What Happens When Values and Budget Don’t Align During the College Search

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Joe Messinger

By Joe Messinger

April 13, 2022

We always talk about the importance of choosing a college our clients *can* afford – but what happens when the most affordable path to college isn’t the path that aligns with your client’s goals and values? 

The truth is that we occasionally come across a case where a family really should (or really wants to) choose a college that isn’t the best possible option, and we help them make the careful adjustments to their financial plan to make that decision a reality.

Avoiding the “Brand Name” Trap

First and foremost, if a family is picking a pricey school that’s out of their budget, it should be for reasons other than the school’s “good name.” We want to encourage families to think critically about their college selection process, and picking name-brand schools only doesn’t fit the bill. Going to Harvard to obtain an education degree is not worth the investment if your clients are paying full price. An elementary teacher’s salary will not be enough to justify the cost to attend Harvard, and will likely leave a student in massive debt.

Instead, families need to understand the payoffs and benefits of their school choice. Being blinded by “name recognition” can cause families to go into massive amounts of debt for no reason.

When is an expensive college “worth it”?

A few pricier colleges may be worth the extra cost depending on the outcome your clients are seeking. Several things must be taken into account when determining whether or not a college or university that’s outside of the initially defined budget for your clients is “worth it.” These include:

  1. Will your client’s student be going into a field where their alma mater matters? For instance, students interested in working on Wall Street that attend Harvard have a better shot at getting into a very lucrative field because of the connections they form at Harvard and its name recognition in the financial sector.
  2. Does the client and their student value a specific type of education that this university offers? A small liberal arts college may be exactly the type of well-rounded education that your clients firmly believe in, and want their student to experience – even if little to no financial aid is offered. Alternatively, they might value education from a college where they (your clients) are alumni, whether or not legacy students get additional financial aid consideration. 
  3. Will this specific college or university offer an extra “edge” for your client’s child after graduation? Some universities have special career placement programs, or extensive alumni networks that make obtaining a job after graduation or climbing the ladder much easier. For example, creative arts or design schools often offer carrer fairs with elite organizations that are seeking specialists to join their team right out of school and, as a result, they can boast a high placement rate from each graduating class. 

Setting Priorities

Expense is relative when it comes to college, as is the case with most financial decisions in life. Of course, as an advisor, you know this already. Every family makes decisions in each season of life based on their goals and values. Even if a goal they’re pursuing is objectively expensive, if it’s important to them, the expense is irrelevant. College is no different! 

If your clients are driven to help their students attend a college that’s not the most affordable option on their list, it’s important that they’re making this decision because what that specific college has to offer aligns with their values and goals. It’s likely that, when this is the case, they won’t mind making adjustments or tradeoffs in other areas of their life to achieve this goal. 

However, if they’re pursuing education at a “too expensive” university because their student really wants to go, or they are attracted to the brand name, or their neighbor down the street is sending their kid there – they’re going to wind up disappointed. As an advisor, our job is to help them evaluate this decision before it’s too late, and ensure that they’re in the right head space before moving forward. If it turns out that this college is truly a priority, then it’s time to help them figure out the best possible option for creating a funding plan. 

How can you help your clients find a balance? 

If attending a specific college is a value and priority for your clients, it’s time to help them figure out how to balance this new objective with their other financial goals. Our job as their guide is to educate them on these trade-offs, not to judge them for their decisions or values. In order to make attendance more feasible, and to reduce the financial impact of the tuition bills that are inevitably going to start rolling in, there are a few steps you can take:

  1. Evaluate your client’s retirement horizon. How will helping to pay for college bills impact that timeline? In some cases, if your clients are willing to work a few additional years to boost cash flow, the cost of the more expensive college may be offset successfully with only time lost.
  2. Minimize student loan debt. Although they’ve decided that this college is a goal for their family, your client doesn’t need to sacrifice their entire financial future by taking on massive amounts of Parent PLUS loans, or cosigning on their student’s loans. Help your clients by finding ways to fund their education while minimizing loans. This could mean their student pursues a part time job or a work study program, or that they divert savings from another short-term goal to pay for a chunk of tuition. 
  3. Reducing retirement contributions. While this isn’t an ideal solution, some clients we work with are in a situation where they are more than set to retire comfortably, but have a massive funding gap. If this is the case, clients who are willing to continue working for a few more years can look to reduce their 401k contributions during this window to help free up cash flow to fund their student’s college education. 
  4. Evaluate goals. There’s a saying we love: You can do anything, but not everything. For many clients who are looking to help their college-bound students start life on the right footing, this is absolutely true. Funds aren’t unlimited, but they can achieve a few hyper-focused goals if they set their minds to it. Help your clients take this time to reevaluate their goals. 

Understanding The Net Cost

As a financial advisor, the best head start you can give your clients and their student is to help them truly understand the net cost of each college on their list. Use College Aid Pro™ to help evaluate what each school will cost your client over the next four (or five) years. This can help them start to get a clear understanding of what they’ll be expected to pay out of pocket. From there, you can partner with them to build a realistic plan to help fund the expense. 

It may also help your clients truly evaluate whether or not the school their family is considering is actually worth the added expense. When using College Aid Pro™, you can guide them through what type of financial aid may be available to them at other schools, and how the difference in these costs will impact their overall financial plan.Use coupon code SVNG4COLLEGE15 to get 15% off all business solutions for life.

Ultimately, our job as financial advisors is to be there for our clients and to help them leverage their wealth to support their goals and values. If having their student attend a certain school is on that list, we can help them make that decision as financially feasible as possible through education, compassion, and strategy. 

Adapted from a blog post by Joe Messinger written for Capstone Wealth Partners.

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