Archive for College Planning

How Much Student Debt Should Parents Take On?

student debt, denver financial planner

We are getting back to into the swing of the school year and for many, school means college.  College soon, or college now, and the angst of paying for it.


I went to a seminar last year by Joe Messinger, CFP ® of Capstone Wealth Partners.  He gave us amazing perspective on the student loan crises and how advisers and parents (one family at a time) can stop this madness.


Financial Reality

His first concept was showing us a photo of Kobe Bryant’s house next to a picture of his own house.  He told us (and we know this!) that as much as he would like Kobe’s house, he can’t have it because he doesn’t have the income to support the payments.  No mortgage company in their right mind would lend him the money to buy a $10,000,000 house on a meager financial advisor’s income.


So, why isn’t college lending the same way?  A person can take out $150,000 worth of student loans to become a teacher earning $40,000 his first year out of college (with the help of his unwitting parents, of course).  It sounds mean, but does this make any sense at all?  No!  The college loan system SHOULD be like the mortgage industry – there should be at least some reason for the amount of the loan besides the student just wanting to go to school where the fall leaves are the prettiest.


Student Debt

Mr. Messinger’s idea is that families should not take out more in loans than what the student will likely make in her first year’s salary of her chosen major.  So, if that major is Computer Science, with a median first year income of $80,000, that’s the cap of the loans that should be taken. Total!  Not every year!  If the student wants to be a Social Worker earning $35,000 in his first year, that is the maximum loan that should be taken.


That doesn’t mean the education should only cost $35,000.  There are other ways the bills can be paid, such as merit scholarships, need-based grants, work-study, family assistance, savings, and the student just getting a part-time job during school.  Starting college at a community college for the first year or two can offer huge savings on the total cost of tuition for a bachelor’s degree.


The point here is that student wants cannot trump the family’s overall financial needs.  Parents need to not be in 6-figure student debt heading into retirement, and students will have a hard time launching into adulthood saddled with unreasonable debt.


College Merit Scholarships: What They Are and How to Get Them

merit scholarships, denver financial advisor

This week I am happy to offer an article by guest blogger Sara Zessar, an expert in the field of finding the college fit for students and money to help pay the tuition.  Read more about Sara at the end of this piece.


What is a merit scholarship?


In essence, it’s a scholarship that is awarded based on one or a number of factors, such as academic achievement (often as indicated by GPA and test scores), leadership, community service, extracurricular activities, and talents.  Merit scholarships are not based on athletics or financial need, which is why they may be a great option for students who don’t qualify for need-based aid.


Many colleges offer merit scholarships, ranging from a few thousand dollars a year to full tuition.  Just as the amounts of scholarships vary considerably, so do the qualifications and methods for applying.  As you are researching colleges, it’s important to find out what (if any) merit scholarships are available, what they’re based on, and how to apply or be considered for them.


Here are examples


The University of Colorado, Boulder awards scholarships to Colorado residents through its Esteemed Scholars Program.  Students are automatically considered for these scholarships when they apply for admission to the university.  The scholarships, which range from $2,500 to $5,000 per year, are based on students’ GPAs and SAT or ACT scores, so it’s easy to determine the amount of money you’ll be offered.


In contrast, the University of Southern California’s merit scholarships are “based on academic excellence, leadership, service and talent.”  USC uses a holistic review process to evaluate students for scholarships, so there’s no way of knowing if you’ll receive a scholarship or how much money it will be.  In order to be considered for merit scholarships at USC, students must apply to the university by December 1.


At Tulane University, students are automatically considered for partial-tuition merit scholarships.  The university also offers full-tuition merit scholarships, but these require a separate application, and some require students to apply for admission by the Early Action or Early Decision deadlines.


The Danforth Scholars Program at Washington University in St. Louis awards merit scholarships to students who have been nominated by their high schools.  Once students are nominated, they have to complete an application for the scholarship.


