Your Life, Simplified

College Planning: Going Beyond the Dollar Signs (31:52)

May 14, 2019

It’s no secret higher education tuition costs are rapidly rising. So when it comes to college planning your mind likely goes right to dollar signs. But there’s more to planning for college than just finances. Cozy Wittman of College Inside Track goes beyond loans and scholarships for an in-depth discussion on college planning considerations you may not be thinking about. 

Transcript

George: Hello. Thank you for downloading another episode of Your Life, Simplified. My name is George Fernandez, and I’ll be the host of this episode. When we work with clients, one of the topics of conversation that we always have is preparing for college and it’s interesting, they often prioritize college as being more important than their own retirement, which is one thing that always kind of surprises me. And when I have those conversations with clients, one of the things that I’ve discovered in my experience is that there are three fears that they have that kind of rise to the top of concerns, and that is the college costs themselves, being accepted in college of choice and graduating in four years while also having a great learning experience. And I know that was really important for my family, making sure our daughter, who went off to Minnesota, finished it in four years. To help us navigate these topics, we’ve invited our guest Cozy Whitman from College Inside Track to walk us through these issues. It’ll be interesting to hear her perspective and the experience over at College Inside Track as to how they help clients address these three topics. And so Cozy, I think maybe what I’d like to do is first thank you for being here , because I know this is a great opportunity for us, but also I know it’s a long trip down from St. Paul as well, to have this conversation. So I really do appreciate that. What I think I’d like to do first is have you introduce yourself and tell a little bit about your background, how you got started in this.

Cozy: Thank you for having me. I love chatting college, so I’m happy to be here. I am with College Inside Track, and I connected with them because I’m a mom of five and found myself in the position of searching for college, and I was not sure exactly how to launch that search. You know, do I put a map on the wall and start throwing darts at it? Like, how do we know where to start? So, I connected with them. They did amazing work for our family. I have very specific financial goals for college for my kids. And so they helped us meet those. And so I turned around and said, “How can I help you guys grow?” And here I am.

George: Wow, that’s great. So you know firsthand with five children what the process looks like. And I know I have three children myself, and we went through this process as well. I wish I had known you then. So with your background in this space and understanding what this process looks like, I was really intrigued to find out that the approach that you all use and the three areas that you address when working with clients fit really well within what I have found to be the top three issues that our clients face. And you all described this as financial fit, academic fit and social fit, which is what we’re going to talk about today. I don’t even know where to start with this topic. I mean, we could really go anywhere and before our conversation today, we joked that this could be an all-day kind of podcast, but we know we only have a few minutes to do that. So we want to hit some of these topics head on. The first topic is cost. When I think of costs, I can’t help but think of a story that I heard my father-in-law tell me when we first met, you know, 35-plus years ago. He tells a story about when he graduated in the early 60s from medical school, he had $200 in his pocket and a new brown suit. I used to joke with him about whether the story was about the suit, because brown was his favorite color, or if it was the $200. I think the point was he paid his own way through college, including medical school. And you know, I was really fortunate myself. I was able to pay my way through college as well. Now it took me eight years to do that, but I was able to pay for my own college along the way. And that is not a luxury that students have today, it seems. I know with the cost of college, it doesn’t seem like that’s even possible. So what’s the state of college costs and why isn’t that possible as easily as it was 20 or 30 years ago?

Cozy: I think that it’s an area of huge misconception for families and a great place to start. College has shifted significantly, right? The increases in the cost of attendance over the last 30 years, on average, nationally have gone up about 215% for public universities. But there are notable exceptions and those are the big dog, big state universities that people know and love. Maybe most notably, Missouri has gone up 641% over the last 30 years. Michigan’s gone up 1,047%. Wisconsin’s gone up 1,053%. Texas has gone up 439%. These increases have outpaced your salary or my salary, for sure. Salaries haven’t kept up at that rate over the last 30 years.

The other thing that has shifted or changed is that the percentage of college costs the federal student loan program covers is significantly less today. It used to be that if you took out a student loan, it covered a much larger percentage of your overall cost of attendance than it does today. The other big factor is that the FAFSA formula that determines whether or not a family has need or no need now includes a much larger percentage of the family’s income as part of that formula. And so fewer and fewer families are need-based. The student loan programs cover less, and the tuition increases have outpaced most of our abilities. So when you think about the average big public university costing somewhere in the $20-$25,000 range, imagine some part-time job that a full-time student could take on and earn $25,000. Right?

George: Exactly.

Cozy:                   So it’s just challenging. And the last time most parents were actually thinking or looking at colleges was 15 to 20 years ago. So, things have shifted significantly in those two decades.

