
And it was frustrating as a parent to see both his hopes being built up for this considerably more expensive option and nothing being done from the other school to give him any sense of comfort that, don't worry, we've got you covered. I don't know how his application ended up at the bottom of the pile there, but it did. And so there was an almost
Deb Meyer (02:55.342)
The more affordable, yeah. Right, right.
Ann (03:11.044)
you know, about a seven-week gap where he's, like I said, just constantly hearing from the one school and nothing from the other one. I would say the lesson from that was I was really glad that we had talked about money and talked about having a budget for college and whatnot, where, you know, we were kind of trying to manage his expectations about just because it looks like this school loves you more doesn't mean that that's ultimately going to be the right choice for you. And I would say, you know, when we were earlier in the... go ahead.
Deb Meyer (03:46.872)
I'm curious, which one did he end up choosing? The one that was like rolling out the red carpet, super excited to have him or the in-state school?
Ann (04:00.592)
Well, so I will tell you, but only if I can tell the story of that because I don't know when everything I do is about paying for college and making good financial decisions. Now I'm going to say he chose the out-of-state option that looked like it was $7,000 a year more. But that was because once he got the acceptances for both and we're like, wow, $7,000 a year is a lot to pay for good weather because we're in Oregon and the school he chose is in Arizona.
Deb Meyer (04:05.432)
Sure, sure. Yes, please do.
Ann (04:28.15)
And, and he was absolutely crushed when we told him that. And, and we, we said, you know, why don't you figure out how you're going to close that gap and, how you're going to make them actually cost the same. And, and there were a lot of good lessons in that for all of us. the first one was, you know, he noticed that, the school he went to Arizona had used their highest-price dorm and meal plan in their aid award.
Ann (04:56.912)
Whereas Oregon had used their lowest price one. So actually he's like, if I look at what I would choose, you know, cause I wouldn't choose either of those. If I looked at comparable options, that closes the gap by about $4,000 a year. And then he went on to learn that at Arizona, your tuition was fixed for all four years. Whereas in Oregon, we typically had 5 % tuition increase every year. So even though was more expensive now, it was likely to be less expensive.
Deb Meyer (05:03.298)
Mm-hmm.
Deb Meyer (05:10.636)
wow.
Deb Meyer (05:20.086)
every year. Wow.
Ann (05:26.308)
junior and senior year. And then he started looking at housing once he moved out of the dorms. And we discovered that housing there was actually a lot cheaper. In fact, he ended up paying about $200 a month less in rent than his friends who went to Oregon. So all in all, even though it looked on paper like it was going to be a lot more expensive for him to go out of state, it ended up being either the same cost or cheaper.
Deb Meyer (05:27.907)
Mm-hmm.
Deb Meyer (05:47.726)
pretty comparable. Wow. That is surprising. I'm glad you shared that story because I think for a lot of people they see these, you know, high sticker prices and they get a little bit chill shocked. And I think in your book it even points out like, here's a pretty rapid difference there between the sticker price or the list price and then what you're actually paying to attend that institution. So could you talk a little bit more about the nuances there even at a broad level?
Ann (05:59.696)
Mm-hmm.
Ann (06:12.825)
Yeah.
Deb Meyer (06:17.29)
necessarily between Oregon and Arizona.
Ann (06:20.4)
Sure. Yeah, so every college has its list price. And that is if you got no discounts in the form of scholarships, financial aid, or other assistance, that is what you would pay. Very few students actually pay the list price of college. In fact, across the board, there's a study that's done every year about what people actually pay.
The average tuition discount rate is about 56%, which means that for every $1,000 of tuition that's billed, $560 of it is not paid. Now, this doesn't mean that you're gonna get a 56 % discount at every college that you apply to. It does mean that if you're willing to do your homework, you will find great deals in college educations. Every college offers scholarships.
Deb Meyer (06:54.072)
Wow.
