College Financial Planning: Advice for Parents and Students

CollegeFundingAdvisorsToday many would-be college students and parents are second guessing the culturally assumed next step after high school. And for good reason. Outstanding college student loans have exceeded $1 trillion. Time Magazine listed “Questioning the Value of Higher Education” as one of the top-ten trends in America in 2011. The New York Public Interest Research Group (NYPIRG) recently launched a campaign warning students with this message: “Don’t Major in Debt!

I have had countless conversations with students and parents regarding funding for college. Many families are asking difficult questions about whether or not a college degree is “worth it” in today’s economy. (These conversations have been the catalyst for the new CTI seminar: “The College Choice: Faith, Family & Finances.”)

Terry Evearitt is committed to helping parents and students make wiser decision about college. His life journey has taken him in many directions including: journeyman carpenter; sailor on the Great Lakes; US Army (Vietnam veteran); missionary for three years in West Africa; pastor for 13 years; and working in financial services for 25 years. Terry draws on all of these experiences when working with families through his business College Funding Advisors, Inc. Terry is also a good friend. I have learned much from our many conversations about college planning and the future of higher education. (Terry graciously offers a one hour FREE consultation and I would strongly encourage interested readers to take advantage of it). What follows is an interview with Terry to help us think more clearly about planning for college:

What motivated you to focus on college financial planning? Why are you passionate about this work?

Terry6Terry: It comes from two life experiences: First experience was while doing general financial planning for families. I often ran across clients who had graduated 15 years ago and still had $30,000 or more in student loans. Second is from personal experience. When my children started college, I was not prepared. I jokingly comment to my clients: “You don’t have to make any college planning mistakes. I’ve already made them all!”

Some experts have suggested that college loans/debt is heading toward a bubble that will lead to another economic crisis. Do you think college debt is as bad as many pundits suggest? Are we heading toward a crisis? 

Terry: For many families it is far worse than they can imagine. Statistics are that few are prepared for retirement. When people enter their highest earning years and should be aggressively saving for retirement they are hit with college costs for their children. You cannot borrow for retirement and you cannot repossess a college education. Also, statistics don’t reflect all the student loans. Often parents will take a second mortgage to pay for their student’s college costs. These are not calculated in student loans. For many families and students college debt will be with them for decades.

What do you think surprises people the most when you talk to them about the rising cost of higher education?

Terry: Most people have no idea about today’s cost of college. For many they have not “counted the costs” and what it will mean to their economic future. People have been saying for decades that college costs can’t keep going up. Guess what? Today many colleges cost over $60,000 per year and the least expensive state supported college in Pennsylvania costs over $20,000 per year.  Where’s that money coming from?  How can you afford college?

What advice would you give parents and students who are just starting to think about college planning?  

Terry: Start early and explore ALL options. Earlier is always better than later when it comes to college planning. Begin with a career direction. Next, explore what college major is required for that career. Finally, explore what is the best way to get that degree; explore all options.

Is there anything else you would like to communicate to students and parents?  

Terry: It has been my experience that many do not know what they don’t know and they don’t know they don’t know it. Most families don’t know enough to ask questions or where to begin a college plan. Yes the web is full of information but it is difficult to apply it to your unique situation. Every family and every student is different. There is no “one size fits all” in college planning. It is possible to get a great education and not be in debt for the next 15-25 years. I love helping families discover what works for them!

Related Resources:

Seminar: The College Choice: Faith, Family & Finances (October 12)

Blog: “Houston, We Have a College Planning Problem

Expert Interview:  “College, Crippling Debt and the Need for Financial Wisdom: J. Steve Miller Interview” by Derek Melleby (.pdf)