George:              Yes, that just amazes me as you went through those numbers, and I hear 1,053%, 1,047% and 641% increased costs. It just amazes me how much costs have gone up and, said another way, the college or federal government doesn’t cover as much of the percentage. So, the federal government might argue that well we’re paying what we’ve always been paying. That’s the problem, right?

Cozy: Right. It’s just a bigger burden on the student.

George: So that’s really incredible. And I think that in talking with parents, it often comes up that they don’t even apply for financial aid because they feel like, well I’m not going to be able to anyway because I make too much money. What’s the conversation sound like when you start having those conversations?

Cozy: I think it’s important to distinguish the two kinds of aid available to families who are going off to college. One is need-based aid and people get super mired in that need-based world and really think heavily about whether or not we’re going to be need-based. And if we move money, will we be need-based? And the fact remains that you will either be perceived by the colleges as need-based or not need-based or somewhere in-between. But there’s not a lot you can do to shift that around. So the other pool of money available to students who are going off to college is based on merit aid and merit is all of the amazing and wonderful things about the student, right? The clubs they participate in, the work they do and the higher-level coursework that they’re doing in high school. Kids can take on college-level work in high school and all of those things pulled together to make them a student that colleges are interested in having on their campuses.

And so when families kind of come forward and say to us, well, we’re not going to be need-based. So we’re not going to fill out the FAFSA. The fact remains, there’s some lack of predictability and whether or not you will be need-based. It is a scale from 100% need to 100% merit, and most people fall somewhere in between.

George: Okay.

Cozy: And that lack of predictability is one of the reasons that we suggest people fill out the FAFSA. It is also the application for the student loan program. So if loans are going to be part of that process, you have to fill it out. And then some schools, because they are interested in family’s financial data for the purposes of, who will be our next great contributors to our endowment, are interested in that information and sometimes bolster their merit packages just because you filled out your FAFSA. So, there are lots of good reasons to do it, and so we encourage families to do it.

George: That’s really interesting. So, you fill out the FAFSA, even if you’re not getting student aid, financial aid.

Cozy: Right.

George: But because you filled it out because you represent someone they want to have there, the fact that you filled it out, there’s actually some kind of, I don’t want to say reward, that’s probably not the right word.

Cozy: A little bit.

George: But there’s kind of a reward that they provide you on the merit-based scholarship they’re going to be providing and saying, okay, well you filled this out. Now we know this about you. So, here’s another $1000, another $1,800 off your merit aid.

Cozy: That’s right.

George: It’s very interesting.

Cozy: You can’t predict that piece of it. Colleges don’t advertise that piece. We just encourage families to do it.

George: Because you don’t know when or if they will.

Cozy: That’s correct.

George: So why not?

Cozy: That’s right.

George: That’s what it comes down to. Okay. Well that kind of leads us into the second piece, which is the academic side. Getting into the college of choice. You know, my student is a been a 4.0 student and valedictorian. So I’ve picked all these schools, these Ivy League schools, or whatever, as to where my student’s going to go. That may or may not be the best way of approaching that, it sounds like.

Cozy: That’s correct. So we encourage families to really think through which is the right academic fit for my student, in terms of majors and rigor. What is the right social fit for my student? And those are things like distance from home and size of school and what activities are involved at this school. And then what’s the right financial fit for the family? And you have to include all three of those things. When we present that information to families, it’s an equilateral triangle, right? All three of those areas need to be there for it to be right fit for the student, because it doesn’t do you any good, for instance, to go off to that Ivy league school if your family can’t afford it and you end up taking on tons of debt for them to be there. There are more than 3,000 universities in the United States. Many of those schools will be right fit. Many of those schools are going to give your kid a great education. So really breaking down your goals in those three different areas, right? It’s going to be academic fit. If your student, for instance, GPA and ACT score or just GPA in some cases, right? A lot of schools aren’t even using ACT or SAT scores as part of their entrance criteria. If your student is slightly above that incoming average, it’s going to be a great academic fit for them. And assuming that they have some of the majors that your student is interested in with some level of elbow room for changing majors, because all students do.

George: That’s a real interesting point. So if you have a student who is, let’s say a 3.8 student, gets a 24 or 25 on their scores, and he or she applies to a school that’s really looking for 32, they’re going to struggle getting in. So finding a school that would fit that kind of picture, if you will, that profile. I think it would be a really powerful thing to consider that there may be a lot of schools out there that are looking for a student like that. That’s really what you’re saying.