Ann (07:12.418)
every student is eligible for scholarships, but not every student is going to be eligible for scholarships at every college.
Deb Meyer (07:18.606)
It's going to depend on grades and in the case of non-mayor, I'm sorry, financial needs.
Ann (07:22.772)
grades, financial need, what the college offers. So scholarships that colleges offer largely fall into two categories. There is need-based financial aid, and then there are merit scholarships. And need-based financial aid is scholarships and grants that meet the difference between the cost of attendance at the school and the student's ability to pay as calculated by the FAFSA and the CSS profile. So if you are someone who
Deb Meyer (07:35.63)
Mm-hmm.
Ann (07:52.336)
you know, the FAFSA says can only pay $30,000 a year and you want to apply to private schools that cost $90,000 a year, it's important that you look for those private schools that will meet your financial need and apply to those. Not all of them do. And Ivy League actually, well, the irony of all of this is the more selective the college, the more generous they tend to be.
Deb Meyer (08:05.932)
Mm-hmm.
So like an Ivy League, they're not gonna meet your financial need, right? Ivy Leagues are gonna be expensive regardless. Or they may,
Deb Meyer (08:21.308)
okay, because they have the larger endowments usually?
Ann (08:21.744)
And there's two pieces to that. One is they have the endowments, the larger financial resources to be able to do that. They also, as part of being selective, they want to make sure that everyone they admit is likely to actually accept that admissions offer. But the other piece of it is, you
Deb Meyer (08:41.812)
OK.
Ann (08:48.272)
Part of that selectivity is knowing, part of the reason they're so selective is that the people who are admitted do attend and lots of the people who are admitted are people who are willing and able to pay full price to attend there and that allows them to dedicate their resources to students with higher need. I think one of the biggest mistakes that families make is on the other side of...
of things, assuming my student is a great student, they're going to get merit scholarships, I'm going to apply to the Ivy Leagues. There are no merit scholarships at the Ivy Leagues. So financial aid in the Ivy Leagues is solely on the basis of need. Being eligible for merit scholarships elsewhere is table stakes to get your application looked at at the Ivy Leagues.
Deb Meyer (09:21.942)
It is largely financial aid driven at Ivy Leagues. Yeah.
Deb Meyer (09:34.018)
Yeah, mean, Ivy League, I presume most people are in the top of their class regardless if they're applying right there. They're going to already have the great test scores and it's going be hard to distinguish merit-wise.
Ann (09:40.63)
Exactly, exactly.
Ann (09:48.162)
Exactly. Now the other big pool, the other big type of scholarship that colleges offer are what's called merit scholarships. And those are scholarships that are designed to attract students that the college wants to enroll. And those are, you we always think of basketball and football players, but it's really the mathletes who clean up on the merit scholarships. The vast majority of merit scholarships go to students with good grades and good test scores. So even in our test optional world,
Deb Meyer (10:00.695)
Okay.
Ann (10:17.282)
If you are a student who is looking for merit scholarships, you are going to want to take the SAT and the ACT.
Deb Meyer (10:23.968)
Okay, is it worth investing in like an SAT or ACT prep class for those students that you know maybe they get an okay grade or not grade but test score the first time but they really want to improve it to a certain level to be eligible for more merit-based scholarships?
Ann (10:34.67)
you
Ann (10:42.5)
think in a lot of cases that does make a lot of sense. mean, if you think of it, if a $1,000 investment in test prep results in a $5,000 a year scholarship, that's a pretty good return on that investment. One of the things you can do, there are lots and lots of good tools out there to help families figure this out. To figure out if you're eligible for need-based aid, the Department of Education has a tool on its website called the Student Aid Estimator, and that will give you an estimate of your student aid index.
Deb Meyer (11:08.909)
Mm-hmm.
