Savvy College

Planning

By Lynn O’Shaughnessy

What You Need to Know

in 2017 & Beyond

Late Stage College

Planning Definition…

When parents are nearing the end of saving

for college, how do they stretch whatever

they have managed to save as far as

possible when contemplating their college

costs.

Your Gift

① Understand what the new financial aid changes mean.

② Implications for grandparent giving.

③ Latest college loan changes.

④ A major source of college money.

⑤ Checking a student’s salary potential at a specific school.

What You Need to Know in

2017 & Beyond

Understand what the financial aid

changes in the fall of 2016 mean.

Winning Strategy No. 1

Free Application for Federal Student Aid (FAFSA)

FAFSA is required to qualify for federal and state aid and

usually aid from colleges, too.

CSS/Financial Aid PROFILE

PROFILE, a creation of the College Board, is used by 229

undergrad schools (mostly private) to determine who get their

in-house awards.

Big Change in for Aid

Applications

FAFSA & PROFILE

Students applying for

2017-2018 school year,

started filing the FAFSA

beginning Oct. 1, 2016

instead of Jan. 1, 2017.

New Filing Deadlines

Families will use two-year-old

tax returns.

Referred to as “prior-prior”

taxes (PPY).

Using Older Tax Returns

For the 2017-2018 school

year, families are using 2015

tax returns.

Using Older Tax Returns

Your clients can use IRS data retrieval tool.

Tool connects client filing out FAFSA to the

IRS. The IRS fills out the relevant financial

information from tax return.

New System = Fewer

Mistakes

Slowing Down the

Aid Clock

The MAD DASH to complete forms will

disappear.

No rush = More accurate information.

Families should be able to

get award offers much

earlier and compare offers.

Acceptances and offers can

arrive together.

Awards will be more

accurate.

This change will help

families make better

decisions.

Changes Are a Big Win

for Families

The mechanics are straightforward, but implications aren’t.

Your finances will matter beginning in sophomore year in high

school.

1st base year: 2nd half 10th grade/1st half 11th grade.

Last base year: 2nd half freshmen yr./1st half sophomore

Finances won’t matter after sophomore year in college.

Current assets will still count.

What This Means

Parents will need to think about potential moves earlier.

Selling stock for capital gains.

Avoid taking retirement distributions.

Sink more money into retirement accounts earlier.

Moving money from UGMA/UTMA to custodial 529.

Maximizing Financial Aid

Harder

Help from Grandparents

Grandparents can help earlier

without hurting aid chances…

Grandparent help with costs is

considered child’s untaxed

income that’s assessed at up

to 50%.

PPY: Grandparent Friendly

Grandparents used to have to hold

back to avoid hurting aid chances…

Grandparents used to need to

wait until the final financial aid

application was filed to help.

PPY: Grandparent Friendly

Grandparents can help a year

earlier…

Grandparents can help with

costs after the aid application

has been filed in 2nd semester

sophomore year.

PPY: Grandparent Friendly

For parents taking a hit with prior-

prior tax returns…

They can ask for a

professional judgment

from colleges.

Families Can Appeal

Know changes in college loan

landscape.

Winning Strategy No. 2

.

These are loans for students only. These

are best loans because of the federal

safety net.

Federal Direct Loans

No credit requirement for

college students.

Must be enrolled at least half

time.

Subsidized loan: government covers

interest while student in school, 6-month

grace period after graduation and

deferments.

Subsidized vs.

Unsubsidized Loans

FAFSA formula determines

who qualifies for the

subsidized Direct Loan.

Unsubsidized loan: students are

responsible for all the accrued interest

beginning when money borrowed.

Subsidized vs.

Unsubsidized Loans

Students of any income can

qualify for the unsubsidized

Direct Loan.

Unsubsidized loan: are the only Direct

Loan option for graduate students.

Subsidized vs.

Unsubsidized Loans

Graduate and professional

students have another federal

loan option.

.

.

Parent Loan Options

This federal loan allows parents to

borrow up to the amount not covered by

child’s financial aid.

Parent PLUS Loan

Can’t have certain adverse

black marks on credit history.

All qualified parents get the same rate.

Begin payment immediately or wait

until child graduates or leaves school.

Parent PLUS Loan

Interest rate for 2016-2107

school year: 6.31%

Loan amount fee: 4.27%

Private loans have traditionally been

taken out by child and cosigned by

parent or other adult. Now there are

private college loans for parents.

New Parent Private Loans

Only parent is obligated to pay

the debt.

Private loans can be less expensive

than PLUS Loans for borrowers with

very good or excellent credit scores

(750+).

New Parent Private Loans

Only parent is obligated to pay

the debt.