Cozy: And today, families don’t know this either. How you tell your story matters as much as your numbers on a piece of paper. There are more than 1,000 schools today, as mentioned, in the country that don’t use SAT or ACT scores as part of their entrance criteria. So if you have a really sharp student with strong testing anxiety or maybe who just didn’t have a great performance on the ACT or SAT, then you just change your strategy to go and look for schools that just look at the transcript, right? And families can find that full list of who uses and who does not use tests at fairtest.org where you’ll find the full list of schools who aren’t using standardized testing any longer.

George: That is a great piece of information, because you know some students do have test anxiety and it doesn’t matter whether you take it one or 10 times, the results aren’t going to be that much different because of that anxiety. In fact, I would argue that the more often they take it and the more times they take it, anxiety gets even worse.

Cozy: That’s right.

George: So that’s really important.

Cozy: Yes.

Brian: Thanks again for downloading this episode of Your Life Simplified, which is produced by Mariner Wealth Advisors. At Mariner Wealth Advisors, we’re here to serve as your advocate. We help people chart a course to reach their personal and financial goals so that they can have greater peace of mind that may lead to a more fulfilling life. We do this by always putting our clients first because as fiduciaries, we’re required to provide guidance that’s in the best interest of clients, not in the best interest of a company or shareholders or anyone else. So as you listen to this podcast and have questions about maybe your own financial situation or would simply like a second opinion, or even if you have an idea for a future podcast, please go ahead and email us at podcast@marinerwealthadvisors.com.

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George: Are there other types of merit that people don’t consider as often as they should?

Cozy: Yes, let me take a step back and talk a little bit about merit aid. Merit aid, when people think about college and how to pay for college, they often think about grants and scholarships. But they don’t think about colleges with grants and scholarships. So they spend a lot of time and energy wandering through websites looking for private scholarships that are the, “I have red hair, one blue eye, and I’m the middle kid” scholarship. So kids spend a lot of energy searching for the right ones, writing the essays that go along with it, to get themselves $150. And, it just doesn’t go very far to moving the college needle. And so, what we encourage families to do, is actually understand the colleges themselves. The colleges are giving away thousands and thousands of dollars if you know what you’re doing.

And so families can think about merit aid as the way that the colleges measure their own success. And what they do is use grants and scholarships to attract their strongest freshman class for the things that the college cares about this year. So, for instance, often, I’ll encourage people to look at a state, and I get a lot of pushback on that, because out of state schools are very expensive. True. If you want to go to one of the big dog state universities out of state or are you going to pay $60-$65,000 for that experience? 100% you are. But there are a lot of state schools that one, don’t do out of state tuition and private schools never did it. And private schools are big contributors, right? I want my best freshman class sitting here in the fall.

And so they give away thousands of dollars. They bring themselves in at or below state school pricing often. If you’re looking at the right colleges. So, it’s important for families to understand that there is criteria out there that colleges are thinking about. Maybe your student is interested in a really interesting major at this college that doesn’t have very many students. Colleges will pay a little bit of additional grant or scholarship money for that student to come, because they need to build this major up. They may look for skill sets that the student has that are unique and interesting. We had a student who played ultimate Frisbee who got an additional $8,000 of academic aid at a private school for him to go off to play ultimate Frisbee. 

George: I would not have thought of that one.

Cozy: Yes, tuba players, flutists; everybody can carry that flute, man. But finding somebody who will carry that tuba around? State schools will give money away for that, too. So it’s a combination of things. By and large, families can think about state schools as giving money away for academics and some sports and some other activities where private schools are really interested in a whole bunch of things. And again, how you tell your story and how often you’re interacting with those schools matters very much.

George: Wow. And so location; I think you were sharing a story, if you could, again, about schools that want to have representation from every state, for example, and perhaps you know maybe lost a couple in graduation and maybe you just happen to be applying at the right time.

Cozy: Well, you always increase if a student is interesting and unique. Fifty percent of kids go within a hundred miles of their own home to college. So you are automatically more interesting if you are stepping outside that boundary. And think about it this way, if you go out to any college website, doesn’t matter which one it is, there is a picture on the homepage. And the picture is fall, beautiful leaf coloring and a mix of men and women in multiple ethnicities, right? So for colleges, demographic mix matters to them. And part of that demographic mix is, where are our kids from? And they love to say, we have one kid from all 50 States in 37 countries around the world. So it trickles down into the majors. If you are a man and interested in nursing for instance, there’s more merit money for you than women going into nursing today. If you are a woman interested in the STEM fields, there is more money for you than men going into those today. So, think about who the student is and then think about how colleges benefit from who that student is—that’s how families should be thinking about this.