Ann (11:12.32)
And that is the number that the FAFSA says you're able to pay for college. So if your student aid index is lower than the cost of college, then you're eligible for need-based aid and you should apply to colleges that offer need-based aid. If your student aid index is above the cost of college, then you are not eligible for need-based aid and you should look for colleges that offer merit scholarships. There are a couple of really good websites that have a lot of information on what colleges offer.
One of the ones I really like is CollegeData, and that's just collegedata.com. So if you're a candidate for merit aid and there's a college that you're interested in, you can look them up on CollegeData, see whether they offer merit scholarships to students who don't have financial need. And then you can look, and if that is the case, then you can look over and see what the profile is of incoming students, GPAs and test scores, and see where you fall in that ranking.
already above 75th percentile in test scores and GPAs, maybe you don't need to invest in improving that a lot. But if you're below that, that could be an opportunity to get you in line for a larger scholarship.
Deb Meyer (12:27.276)
Okay, okay, great. Now I know you're giving a lot of data here and Student Aid Index, one of them. Can you break that down again just with the idea if your student aid number is above or below, like whether it makes sense to focus on merit-based versus the financial need? Could you repeat that?
Ann (12:47.438)
Yeah. Yeah. So the FAFSA, which for those of you who haven't filed it, it is the Department of Education's financial aid assessment tool. It's called the Free Application for Federal Student Aid. All colleges use this to allocate their financial aid. There's an additional form called the CSS profile that's used by about 250 private schools for their own institutional aid. But everyone files the FAFSA and there is one calculation methodology.
Deb Meyer (13:10.744)
Okay.
Ann (13:15.994)
For the FAFSA, it calculates a number called your student aid index, and that is the number that they say you are able to pay to attend college every year. Most families find that number pretty horrifying because it's big. It's more than you will think you can pay for college. If that number is higher than the cost of attendance at a college, you will not be eligible for any need-based aid. You will still be eligible for federal student loans, for Parent PLUS loans.
Deb Meyer (13:28.992)
Okay. Right, right.
Ann (13:45.006)
but not for Pell Grants, not for Work-Study, not for Subsidized Loans, and not for any of the college's institutional need-based aid. And you can just Google student aid estimator and then go to the Department of Education site to find that link. Now, let's say your student aid index is $40,000. You will not be eligible for need-based financial aid at
public colleges or your in-state public college, but you would be at private schools. So it's not one size fits all, of course, because that's not how our system works, but that can be helpful for families in figuring out. And if your student aid index is $150,000,
Deb Meyer (14:19.042)
but you might be at a private school.
Deb Meyer (14:29.635)
Yeah.
Ann (14:40.912)
You are never going to be eligible for need-based financial aid. That does not mean you need to expect to pay $90,000 or $100,000 a year for your kid to go to college. It just means you need to look for colleges that offer merit scholarships.
Deb Meyer (14:52.652)
Okay, if the grades and test scores and things are there. Yeah. Okay. Okay.
Ann (14:56.236)
Exactly. to give you an example of merit scholarships, first and foremost, it is not just private schools that offer merit scholarships. Most public colleges offer them as well. And in many cases, they offer them automatically. And they'll say, if your GPA is at least this, and they'll say weighted or unweighted, you will automatically get this. They also offer, many of them also offer merit scholarships to out-of-state students.
Deb Meyer (15:08.341)
okay.
Deb Meyer (15:16.322)
Mm-hmm.
Ann (15:25.176)
So that was my son's experience in choosing schools is he found an out-of-state school that was gonna offer him a merit scholarship that was large enough to bring the cost down to be consistent with our in-state costs.
Deb Meyer (15:41.514)
Okay. And do you find that some colleges are even more willing to accept out of state students because they're trying to attract a more diverse student body? that part of, okay.
Ann (15:52.048)
Absolutely. And oftentimes, part of what colleges want to do with merit scholarships is bring up the academic profile of the school. So for example, anyone who's a national merit finalist gets a free ride at University of Alabama. So want to go to college for free? take the test and go to the University of Alabama. My son was not, he maybe had a 3.5 GPA in high school and got a large merit scholarship.
