With the increased cost and complexity of the college-funding decision, more families are hiring a financial advisor to help with college planning. Getting advice for your child’s college decision may be a good idea as more Americans are burdened by student loan debt. According to the Federal Reserve, Americans owe $1.64 trillion dollars in student debt. Of the 45 million people who have student loans, only about 19.4 million or 41% are actually in repayment.
Selecting and paying for college is one of the most expensive and important decisions you may make for your child as a parent. It certainly is stressful and can be confusing for many families. Financial advisors may vary in expertise and you need to understand what to be looking for in a college financial planner.
The job of a college financial advisor is to help a family navigate the entire funding decision. There are various stages that need to be considered and it’s not just financial aid. The advisor should be able to address the financial aid process, college saving plans, educational tax strategies, various financing options, and student loan repayment.
You may question why I include student loan repayment and forgiveness as expertise. If you are going to borrow any student loans, then the proper use and structure of student loans need to be put into place at the time of incurring the debt. It needs to be part of any comprehensive four-year college plan. This will include the long term look at what life will be like after graduation and when the student is in repayment.
As more families borrow money to attend college, more time needs to be spent on the “HOW” the family will pay these expenses. As stated above, the importance of the student loan structure will determine the repayment options, loan forgiveness, credit score and who is legally responsible if a default should occur. These student loan decisions will impact a student’s and parents’ life for the next 10 to 30 years. Getting the loans is often not the problem. It is a future repayment that is not transparent and the reason why proper advice is needed more than ever.
Families need to be careful when they engage a financial professional to help them with these decisions. The college financial aid process requires that a family disclose entire financial life. The recommendations should be part of a holistic financial plan and not just a quick fix for college. Our College Funding and Student Loan Advisors (CFSLA) have been trained to provide the knowledge and strategies that families need to make informed college financial decisions.
Getting the right advice may help families avoid mistakes costly mistakes and avoid excessive student loans. According to a recent FINRA study, over 54% of millenniums would have made a different college financial decision if they had better information at the time of their college selection. If professional financial help is needed, please visit PayForED where we now have a list of financial professionals trained in College Funding and Student Loans.