I use these examples to illustrate differences in the types of merit scholarships colleges offer and the processes by which they are awarded.  As you research colleges, be sure to investigate the requirements for applying for scholarships.  Do you need to apply by an earlier deadline to be considered for a scholarship?  Are you automatically considered when you apply for admission, or is there an additional essay you have to write or a separate application you have to fill out?  Do you have to be nominated, and if so, who can nominate you?


Getting answers to these questions can mean the difference between receiving thousands of dollars and not getting a dime, so make sure you take the time to do your research.


sara zessar, college


Sara Zessar, the founder of Discovery College Consulting, LLC, has assisted hundreds of students with the college search and admissions process. With an M.Ed. in counseling, Sara worked for six years as a high school counselor in private, public, and charter schools. Because of her counseling background, she is able to help students and families with the emotional aspects of the process in addition to the academic and procedural ones. She also assists students with the scholarship process, and Discovery College Consulting’s students have received up to $33,000/year in college merit scholarships.  To learn more, visit

Mid-Year Financial Check-Up: 4 things you should think about now

financial check-up

It’s July already????


Yikes, 2017 has gone by quickly!  Time to do a financial check-up on those New Year’s Resolutions to see how you are doing.  I don’t know what your resolutions were, so here are a few common ones that there is still time to tackle.  BEFORE you are making your resolutions for 2018, that is.




  1. Starting a 529 plan for your kids’ college. It doesn’t have to be much.  Just $50 to start and $25/month can get you going in a Colorado Direct Investment portfolio managed by Vanguard.



  1. Increasing your 401(k) contribution at least 1% from last year. Most plans let you go online and change your savings amount any time during the year.  Don’t delay!  Save more today!

Health Benefits


  1. Use your Flexible Benefits Account money. Did you set aside pre-tax money this year to finally get those glasses, map those moles, fix that tooth, or other medical procedures you’ve been putting off?  That money has to be spent by year-end, so get those appointments made!



  1. Use an app to see how much you are really spending on…clothes, liquor, lunches out, fishing gear, workout clothes, kids’ sports, whatever! Try,, for free and easy ways to track spending.


Okay, that’s enough for now.  If you do even two of those four items before the Fourth of July fireworks, I’ll consider it a victory.

What are the Odds? A look at sports scholarships.


Are you game?


I admit it. Often when we go to my kids’ sports games I bring along a guy who yells at my kids from the sidelines.  He is their father, so I don’t have much choice.  Occasionally, I’ve been known to say a few loud-ish words myself.


Why do we put such importance on performance in sports?  For our family, we are mostly concerned with the effort the boys are showing.  If they just sit back and chew their nails during a game, we are irritated even if the team won.  If our boys display hard work and effort, we are happy even if the team loses.


Some parents are hoping their little Bo Jacksons will do them the favor of paying for college tuition with their athletic efforts.  If that’s the case, you may want to know which sports to concentrate on to have the best chance.


Odds are….


From a study done by Patrick O’Rourke and quoted in this article of Market Watch, here are the sports in which kids are statistically most likely to earn scholarships (talent and effort not included).


For men, the best ratios of college scholarships to high school athletes are

  • gymnastics (20:1)
  • fencing (22:1)

The worst odds are in

  • wrestling (176:1)
  • volleyball (177:1).


For women, the highest odds are

  • rowing (2:1)
  • equestrian (3:1)
  • rugby (9:1)

(Of those, only rugby probably wouldn’t cost you a fortune before college.)

The worst odds are

  • track and field (64:1)
  • bowling (94:1)


The biggest surprise here is that you could possibly get a bowling scholarship at all.


Whatever the reason, we parents should just chill out and stop yelling from the sidelines.  Concentrate on who is bringing the after-game snacks for the kids and the during-the-game beer for the parents.

Kristi’s Quotes: Giving the Gift of Financial Well-Being

Financial Planner

This one came out around Christmas from Fox Business, but it’s a concept worth thinking about whenever gift-giving opportunities arise.


While it’s long been possible to hand out cash, buy stock or contribute to college savings plans, financial institutions and retailers are making it easier to bestow a gift with lasting value.