Deb Meyer (16:09.08)
Go to University of Alabama.
Ann (16:20.47)
Merit scholarships are not the sole province of the 4.6 GPA, 1,500 SAT kids. It's just a matter of finding colleges where you are in the top quartile academically and where they're looking to enroll students like you.
Deb Meyer (16:27.192)
Mm-hmm.
Deb Meyer (16:34.668)
of that student body.
Deb Meyer (16:39.402)
Okay. And then on that same line, I guess when you're looking at the cutoffs for some of these grades, you, are the colleges typically looking at unweighted grades or weighted grades or does it really just depend on the specific college?
Ann (16:54.222)
That is a great question. It actually varies from college to college. So our learning from that process was that the school that my son went to used unweighted GPA. And we had been, like many families, where we saw our high school offered IB courses and AP courses and all sorts of advanced stuff. And kids were encouraged to sign up for that and challenge them to the highest degree possible. Had we
managed that a little better, he probably would have gotten $12,000 a year more in merit scholarships if he'd had just a little bit better GPA because he struggled in those courses. He was a smart kid. was a good test taker. Yeah, tested into high level courses and then just didn't, as a high school student, have the academic maturity to manage that workload. my advice to parents is
Deb Meyer (17:34.146)
He was taking the more advanced courses, but not doing as well. Yeah.
Ann (17:52.492)
because of course you don't know where your student's gonna end up applying to college when they're a freshman in high school. If you are intending or hoping that your student will apply to the most selective colleges, the Ivy pluses, the public Ivies, you wanna have a full suite of the most rigorous classes that your high school offers, that's just table stakes in the admissions game. If you are anyone other than that, I would recommend both
from a college placement perspective and from a parenting perspective, that you look for the courses on the topics that your student's really passionate about and guide them to taking those as their more challenging classes and also give them some opportunities to feel successful in other classes. Because in my son's case, it wasn't just about the money. It was about the number of nights that he was crying over his homework.
Deb Meyer (18:43.224)
Mm-hmm.
Deb Meyer (18:46.824)
Mm, just struggling, yeah.
Ann (18:47.212)
in high school that he was saying, I'm the dumbest person I know, and really a smart kid struggling. And to give you an example, he failed high school calculus. In college, he tutored statistics.
Deb Meyer (18:52.092)
Mm.
Deb Meyer (19:02.498)
Wow.
Ann (19:04.528)
So that to me is not his college was easy, it's that we had him in the wrong courses as a high school student.
Deb Meyer (19:06.563)
Yeah.
Deb Meyer (19:10.776)
Yeah, or even sometimes the teacher too. mean, yeah, we're going through this with my son. I have a sophomore in high school and we had a high school he went to last year. We ended up relocating and now we're in a different high school, very different format, different teachers, different expectations. And I will say this has been one of the most challenging school years ever in his, I mean, he's 15 and
Ann (19:16.1)
There's that.
Deb Meyer (19:39.982)
It's hard. It's hard when they're struggling to see them struggle.
Ann (19:43.376)
Yeah, yeah. And even someone who's a good teacher doesn't necessarily connect with all the students. you know, I know we had that experience a lot. I had twins and, you know, there were classes where one of them loved the teacher and the other one hated him or her and vice versa. It just wasn't a good, you know, it wasn't a good fit.
Deb Meyer (19:49.3)
Right, right.
Deb Meyer (19:53.215)
Mm-hmm.
Deb Meyer (19:58.57)
It just wasn't the right style. Yeah, yeah, it wasn't as good. Yeah, yeah. Well, and I'm sure in some cases you have to look at the overall mental health of your student, your child, just to see like, okay, is this really worth the stress and the sacrifice or do we need to maybe pivot and make some changes? So I know in my son's case, he...
Ann (20:19.044)
Yeah.