Private Student Loans Guru

New Private Lender List

Sources of private loans:

Traditional banks.

Credit unions.

State loan programs.

Online lenders.

Growing Number of

Private Lenders

Emphasize Saving

It’s always cheaper to save than to borrow.

Assuming 10 year repayment…

Subsidized Direct Loan: $1.24

Unsubsidized Direct Loan: $1.39

PLUS Loan: $1.71

Cost of $1 Borrowed

Assuming 25-year repayment…

Subsidized Direct Loan: $1.65

Unsubsidized Direct Loan: $1.84

PLUS Loan: $2.58

Cost of $1 Borrowed

Check 4-Year Grad Rates

Winning Strategy No. 3

Check Graduation Rates

Four-year grad rate at

public colleges and

universities 33%

Four-year grad rate at

private colleges and

universities 53%

Check Four-Year Grad Rate

The Chronicle of Higher

Education’s College Completion

University of Texas: Four-

Year Grad Rate

A look at where the college money

is in 2017.

Winning Strategy No. 4

Where the College

Money Is

Don’t Believe the

Sticker Price 58% of students at public colleges and

universities get institutional money.

88% of students at private institutions, get

institutional grants and/or scholarships.

The Typical Price Cut

Average discount at private schools is 55.5%.

Throw a Wider Net

Don’t just look at

research

universities. Check

out colleges and

master’s level

universities.

Research

universities

provide 68% of

freshmen with

discounts.

Master’s level

universities

provide 86% of

freshmen with a

discount.

Colleges

provide 91% of

freshmen with

a discount.

Merit Aid and

College

Rankings

Schools That Don’t Aid Wealthy

Students Rank Highest

Highest-ranked schools often provide the best financial aid.

SWARTHMORE HAVERFORD POMONA WELLESLEY

REED WILLIAMS CALTECH PRINCETON

DARTMOUTH HARVARD PENN BROWN

$700,000 in merit scholarships for

affluent student from Pennsylvania

CASE STUDY: High-

Income Family

Percentage Receiving

Awards

Percentage Receiving

Awards

Percentage Receiving

Awards

Research schools beyond their

name.

Winning Strategy No. 5

Key is making the most of wherever you attend college.

Schools aren’t monolithic.

Check at the department level.

Only resource with actual

beginning salaries by majors.

Check salaries among similar type

schools.

Colleges are businesses. Their No. 1

priority is themselves. Families are lost

and are desperately looking for

answers.

And they aren’t finding answers.

Why You Should Take the Course

Here’s How You’d Benefit

From

It will help

you stand out

from the

crowd

Antidote to Robo Advising

Advising is becoming a commodity.

Every advisor can build an asset allocation

plan. That’s not going to set you apart.

College can help get your foot in door.

Attract Ideal Clients

Affluent parents are the ones most proactive seeking answers.

They are appalled at price of top colleges.

They aren’t finding answers from high school counselors and

college consultants.

Understanding college basics can help you cement your

relationship with clients.

College planning can help you reach out to your clients’ grown

children.

Cement Relationships

Understanding college basics will make you referable.

CPAs, attorneys, college consultants and other professionals

will send business your way.

Become the first person these professionals think of when the

issue of college comes up!

Boost Your Referrals

Parents’ Guide

What You Get in Savvy

College Planning

Four advice-packed webinars.

You’ll have instant access to all the recordings.

Two update webinars throughout year.

WHAT’S Inside Savvy

College Planning

Two Client Presentations

With speaker notes

Parents’ Guide

The Savvy Parents’ Guide to

Cutting College Costs

50 six-sided guides

These are incredibly popular among

parents.

Scholarships & Financial Aid Lists

605 major scholarships from

1,200 colleges.

The schools that provide the

best financial aid.

Colleges that don’t offer merit

scholarships.

Average price discounts at

740 schools.

Marketing Tool Kit

75-page guide

Includes PDF templates, posters,

postcards, press releases

FINRA approved

Article Reprints

FINRA-reviewed.

Brand these article reprints with your

contact information, photo and logo to

create a client touch that is both

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90-question online exam

Answer 60 correctly to qualify for 9

Continuing Education Credits

9 CE Exam Credits

Sampling of What You’ll Learn

Strategies for finding college bargains.

Where affluent students can find merit awards.

How home equity, investments, trusts & more impact

aid.

How grandparents can help with college costs safely.

Maximizing financial aid.

Names of schools the offer the best financial aid.

How divorce/separation impact financial aid.

Boosting admission chances & money.

Best way to use college rankings.

Inside scoop on athletic scholarships

Best ways to borrow for college.

Best ways to repay college debt.

Price

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