College planning is often done backward even for the most careful planners because it’s so hard to know what your newborn or toddler will do for higher education.  In the beginning it’s really just a guessing game, but if you wait to make decisions until highschool, often the opportunity for planning is gone and we can only react. We’ve created an age based guide to help you decide how to make decisions along the way no matter what age your child is?  

Ages 0-5 (Before school age) - You’re excitedly waiting for your new baby and thinking about all the possibilities for their life.  Maybe they’ll get into that college that you didn’t get accepted to, maybe they’ll be President of the United States someday. The possibilities are endless. 

Questions to ask yourself at this time:

• What is your current financial situation?  Do you still have debt?  Are you paying off your own student loans?  Are you currently saving what you need for your own retirement? 

• Helpful information: It’s important to understand where college planning falls in your overall financial priorities. There are many other goals that should come first. Debt repayment, Emergency fund building, retirement planning are just a few. 

• Action item: If you haven't done the foundational work, hold your horses. Ever hear the flight attendant say, put on your oxygen mask first?  The same rules apply here. Making sure your financial house isn’t made of cards is essential. Focus on your own finances first. 

• Action items: If your finances are in order, now is a great time to open and begin funding your child’s college savings account. But what type of account? Ask your advisor about the benefits of 529’s, ESA, IRAs and Series EE or I bonds. 

• Are any relatives planning to gift money?

• Helpful Information: This may be the one exception if you’re still paying off your own debts, you can open a 529 to deposit gifts from family or even allow them to open for the kids on their own. 

• Action Item: Talk with their financial advisor about the benefits of different types of accounts and different owners and also understand the annual max contributions. 

• What are your expectations of your child's future academic journey?  

• Helpful Information: Understand the costs. Has everyone in your family for 6 generations gone to Yale?  We’ll then, we should probably start saving, and saving right away!  Time will tell if academically they will be a good candidate but understanding the cost of your expectations is critical. There are many free tools to help you know what these cost might look like.

• Action item: Check out ​​https://www.tuitiontracker.org/ for a little of school tuitions

• Does your state offer an income tax deduction or credit for 529 plan contributions?

• Helpful Information: Over 30 states, including the District of Columbia, offer a state income tax deduction or tax credit for 529 plan contributions. In most cases, taxpayers must contribute to their home state’s plan to qualify for a state income tax benefit.  If you live in a state that offers a tax deduction, you’ll likely need to use that particular state's plan. 

• Action Item: Check out https://www.savingforcollege.com/article/how-much-is-your-state-s-529-plan-tax-deduction-really-worth for a comprehensive list.

Ages 6-10 (Elementary School) Many times our own financial picture is starting to finally mature about the time out kids are starting to form their own little academic personalities. Now I’m not encouraging someone to use their 7 year old’s grades to determine where they will go to college and what they will study.. But, we’re finally getting a little bit of an understanding of what the possibilities might be.

• How has your child done in elementary school?  Are they very academically inclined?  

• Helpful Information: Take note of how your kids are doing academically but be careful not to come to any hard conclusions. Kids mature and change over time. 

• What is your current financial situation?  Do you still have debt?  Are you paying off your own student loans?  Are you currently saving what you need for your own retirement? 

• Helpful information: It’s important to understand where college planning falls in your overall financial priorities. There are many other goals that should come first. Debt repayment, Emergency fund building, retirement planning are just a few. 

• Action items: If you’re still working through your own financial debt, stay the course here and build a solid foundation before you begin saving for college. Like we mentioned above, you may however open an account for gifts etc. 

• Action items: If your finances are in order, now is a great time to open and begin funding your child’s college savings account. But what type of account? Ask your advisors about the benefits of 529’s, ESA, IRAs and Series EE or I bonds. 

Ages 11-15 (Middle School and early High School). The time when college felt far away now seems distant. College is just around the corner and now is the time to get serious. 

Questions to ask yourself at this time

• What types of interest is your child learning towards? 

• Helpful Information: The types and costs of college vary greatly for many reasons, but one of the biggest is based on major. For example, if you want to study surgical Robotics you may look at a specialized school like Virginia Tech or MIT, but if you want to do coding, then maybe you can do a certificate and skip the 4 years. If you want to be a teacher you may opt for a local state school. 

• Action Items: Attempt to align the income your child will receive from their chosen profession with the cost of the school. Should you pay $80,000 per year in tuition for a job with a starting salary of $50,000. Absolutely NOT. 

Age 16- 18 (Junior and Senior Year of HS) It’s go time! SAT prep, narrowing down majors and colleges and starting to put in the work to begin your college application process. Now is the time to start having some serious conversations with your children to make sure your family is prepared. 

Questions to ask yourself at this time:

• As your child is looking forward to applying for college, what are their expectations of the experience?

• Helpful Information: Now is the time to really dial in with your child about what their wants and needs are.  It’s unfair to your kids if they don’t understand the future ramification of their choices now in their life as a young working adult. 

• Actionable Items: Sit down and have HONEST conversations with your child about what’s been saved and how much they will be responsible for. Will they be expected to contribute through work study, student loans or scholarships?  If they take out a loan, who is responsible for paying them off and talk them through what those payments will look like, so they can prepare themselves and make practical decisions for their own future. 

• Helpful information: Begin to look for  grants, scholarships or awards.  Applying early is key, as many awards are given on a first come first served basis. 

• Action Items: Complete the FAFSA form as it is used by colleges and states to determine need and eligibility.

• Action Items: Consider looking for awards either online, at college, affinity groups, professional or civic organizations. It’s suggested to start doing your research during your junior year of high school and actually applying during your senior year. Try bold.org or other online platforms. 

Ages 18+ (During Community College, University or Graduate) While it’s too late now to plan beforehand, there are still ways to make money wise decisions for college in the 4-5 years your child will be attending undergraduate. 

• Do you know what your possible tax credits are?  

• Helpful Information: You may be eligible for the American Opportunity Tax Credit for 100% of the first $2,000 of qualified education expenses and 25% of the next $2,000 (per eligible student). 

• Helpful Information: You may be eligible for the Lifetime Learning Tax Credit for 20% of the first $10,000 of qualified education expenses (per tax return). 

• Helpful Information: The phaseout range for these credits for a single filer is $80,000 - $90,000 ($160,000 - $180,000 if MFJ).

• Do you expect to need a loan to cover additional education related expenses? 

• Helpful Information: Consider loans with the most favorable terms, which are generally in this order: Federal Direct Subsidized Loans (needs based), Federal Direct Unsubsidized Loans, Federal Direct PLUS Loans, and private loans (banks, colleges, states).

• Does your child already know what field they want to study, plan on going into the military or work in public service (ie social worker, county hospital doctor or nurse)?

• Helpful Information:  The Reserve Officers’ Training Corps will cover most college expenses as long as the child serves at least four years in active duty and four years in reserves. Your child may be eligible for Public Service Loan Forgiveness or a TEACH Grant if the school has a TEACH Grant program.

We hope that this age based college planning guide will help take out some of the guessing for you and your family and as always, if you have any questions please reach out to the one of the amazing female advisor on our team to talk through the specifics of college planning. 

Written By: Laurie Allen, CFP

LINK HERE: www.lawealthmanagement.com

Prospective Clients: https://form.jotform.com/AllenLaurie/Pre-Client-questionnaire