Deb Meyer (20:21.496)
partition to move from like an honors version of Algebra 2 down to a regular version. And luckily, after some different petitions at the school, he's getting his request. I don't feel great about it, but I'm also like, well, if you're really, really struggling here, why not just take one less honors class and try to see if it makes a difference. Right?
Ann (20:40.782)
Yeah. Well, we're so wired to better, faster, stronger, right? And that's not always the right answer. But I do think getting back to the original point about weighted versus unweighted GPAs, I always recommend, because every school makes their own choices about this, look at what your in-state schools use for GPAs for calculating automatic scholarships.
Deb Meyer (20:50.028)
Yeah, yeah, for sure.
Ann (21:10.132)
and plan around that because that's a good, you know, safety fallback provision is making sure that your student is not only tracking for your in-state schools requirements, but also tracking for their scholarships. And if that means having a weighted GPA or an unweighted GPA, let that inform some of your course decisions. They will have plenty of opportunities to challenge themselves over the course of their academic careers.
Deb Meyer (21:16.62)
Mm-hmm.
Deb Meyer (21:31.32)
Mm-hmm. This is, yeah.
Deb Meyer (21:38.094)
Yeah, okay, great. So I do have several more questions I want to ask you. I hope I have time for all of them. I guess if the student gets into his or her dream school, should they send that letter of acceptance right away back to the school? Or does that impact the chance of receiving financial aid at all? Like if they are quick action takers versus waiting a few months?
Ann (22:04.378)
Well, yeah, and because they're so excited and they're like, want it, you know, I want it now, I want it now. And they're the ones who click that button in the, in the portal. so I would say a couple of things, you know, if that is your student and actually whether or not that is your student, every college has a tool on their website called a net price calculator. And so you can do the college's net price calculator before you even apply. And that will give you an estimate of what kinds of scholarships and financial aid students like you.
Deb Meyer (22:12.579)
Right.
Deb Meyer (22:16.707)
Mm-hmm.
Deb Meyer (22:22.712)
Mm-hmm.
Ann (22:34.8)
got at that college this year. So do that before you apply so that you are not surprised on the other end when you get your acceptance letter. Now, are not binding. Net price calculators are not binding offers. We found with my daughter who applied to a lot of private schools, every acceptance she got, the aid package was within $2,000 of what the net price calculator had set.
Deb Meyer (22:37.025)
Okay.
Deb Meyer (22:58.188)
Impressive.
Ann (22:59.448)
So it can be really, really helpful. It can also be helpful for crossing schools off the list that are never going to fit your family's budget. Now, we've done that. Fast forward, you're getting acceptances. Should you accept them right away? If you would like to appeal your financial aid award, you should not accept right away. You have until, assuming you're doing regular decision, you have until May 1st to accept at your college. And oftentimes,
Deb Meyer (23:01.453)
Mm-hmm.
Deb Meyer (23:07.116)
Mm-hmm. Mm-hmm.
Ann (23:28.596)
Waiting longer means more financial aid is available as students who are accepted, you know, most students are accepted at multiple colleges and so they're going to turn down their acceptance at some of those schools. And in many cases that will free up additional scholarship dollars. You know, the college typically has a scholarship budget for every year. And as people rescind their awards or rescind their offers, decline their offers,
Sometimes that can free up additional dollars in the process. People don't often appeal their financial aid award letters. Something like 75 % of financial aid appeals are successful. thing that, I would say one of the challenges in the whole college space is we let so much of the college narrative be driven by the Harvards and Stanfords of the world where it's like, just be grateful you got in, that's all you need, that's your ticket.
Deb Meyer (24:11.266)
Really? Okay.
Deb Meyer (24:22.775)
Hmm.
Ann (24:26.512)
And the vast majority of colleges are actually actively trying to recruit and enroll students. And their best means for doing that is by offering them additional scholarships. And I always tell parents, the school has more money than you do. So, you know, by all means, ask for some of it. As long as you are polite and respectful and do it in a decent way, know, nobody's going to take away your acceptance offer.
