September, 2011
By Michael Kalscheur, CFP®
Senior Financial Consultant, Castle Wealth Advisors, LLC

A few weeks ago, my oldest two nieces headed off to college; one to a big state university and the other to a small private school. There are very few similarities between the schools, but there are some. Both are within 50 miles from home and each other. Both boast an impressive history in the particular field of study my nieces are interested in: teaching and youth ministry respectively.

Both schools are expensive, but you may be surprised at which one turned out to cost more.

The public school’s costs are $8,558 for tuition (in-state) plus another $8,472 for room and board. Tack on a couple thousand more for books and living expenses and the total comes in around $19,000.

The private school’s sticker price is $22,546 tuition plus $7,214 room & board. Include books and incidentals and the total is roughly $31,750. The difference (over $12,000 per year) is significant until you consider:

  • At the public school, about 70% of the students were offered aid, with the average aid package coming to about $10,000 per student. At the private school, about 67% students were offered aid, with the average aid package coming to about $18,000 per student.
  • At the public school, 42% of aid was in the form of grants or scholarships vs. 63% at the private school. 58% of the aid at the public schools was in the form of loans or work, vs. only 37% at the private school.

Based on this, you could say that for the average (i.e. need-based) student, the net cost of the public school is approximately $15,000 per year while the net cost of the private school is about $19,000 per year.

My experience has shown that this is typical; the private school will be only slightly more expensive than the public school because the private school will make up some or all of the additional need with grants or scholarships, which don’t need to be paid back. Loans are nice, but they eventually have to be paid back.

Now, if you are like me, and think $15,000 a year is still expensive, what can you do to help with college costs? Here are some traditional financial suggestions:

  • Qualify for more need based aid. Everyone should complete and file the Free Application for Federal Student Aid (FAFSA), but the overwhelming majority of your aid is based on income. Unless you are willing to take a big pay cut, your need based aid won’t change much.
  • Save more in your 529 plan. This is a great idea, especially if your student is still in elementary school. The maximum contribution per year is $13,000, but many families can’t save that much. Also, 529 plans are invested in the market, so as your student gets older, it’s important to take less risk in the stock market and buy the more dependable (but low yielding) bond and cash investments.
  • Go out and search for scholarships and grants. Everyone has heard of someone who paid their way through school because they qualified for the “2nd Generation Polish Immigrant Majoring in Special Education at a Small Mid-Western School,” but who actually qualifies for these?

As you can see, this traditional financial advice lacks something: short term flexibility. Fortunately, there are some options if you only have 3 - 4 years until one of your students heads off to college. The best part is none of these have anything to do with making or saving more money. Here are ideas along with some suggestions on when to implement each of them:

High School - Freshman Year

  • Talk to your student about college, careers and expectations. If you want them to help contribute towards their college expenses, be up front but realistic.
  • Whether or not you want your student to help pay for school, you should encourage them to get a job over the summer, and maybe even a part-time job during the school year.
  • Hit the books. This is the year that transcript grades start and will either help or hurt. A little extra time can make a big difference four years from now.

High School - Sophomore Year

  • Seek out advanced coursework and strive for college prep classes, not just the state minimums. That means advanced math, a foreign language and advanced science. That doesn’t mean study hall.
  • Make sure you are involved in extracurricular activities. If your student is an athlete, that’s great, but schools look for more than athletics. Volunteerism, part-time work and other activities that impact the community can all help with admissions and scholarships down the road.
  • Sign up for and take the PSAT. It is usually given in the fall (Mid-October) and is a good primer for the SAT and/or ACT (usually taken Junior year).

High School - Junior Year

  • High school Advanced Placement (AP) classes offer a way to take high school courses and then, if you pass the final AP test, qualify for college credits. Courses are usually organized by a high school coordinator, but exams can be taken even if an AP course is not offered by the high school. Exams cost about $90.
  • When considering different schools to attend, don’t limit your search to just public schools. Remember the example above – private schools may not cost that much more than public schools.
  • Colleges and universities, especially private schools, are cognizant that parents are concerned about costs. This is the time to ask about special programs that your student may be able to qualify for. For example, the private school my niece is attending has a 3 year accelerated graduation for certain majors.
  • 2nd semester of Junior year is the time to take the SAT and maybe the ACT too. Look at the admissions criteria at the schools you are interested in to see which test they accept. Most students will want to take them again 1st semester of Senior year to see if you can improve their scores.

High School - Senior Year

  • Review the 33 College Level Examination Program (CLEP) tests. These are exams on things from Foreign Languages to Macroeconomics to Business Law. If one or more of the schools you are considering accepts them, take one or more – they only cost about $75. Students can earn from 3 – 12 credits per exam.
  • Local colleges and universities may also offer dual-credit courses. These are courses that are offered at the high school, or even on the college campus itself, that allows students to earn both high school and college credits.
  • If you know that money will still be tight, consider attending a local community college for the first year or two. This will save you considerable amounts on both tuition (less than half of a public university) and room & board (live at home).

College – Freshman & Sophomore Years

  • Even after you start college, community colleges are great for picking up a class or two over summer break. Just be sure to check with your school that the credits will transfer before signing up.

It is always best to financial plan for your students’ education early. If, however, that opportunity has passed you by, it’s not too late; these suggestions show that a great college education is still possible.

Michael Kalscheur, CFP®, is a Senior Financial Consultant at Castle Wealth Advisors, LLC. Castle specializes in helping families and closely-held business owners with strategies to protect and transition family assets from one generation to the next. Castle’s senior partners also work with clients throughout the country in making logical decisions to help them fulfill their personal and business financial goals. For more information visit, call 1-888-849-9559 or contact Michael directly at .