Among them is Stockpile, a company that sells gift cards that can be redeemed for stock, which is rolling its products out to more than 14,000 stores this holiday season after seeing success at other retailers. College savings plan administrators, which see contributions peak at the holidays, have been adding new ways to donate. And Gift of College, which helps people to contribute to college savings plans or pay down student loans, began selling gift cards at Toys R Us and Babies R Us nationally this month.


Click here for more….

How Does Your College Savings Account Affect Your Child’s Eligibility for Financial Aid?

It’s almost back to school time!  To me, that means back to homework time for parents.  And why do we do all of this nagging and whip cracking to our kids about grades?  So they can go to college and hopefully get some scholarship money to pay for it.  The ultimate goal being, of course, that your children get good jobs and move out of your house as soon as possible.


A question I get a lot about college savings is whether having a 529 college savings plan will ruin the kid’s chance at getting financial aid.  The answer is no, usually what ruins the chance of getting need-based financial aid is the parents’ income.


FAFSA (Free Application for Federal Student Aid) calculates your expected family contribution (EFC). The EFC is the amount of money that the parents and student together should pay toward college expenses, based on the cost of attending a particular school. The higher the EFC, the less financial aid you can expect to receive.*


When calculating for the EFC, different assets and income have different emphases.  The biggest driver of the formula is parents’ income.  Some of student income can also be expected to cover college costs.


Fifty percent of assets in the student’s own name (this includes the child’s checking/savings accounts and any UTMA or UGMA investments) are expected to be used toward college costs each year.  Yikes!


However, only 5.6% of parents’ assets are used in the EFC.  529 accounts count as a parental asset because the beneficiary of those accounts can be changed at the whim of the parents.  In other words, 529s are owned by parents, not kids.


Also, relax, Mom and Dad.  Your home equity and retirement accounts are NOT counted toward the EFC.


So, if you are using the excuse not to save for college that it will hurt your chances for financial aid, it’s just that – an excuse.  Instead, go to and get yourself signed up for a monthly automatic contribution to a 529 account.  Even if you can only afford $50/month you won’t be sorry to have that money when Junior heads to college.



Is Your Kid Really Going to Get a Sports Scholarship?

As I write this blog (I write them in advance of them coming out), I’m waiting for yet another cancellation notice for my sons’ games this weekend due to weather.  We will be playing spring sports make-up games until August at this rate.

It’s not so disruptive to my schedule because I am a very relaxed mom when it comes to kids’ sports.  I don’t care if their teams win or lose.

My main concerns about my children’s athletics are these:

  • Are practices and games convenient to my home? Walking distance is preferred.
  • Is the time commitment reasonable? No more than 6 hours per week is ideal.  Tournament avoidance is desired.  Overnight travel is not tolerated.
  • Are the coaches competent but not abusive?
  • Are the other parents people I like to hang out with? If so, I will provide the drinks and snacks!
  • Is the registration cost reasonable?


Of course, you can always find something on the internet to support your way of thinking.  And so I did:

  • Travis Dorsch (former kicker for Purdue and the Cincinnati Bengals) conducted a study that found spending on youth sports has grown to up to 10.5% of family gross income.
  • The percentage of kids who get college scholarships to play sports is low – 3% – 5%, so putting a ton of money to sports hoping for a payoff later is not a great investment.
  • Putting too much pressure on kids for something that is supposed to be fun is emotionally damaging. The best memories of professional athletes of playing sports as kids are often of unstructured games with friends.


The source for these juicy tidbits is a New York Times article by Paul Sullivan (no relation!), “The Rising Cost of Youth Sports, In Money and Emotion,” published January 16, 2015.  Check it out for the full quotes and sources.


If these topics sound like they would be of interest to your employees, sales conference, or professional organization, contact me at 303-324-0014 or for more information.


Better Income through Education

Every parent has probably had this conversation with their school aged child.


Kid:  I hate school.  I can’t wait until I’m a grown-up and don’t have to learn or do homework.

Parent:  Guess what, chief.  You are never done learning and doing homework.  I still have to learn new things all the time so I can keep my job.


So true, but how many of us are going the extra mile to invest in ourselves?  As a Certified Financial Planner licensee, I’m required to document 30 hours of continuing education every two years.  Lawyers, CPAs, doctors, and many other professions have specific education requirements to keep their licenses active.