Deb Meyer (24:32.568)
Mm-hmm.
Deb Meyer (24:46.072)
Sure, sure.
Ann (24:55.952)
as a result of you asking for additional financial aid. And hey, if they come back to you with another $2,500 a year, that's $10,000 less of your own money that you're gonna spend over the course of four years.
Deb Meyer (24:56.13)
Mm-hmm.
Deb Meyer (25:10.03)
Okay, thank you. Now let's say that same student, regardless of whether they've accepted or not, unfortunately the parent loses their main source of income. This is a breadwinner losing their main source of income. Let's say as soon as, you know, spring semester of senior year. So the student's about to enter college that fall.
Does that change anything in terms of should they be sending a letter into the school to do the financial aid repeal and does it like a severance package impact that at all?
Ann (25:44.344)
Yeah, so any time that there's a change in your family's financial circumstances, you should reach out to the school and ask for a change in your financial aid package. Even if you weren't receiving any financial aid prior to that, financial aid is calculated largely based on your income. And so if your income changes, your ability to pay for college changes and the way that it's calculated in the formula changes. Now, unfortunately, colleges are under no obligation to meet your financial need.
Deb Meyer (25:55.726)
Mm-hmm.
Deb Meyer (26:00.814)
Mm-hmm.
Ann (26:13.74)
whether it's upfront or whether it's because your financial situation has changed over the course of your college career. And every college makes its own decisions about that. I've seen colleges that react immediately and make immediate adjustments. I've seen colleges that say, well, we're going to wait until we see a tax return showing that your income has actually changed.
So in some senses, there's a benefit to having that happen senior year, so you can, senior year of high school, so that you can be in touch with the colleges and know how they're gonna respond to a change in your circumstances versus, say, freshman year of college where you're already committed to, you know, already committed to a college. This is one of the many reasons that I think it's so important for parents to be
Deb Meyer (26:54.222)
to that change,
Ann (27:09.712)
transparent with their kids about what their college budget looks like and what their family's financial situation is. That's not to say that, you know, mom and dad need to share salary information with their kids. But it is to say, you know, if your college budget is $25,000 a year and it's based on this amount of savings and this amount of spending out of pocket, make sure your kid understands that because they will probably be aware if you lose your job. And, you know, in that portion that's being paid out of pocket might not be.
might not be as easy to come up with.
Deb Meyer (27:43.15)
Okay, okay. Now, I think you made a point early on in your book about college isn't necessarily for everyone. So, you know, some people are going to succeed in college, it's a natural extension, but are there any situations in which it just like doesn't make sense to really go through all of this? I mean, how early can you identify that as a parent that, hey, this might not be the right next step for my child?
Ann (28:08.344)
Yeah, I mean, I think there are lots and lots of different pathways available to students. The thing I really don't like is when people say, well, if you can't pay for college, it's trade school for you. You know what? Trade schools cost money too. And college is available at literally every price point from zero to a million dollars. So don't let money be the tool that makes you decide that college isn't for you.
Deb Meyer (28:18.402)
Hmm. Yep.
Ann (28:38.98)
There are loads of good pathways through, you know, in this country largely through highly skilled trades, you know, being an electrician, being a plumber, you know, things like that, which are career paths that are not going to be, you know, not going to be replaced by automation, by offshoring, by other things like that, but that do still require the acquisition of skills. Now, the good news is you can use your 529 to pay for those types of things.
Deb Meyer (28:47.02)
Mm-hmm.
Deb Meyer (28:59.886)
Sure.
Deb Meyer (29:08.408)
Mm-hmm.
Ann (29:08.496)
as well. The people who really come out behind for having gone to college is people who enroll in college, take out student loans to attend, and then withdraw, where they've got the drag of student loan debt without the earning power of a college degree.
