Advisors Include Kids in College-Financing Talks

A mind is a terrible thing to waste. It can also be expensive to support.

While a college degree helps set people up for success, its cost is a growing concern. Nearly half of college-bound students say price is the most important factor in deciding where or how to pursue higher education, up from 40% in 2021, according to a Fidelity study. Meanwhile, 60% of parents are concerned that market uncertainty will affect their ability to pay. Advisors can ease those concerns by including both parents and children in meetings.

“While kids sometimes start out nonchalant, seeing real numbers often triggers an ‘aha’ moment,” said Patrick Huey, owner of Victory Independent Planning.

Bring the Kids

A tough but important conversation occurs when an advisor has to recommend against a child’s dream school, especially when that first pick could result in decades of debt. “I wouldn’t hesitate to do the same for my own family if the numbers don’t work,” Huey told Advisor Upside. 

It’s best to remind clients that deciding on a college should be treated more as a financial decision than an emotional one, said Alvin Carlos, an advisor with District Capital Management. “You don’t have to go to an Ivy League school and break the bank in the process to set your kid up well.”

Class Is in Session. The average US college cost tops $38,000 per year, including books, supplies, and living expenses, according to the Education Data Initiative. Pandemic disruptions, family challenges and economic volatility have pushed more students toward affordable options, the Fidelity study found:

• Public in-state colleges remain the top choice for students at 35%, up one percentage point from 2021.

• Public out-of-state interest dropped to 9% from 14%. However, interest in private schools showed the exact opposite.

• Interest in vocational schools remains low at 6% but has tripled in popularity since 2021.

A strategy like a 529 plan is a tried and true method for clients to save for their children’s education. But there are a few other tactics advisors could suggest to more cost-conscious clients. “Merit aid hunting is underrated,” Carlos told Advisor Upside. “Applying to schools where the student is at the top of the applicant pool can lead to big discounts.” He added that starting at a community college and transferring can cut costs in half. “You can find a sweet spot between a great education and a price tag that doesn’t mortgage the future,” Carlos said.