George: It’s a great point. I didn’t realize this until we had this conversation. Our youngest daughter went to school and majored in mathematics and she got a great scholarship, because so few women actually go into that field. So I didn’t quite understand at the time why her scholarship seemed so much better than we expected. I’m not complaining, but now I understand, that was a field where the school wanted representation in and that’s one of the ways that they do that. So moving into the next topic, we talked about finances, the merit side and the academic side. Shifting gears and talking about the social side, graduating in four years and having a great experience. The social side being a really important piece of that. But I would imagine schools look at the student’s ability to graduate as also being an important piece of that, too. So when they bring a student in and they give them the merit aid and like you said earlier, they want them to represent the success of the school, because if they don’t graduate, that looks poorly on the school.

Cozy: Yes. Schools measure their four-year and six-year graduation rate, so, they are encouraged to get kids out. Not all schools have great four-year graduation rates. If your financial strategy is based on the idea that, my student is going to get in and out of there in four years, you’re going to want to know what that four-year graduation rate looks like and, why don’t kids graduate in four years at your university? I think that families need to think through this aspect. We get, super focused on the idea of, “will my kid get in?” And people don’t step beyond that acceptance piece to say, “what’s the experience going be like? “What’s the likelihood that this school is going to get my kid out in four years?”

What’s the likelihood that my student is going to get help finding an internship and then a job? So families should be interviewing these schools as much as they perceive the schools are interviewing them, because at the end of the day, you are paying for this experience, and you want to get the most out of that experience as you can. So thinking through things like, how far from home is the student comfortable? What size school feels good to me? And the only way students are going to start to know that is by touring. Thinking through the potential majors with the understanding that almost every student changes their major once during this college experience. Because you are going to be a person, as well as a student, on this campus. What other activities are important to me? What else would I like to try while I’m in college? And so, taking it a step beyond, “Gosh, I hope I get in,” to, “I want to make sure this is a great experience for me as a person and a student.”

George: It’s a really great point. And so how important are college visits before you make a selection or before you finally accept or maybe before applying, how important is that?

Cozy: Super important. So, colleges do track how often they interact with students. It’s a category called demonstrated interest. For stronger merit schools, or schools giving away merit money in the form of a grant or scholarship, that interactive piece is very important. If I’m a college admissions counselor, and I have some money I’m going to give away, am I more likely to give it to the student who I’ve talked to a couple times? I know they’ve been to my college, they came to our alumni event when we were in town. They stopped by our table at the college fair. Or am I going to give it to the student who just applied to my school, and I never talked to them or saw them. As a college admissions person, I’m going to give more money to the kids who I perceive are coming because I want to try and get them in the door and in a chair. That’s my goal.

George: That’s real interesting. So not only as a student gaining a better cultural understanding of the school by visiting and getting a lay of the land and, and looking at the city that it’s in, there’s also a financial component of that because of your demonstrated interest. Actually, you’re saying, because you’re demonstrating your interest. We have this initial carrot for you to consider us when we do create an offer for you.

Cozy: Yes.

George: And hopefully that will create a bigger, a better offer. Very interesting. I know when we were looking through schools, the cultural component was really important for our daughter. And so we did visit schools, and we actually visited a school and it sounded great from on the paper, looked great on the website, great in the conversations, but our actual visit to the school was different as we walked around and interacted with the students. I won’t say what school that was.

Cozy: Yes.

George: We discovered that it really wasn’t going to be a good fit.

Cozy: Yes.

George: And it really didn’t match up with all the stuff they had on their site, which was really interesting. So there was a disconnect, and my daughter recognized that and said, “This is a beautiful location. I’d love to be here for that and for the learning processes, which sounds really cool, but culturally it just doesn’t feel right.”

Cozy: Yes.

George: And that’s another reason why I think for us it was important for us to visit the school. But I hadn’t considered the financial side of it. So like I said, I wish I’d known all this stuff back then.

Cozy: It’s fun because it’s all really merged together. The academic, social and financial pieces really are pulled together and woven into each other. And so, I think it’s important, for instance, for families to have a budget and understand what they can afford. And, it’s tricky to do. There are aspects of this that are not transparent to families, so it’s hard to predict that merit aid package and what it might look like, but you can certainly play the odds.

George: Thanks again, Cozy. These are all really great reminders. As we talked beforehand, you know, I wish I had known this when my kids were going to school. But it’s great to have somebody who we can lean on when we have these kinds of questions as we pull things together for the end of the recording today, can you just get a quick reminder what some of those really quick hits are of what we can do to simplify the process?