Deb Meyer (29:26.624)
Yeah, or they choose a major where they've taken out so much in student loan debts, it would be impossible to pay those back on that new salary with that degree. Yeah. Well, and I think there's actually an interesting study that came out recently that even goes through, I'll have to link to it in the show notes, but it goes through the different degrees at various colleges and kind of assigns a return on investment for these different degrees. So you can kind of see in real dollars. And I mean, generally speaking, it's skewed more heavily towards engineering and business degrees, things like that, where those have very strong ROI is compared to some of the other subject matters. But it's just an interesting exercise to at least be cognizant of what some of those starting year salaries are.
Deb Meyer (30:15.898)
I've heard of the guideline of going like, okay, don't take out more in student loans than the student will earn as their first-year income. Is that what you've also used as a rule of thumb or generally speaking, like try to stay at that level or below?
Ann (30:31.455)
I like to tell people students shouldn't borrow more than the direct student loan, and that is $27,000 over four years. Here's the thing. Yes, a chemical engineer could have a lot more student debt. However, the highest-paying career paths are also the major tracks that have the highest attrition rates. So what you don't want to do is enter a college with a budget on the assumption that you're going to be a STEM grad and come out with a degree in social work. Almost, you know, just the fact of earning a college.
Deb Meyer (31:03.223)
Right. Right.
Or pick a major strictly because of the earnings potential, but no real passion or skills in that field. Yeah.
Ann (31:12.848)
Exactly. Choose your college based on your budget. Let your budget inform that. There are over 4,000 colleges in this country. Most of them are offering good discounts to students to attend them. And there's also been a ton of research. Speaking of topics, there’s a lot of research done on ROI from different colleges. And one of the biggest studies about that was called the Gallup Purdue Index. And that was done a few years ago. And they surveyed adults who were successful in life and tried to tie it back to their experiences that they had in college to determine what made them successful. And what they found is it had nothing to do with where the student had gone to college, not which college, not how selective the college, not urban versus rural, not large versus small, not liberal arts versus research.
None of those, it really came down to specific experiences that students had. And those were things like finding mentors, feeling like faculty and staff cared about them, having the opportunity to apply classroom learning to a job or an internship, engaging in extracurriculars, working on a project that took a semester or more to complete. So those were all the components of success. And here's the good news: those are available everywhere.
Deb Meyer (32:37.198)
If you can plug into your community where you feel welcomed and encouraged and challenged, that's very encouraging. That's awesome.
Ann (32:43.952)
Yeah, and I will say too, as a parent, I guarantee you my children have never done anything for the purpose of proving their mother right. But my daughter went to a single-digit acceptance rate private school. My son went to a public school that basically you could sign up and they would offer you a big scholarship. They both graduated on time debt free and now are working in virtually identical jobs. So she studied.
Deb Meyer (33:12.45)
But for them, finding those good fit schools, like they did the tours, they just were attracted to different schools and felt like the opportunities at those schools better suited their personalities.
Ann (33:24.312)
Yeah, I mean, they were very different students. so, yeah, what was going to be a good fit for them was not going to be the same thing for both of them. They both loved their colleges, loved their college experiences. And I think if they swapped places, they would have both hated it. So it's also to say there's no one size fits all.
Deb Meyer (33:40.908)
Okay, so they chose wisely.
Yeah, yeah. All right. So one last kind of nitty-gritty question. Should all incoming college freshmen complete those financial aid forms like the FAFSA or the CSS profile in the cases of the more selective private schools, even if the parent's income is high?