What if you are in a profession that doesn’t have a specific education requirement?  You can still engage in learning a new skill or enhancing your current ones.  Who wouldn’t want to hire or promote that person who went out of their way to better themselves professionally?


With online courses, getting top notch certifications is more accessible than ever.  Harvard Business School is now offering an online course called Disruptive Strategy under the HBX label with variety of courses still to be offered.   I’ll bet having a Harvard certification under your belt wouldn’t hurt your chances of getting a raise.


What if business isn’t your bag?  Have the fashion bug?  Get a certification and become an Image Consultant.   Do you like to be hands on and create things?  Take an advanced Lego or robotics course.  How about you sales people who want to earn more by closing more and bigger deals?  There are abundant online and local classes for that if you just use your favorite search engine.


Sure, after we’ve dragged that cursed science fair project to school for our 5th graders, we hardly have the energy to go do our own homework.  However, if you just did one online course per summer (when your kids don’t have homework), think how great that would look on your resume.  Of course, don’t forget to tell your boss, too!


If these topics sound like they would be of interest to your employees, sales conference, or professional organization, contact me at 303-324-0014 or for more information.

The Generous Generation and Saving for Grandkids’ College

Seventy two percent of grandparents polled in a 2014 Fidelity survey felt it was important to help pay for grandchildren’s’ educations.  Wow! That is a very large number.  For those who are in a position to chip in a little (or a lot) for college for their grandchildren, here are a couple of ideas.

  1. Open a 529 in your home state.

    • This option allows you to take a state income tax deduction (where offered) on 529 college savings deposits.
    • You can open an account with yourself as the owner and a grandchild as the beneficiary. This works very well if you are worried about the spending habits of your children and want to protect the money for its intended use.
    • 529 plans have easy, target date investment options so you don’t have to stress about choosing a mix of mutual funds.
    • You can change the beneficiary to any relation out to first cousin. This is nice if Grandchild #1 is more interested in body piercings than Bachelors of Arts.  The money can be used by your other grandchildren.
  1. Open a Uniform Transfer to Minor Account (a.k.a. UTMA or Custodial Account).

    • For those of you who have appreciated securities you would like to gift to grandchildren or just like more investment flexibility, this may be a more interesting option for you.
    • Money put into these accounts is an irrevocable gift to that child, so there is no changing your mind as in a 529 account.
    • UTMA accounts can be used for any benefit of the child, including private high school, summer camp, car purchase, wedding, or help buying a new home. This is more flexible than the college-only 529 account.

There is no right or wrong account to use.  Each has its benefits and restrictions.  Many people use a combination of both.  For a nice table view of the differences, check out this page on Fidelity’s website:


If these topics sound like they would be of interest to you, your employees, sales conference, or professional organization, contact me at 303-324-0014 or for more information.

Your Plan for College Funding Is Probably Not Happening

That’s right, I said YOUR plan, because I already know my kids aren’t getting any athletic or academic scholarships.

At a Financial Planning Association meeting I picked up this flyer from the nice folks at College Invest.  In the flyer there are several interesting statistics:

  • 83% of Colorado parents expect their child to receive a scholarship to pay for their higher education (source
  • In reality, only 10% of students receive non-athletic scholarships (source
  • A measly 2% of high school graduates receive athletic scholarships.

So, what’s a parent to do?

  • Save what you can for college, but not at the expense of your retirement savings.
  • Educate your child on the various costs of higher education as compared with the income he/she may receive for different careers.  A $250,000 tab for college does not justify a job that tops out at $50,000/year earnings.  I don’t care how prestigious the school.
  • RELAX and enjoy your kids’ sports activities.  Don’t be that parent yelling at the referees/coaches/umpires/other team/your own kid.  It really is just a game, not an income stream.  Let it sports be fun, not driven to that scholarship that your kid is 98% likely to not get.


If these topics sound like they would be of interest to your employees, sales conference, or professional organization, contact me at 303-324-0014 or for more information.

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