Cozy: Yes. There are some things that all families should be thinking about. Again, diving into academic, social and financial fit. Creating a budget for yourselves for college and having that discussion with your student. This is what we can afford to have for school. Then cast a wide net. Families all too often I find narrowing their search super early to a very limited pool of schools. Cast a wide net, because you don’t know what the schools are going to be offering. You can ask schools if they give merit aid or don’t give merit aid. And so if you’re a family whose strategy is, I need merit aid as part of this package so we can afford college, don’t apply to the schools that don’t offer it. We recommend that families apply to six to 10 schools.

And sometimes families ask me very specifically, if it’s going to be a lot of money in application fees, if you can ask schools for a waiver. You don’t get what you don’t ask for. And there is also a day in the fall, every fall, that’s free. And so you can apply to any school in the country for that. Yes. A lot of times people think of the essay as an afterthought, and it is not. Some schools will pay up to $9,000 of additional merit aid in the grant or scholarship packages for a well written essay.

George: And that’s nine times four?

Cozy: Times four, that’s right. So it’s real cash for an essay, and it doesn’t have to be an essay about moving mountains. It just is unique to the student an essay that no other student could have written.

It’s tricky for kids. But it can be done. A lot of families don’t know that you can negotiate your financial award. Now you have to have the right schools on the list. And traditionally state schools do not do this. But I, you can go back to a school and say, “Here was my hope for a number, are you going to help me get there?” Because again, you are paying for this experience. And then, my biggest tip to families, because sadly too often they come to me way too late in the process for any of these strategies to be helpful is, start early. We recommend spring of sophomore year. It gives you time to really think through what is the right fit so you can start to develop that budget. If a student is going to take and retake the ACT a couple of times, it takes time to get that done and to do the prep that’s in between. And to do some planning in high school for what colleges really will help me most in high school. And so kids and families should be starting early. You don’t have to dive into like the super drive sophomore year, but starting to think through this and getting a game plan pulled together, we really recommend.

George: So, college visits this in the spring break of senior year is too late?

Cozy: Yes.

George: Good to know. Well again, I just want to say, thank you so much for sharing all of this insight. So how can you help? How does your firm help?

Cozy: College Inside Track helps families really identify right fit schools and then we get them through the essay and application process, helping the student really put their best voice on those applications. Lots of coaching behind the scenes as the student is developing, that college list and honing in on right-fit schools. Helping coach them through how much interaction they should have or not have based on what their list looks like. And then helping families really understand those financial packages when they come back. So we dive most deeply into those academics, social and financial goals for the family. We help them do the right things at the right time to help them get the results that they are looking for. And after the student graduates high school, we stay with our students once they’re in their undergrad programs, so if there’s something they don’t understand or don’t know how to navigate, they can always reach back. But primarily we help families navigate the entire college search process. And you might not be surprised as a parent, that sometimes having a neutral third party is helpful, because kids don’t always think that their parents know everything.

George: Yes, I will agree with that. We’ll leave it there.

Well, thanks again, Cozy for sharing this information. As you pointed out, the most important thing in the big picture is creating a strategy. I wish I knew then what I know now, which is what I kept saying through this entire conversation it seems. So, with that said, let’s look at your own personal financial decisions. We ask all our guests when they come onto the podcast, what’s your worst financial decision? How would you answer that question?

Cozy: That’s easy. So a brand new grad living in California, first studio apartment, I got my first credit card and was getting ready to shop for Christmas. And I thought, this is awesome. There’s a card, and I can just buy stuff randomly. And I ended up, of course, charging myself way up so my credit card debt was quite high my first two years post-college. It took me a long time to beat that down. I for sure would like “now me” to talk to “then me” and keep that away.

George: You’re right. I think we all have probably done something like that, so it’s great to have those reminders, right?

Cozy: Yes.

George: Well, thanks again for being here. We appreciate your time today.

Cozy: You’re welcome. Thank you for having me.

Brian: We know that your time is incredibly valuable and we hope you find this podcast a worthwhile investment of your time. Thank you for listening.

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This transcript is limited to the dissemination of general information pertaining to Mariner Wealth Advisors’ investment advisory services and general economic market conditions. The views expressed are for commentary purposes only and do not take into account any individual personal, financial, or tax considerations. As such, the information contained herein is not intended to be personal legal, investment or tax advice or a solicitation to buy or sell any security or engage in a particular investment strategy. Nothing herein should be relied upon as such, and there is no guarantee that any claims made will come to pass. Any opinions and forecasts contained herein are based on information and sources of information deemed to be reliable, but Mariner Wealth Advisors does not warrant the accuracy of the information that this opinion and forecast is based upon. You should note that the materials are provided “as is” without any express or implied warranties. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.

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