Ann (34:03.876)
Yeah, it's a great question and it's one that people ask a lot. My answer to that is yes, and there's several reasons for that. Number one, like we just talked about, your situation could change and the college has no, if you don't file the aid forms, the college has no means of assessing how your situation has changed. The other thing is, as a parenting tool, I recommend the FAFSA because the FAFSA is the application for federal student loans in addition to all the financial aid tools. And to me, whatever requirements you have for supporting your child on their educational journey, if they don't meet those requirements, you probably don't want to rip the rug out from under them. I we always joked in our house, it was the no tattoos rule, which is as long as I'm supporting your college, you're not getting tattoos. had someone come home with some ink,
Ann (35:02.416)
I wouldn't have totally shut the door on them, but I would have had them take out the student loan for the rest of their college years. So it's just a means of having a little bit of leverage. The other thing that I hear regularly from parents is, well, I don't have financial need, and I'm willing to pay, so I don't want to file it.
Here's the thing. The largest demographic that doesn't complete the FAFSA is students from lower income households. So not filing the FAFSA does not tell the college that you're willing and able to pay. In fact, filing it and showing that you do have the means to pay for college is much more demonstrative to them if that's you, if you are willing and able to do so. That gives them a lot more information than does not filing.
Deb Meyer (35:54.51)
Yeah, that's a shocking statistic on the percentage that don't complete the FAFSA. But I guess it's also probably to a certain extent resources, right? So, you know, for low-income families, it might be hard. There might be mom or dad missing from the picture. They might not have all of the financial details readily available.
Ann (36:13.54)
They might not have filed a tax return or don't understand the process. One of the really unfortunate things about our educational system is how complicated the process is. When you think of it, like knowing how to do the common app, writing an essay, collecting all the letters of recommendation, transcripts, test scores, and then filing the FAFSA on top of it, it has not been straightforward.
You know, it was super complicated in the past. It's simplified now, but it hasn't worked very well since it's been simplified. You know, the tech side of it has been an absolute dumpster fire. This year, seems to be a lot smoother than last year. And hopefully that'll be, you know, hopefully that'll continue to be the case. But there is a high level of complexity. And that's really why, you know, that's really why it's
Deb Meyer (36:48.408)
The tech side of it hasn't worked as well, right? Yeah, yeah.
Ann (37:10.924)
It doesn't get filed along the cases by the people who would benefit the most from filing it.
Deb Meyer (37:16.296)
Mm-hmm. So I know you run all of the, you know, the book and the blog, but you also are a CFP(R) practitioner. You have an advisory firm you're associated with. Do you actually offer consults for those that are looking for just like a, hey, we need to fill out the FAFSA. This is our first time doing it. Do you offer any kind of virtual services in that regard?
Ann (37:38.97)
So I offer virtual services but have an online course that's called the College Financial Plan that walks you through all of the components of college selection. It's really targeted towards families who are in those last stages of junior and senior year, figuring out your budget, talking with your kid about money. And I will say as a segue, there's the financial planning of college, but the parenting is the other equally important.
Deb Meyer (37:44.885)
Perfect.
Ann (38:08.176)
piece of it, know, making sure that you are communicating with your student, not just about their going to college, but your goals for them going to college and your budget for them going to college and keeping them, you know, keeping them in line. But getting back to the course, it's filing the FAFSA and the CSS profile, it's researching colleges, you know, all those late-stage planning elements.
Deb Meyer (38:30.328)
Okay, great. So what is the course address or where is it easiest for people to find you if they want to follow up with some of these resources?
Ann (38:38.094)
So all my stuff is How to Pay for College. My book is How to Pay for College. And my website is howtopayforcollege.com. And my course is on there, along with my blog, where there's tons and tons of free content as well.
Deb Meyer (38:51.586)
Thank you. This has been a real treat. I'm just so glad you are a wealth of information and I encourage anyone that's listening, if you have a student in high school and you're thinking about this for the first time, definitely pick up a copy of the book at the very least. I read it and I loved it so much I gave it to a client whose daughter is in their senior year of high school.
And so, it really is good. We couldn't possibly touch on every concept that is in the book. So it does offer a lot of additional resources. Thank you so much for joining us, Ann.
Ann (39:27.738)
Thank you so much for having me.