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All you hear in the news is that a college education is mandatory for a good job. There’s no doubt in my mind that statement is true. This is why admissions enrollment today is the highest ever, which of course why college costs are the highest ever. Supply and demand. The rising cost of college never seems to end.

If you are retired, the average increase in your social security benefit over the past few years has been negligible. Family incomes have not gone up much either, which is why the average college-tuition bill today can consume as much as 40 percent of a family's paycheck.  As a result, families are finding it difficult to afford a college education.

There are two basic solutions.

The first solution to make college affordable is for colleges to control their costs better. They are way out of hand. No legitimate CEO of a corporation would ever run their company finances the way college presidents run their university. But that’s another topic for another time.

The second solution to make college affordable is families need to realize they need professional financial help when it comes to paying for college. Why would families ever commit to a college before they knew exactly how much they have to pay “out-of-pocket”? They seldom handle any other major purchase that way, but when it comes to college, families seldom realize the actual cost.  

Today, the cost of a public or private college, after the grants, scholarships, and financial aid is doled out, is almost a quarter of a million dollars. Unlike tax, financial, and legal advice, when it comes to college many (even wealthy) families try to do it themselves. As advisors, we know this isn’t the best way to handle paying for college. The good news though, is that the market for professional advice on how to pay for college is grossly underserved and financial professionals that are looking for new streams of business can become a Certified College Funding Specialist (CCFS®) and be there for their prospects and clients.

Save families money and lessen the impact on their retirement.

A Certified College Funding Specialist (CCFS®) can save a family between 15-30% of their overall cost of college. For the average  family with two kids, that's between $50,000 - $100,000.  Well beyond any fee the advisor may charge. Even more important, is detailing a plan to show the family how to recover the cost of college and maintain their retirement goals.

While there are many strategies a Certified College Funding Specialist (CCFS®) has knowledge of, here are a few areas where families could save considerable money, yet seldom consider when entering the college process:

Understanding what college will cost their family prior to high school.

The emotion of picking colleges causes families to make big money mistakes. Many families wait until the student’s sophomore year in high school, or later, to look at colleges. By then, the student’s decision is already being swayed by his or her peers, not by logic. The college search should begin in middle school where the parents and student can have an early discussion about money before the college decision is swayed by peers.

If students wait until their sophomore or junior year of high school, they will often have their hearts set on a particular college, influenced by a peer. Unfortunately, the cost of that college is much higher than the family’s budget and parents are left running around trying to figure how they will finance it. This is where advanced planning, using a Certified College Funding Specialist (CCFS®), can pay off.

Calculating the total cost to graduate from college, not just the first year costs.

Many colleges give out a more generous mix of grants and scholarships during their first year than during the sophomore, junior, and senior years. Students are excited when they first get the school’s freshman financial aid award letter, and they enroll in the college. Then the following year(s) the school issues more loans in the award package and the families become financially stretched to pay the higher cost.

Again, advanced financial planning with a financial professional that is a Certified College Funding Specialist (CCFS®) can offer the family tremendous benefits, especially when it comes determining the TOTAL COST of college and when it is time to appeal the award and request a better package, or even request a four-year estimate of cost and awards from the college.

Learning how to read and understand the college’s financial aid awards.

The federal financial aid system and FAFSA filing is complicated and similar to preparing taxes. Many Certified College Funding Specialist (CCFS®) advisors offer specific services to help families with the process. Families file their FAFSA/PROFILE financial aid forms in October, a full year before the student attends college. However, they never get their financial aid award letters until the following March or April. So they have about 45 days to decipher those award offers across multiple schools before the May 1st admissions commitment date. Since each school uses different formats, difficult-to-understand wording, and combines loans and grants using different names, it is at best difficult to compare which award is best.

A Certified College Funding Specialist (CCFS®) is trained to read and compare these awards. They can explain in minutes which award is best and why. Then the family and student can make a clear decision, especially if the award needs to be appealed to request a better deal.

Developing a cash flow plan for college to limit borrowing.

Everybody borrows money at one time or another, but when you borrow money, only the banks get rich…. not you.  Whether you purchase a home, land, equipment, cover your payroll, or pay for your child’s college education; the question is not “if you’re going to borrow”, but “how much will you borrow.”

Debt can dramatically cut into a family’s cash flow. Interest costs and finance charges can cost 2-3 times the amount you actually borrow. However, if you strategically manage your cash flow and watch your debt, you can control your college costs.

Federal Stafford student loans are capped. There are limits on the amounts each student can borrow. However, parents can borrow the entire cost of college using the Federal PLUS (Parent Loans For Undergraduate Students) loan program.

This unlimited borrowing for education has caused tuition costs to skyrocket. All the Feds would need to do to stop this is put a cap, or a limit, on the amount of PLUS loan that parents can borrow per year, per student. This limited borrowing would force the family to pick a college they can afford, rather than pick a school the student wants to go, regardless of the reason or cost.

Removing the parent’s access to unlimited borrowing for education would force families to be more “price conscious”; which in a few years would also force colleges to rethink their price structure, and make them more “cost conscious” of their spending (tenured professors, capital projects, etc.). It’s simply letting the free market do its thing.

Of course, this will never happen. Congress would need to institute these new education borrowing limits for families, and the college lobbyists are far too powerful to let this happen. Colleges enjoy their utopia. They’re happy with status quo.

Consequently, families must limit their own borrowing and manage their debt. A Certified College Funding Specialist (CCFS®) is trained in college financial planning and can help families calculate their entire cost of college, develop a cash flow budget around that cost, and control and manage education borrowing.

Of course, we are biased, but financial professionals that become a Certified College Funding Specialist (CCFS®), are the only hope families have to make sense of this crazy college system, and give them a fighting chance of not overpaying for college. To think the Federal government or the colleges will come up with a solution for high tuition costs is doubtful.