Paying for college is a retirement problem. But even late starters can use strategies to lower the cost of college through smart cash flow and tax tips. Saving on the cost of college is as important as saving for college. Understanding the financial aid system and the way the Expected Family Contribution works are key to spending less, saving more and having a decent retirement.

1. Money Coach Road Map Series
Paying Less for College:
Debunking Financial Aid Myths and Saving Your
Retirement
Presented by
Steve Stanganelli, CFP® CONGRATULATIONS!
aka Spencer’s Dad
You have at least one
student going to college.
You obviously have:
a.) Smart Kids
b.) Motivated Them
c.) A Willingness to
Invest in your kids
d.) A Success Problem
They Grow Up Fast!
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2. There are two very different
prices for college — one for
the informed “buyer” and
one for the uninformed
“buyer.”
Which price will you pay?
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3. Current Problem
Top PARENT CONCERNS in order of importance
1. Fear parent death before children are grown
2. Saving for retirement
3. Job security
4. Saving and paying for college
College Costs Keep Going UP!!
2010 Annual Average Costs:*
1. Public University - $16,000
2. Private College - $37,000
*College Board – Trends in College Pricing 2010
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4. The College Funding /
Retirement Savings Dilemma
Two VERY EMOTIONAL NEEDS competing
for the same limited resources
Will parents be able to accomplish BOTH?
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5. The economic benefit
of a college education
Median Income by Educational Attainment of the Population 18 Years and Over
•High School Graduate: $21,079
•Bachelor’s degree: $40,166
•Master’s degree: $51,509
*U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement
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6. Concept 1:
College is a retirement problem
Concept 2:
Saving ON College is Different
than Saving FOR College
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7. The retirement problem – every dollar
going toward college can’t go toward
retirement
How much can paying for college effect retirement savings?
Years till Hypothetical Hypothetical Hypothetical
retirement Four-year Four-year Four-year
public college private elite private
cost college cost college cost
$55,000 $138,000 $207,000
15 $175,000* $438,000* $657,000*
Too depressing!
20
Assumes:
5% annual college inflation
*8% return on investments on lump sum amount
For one child!
This is a hypothetical situation and not representative of any specific situation. Your
results will vary
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8. Secrets to reducing the
high cost of college
THE GOOD NEWS:
•College planning is NOT just saving FOR college
•College planning includes saving ON the cost of college.
When it comes to college planning
there is no one size fits all solution.
It's all about knowing the ins and outs
of a very complex topic and how to
apply the secrets of college planning
and funding to your circumstances
so that you don't pay one dollar
more for college than absolutely
necessary.
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9. Saving ON the cost of college
Balancing College Planning Periods: Saving, Spending & Recovery
College financial College admissions and
planning financial aid process
Begins at birth and continues Begins junior year in high school
through senior year in high and extends throughout college
school years
Strategic College Planning Tactical Planning
Timeline
l l l l l l l l l l l l l l l l l l l l l l
Age of child 0 1 2… 17 18
Birth >>> Middle School >>> High School >>> College
By becoming informed at each step along the way, you’ll have the
potential to achieve a much better outcome..
Kudos to You for Taking the First Steps
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10. Foundation for effective college planning
Expected Family Contribution (EFC) – The portion of your income and assets that
you will be expected to contribute toward college costs.
How is EFC determined? – FAFSA (most public) / Profile (many private). Based on
time period from January of the student's junior year in high school to December of their
senior year. This is known as the Base Year.
Financial Need = Cost of Attendance – Expected Family Contribution
EFC
FAFSA / PROFILE
Leverage financial aid
enhancing strategies
Leverage other strategies
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11. Understanding Financial Aid – Basics
Federal Methodology (FM) Institutional Methodology (IM)
Uses FAFSA Uses FAFSA & CSS Profile
Student Assets Assessed @ 20% Student Assets Assessed @ 25%
Student Income Assessed @ 50% Student Income Assessed @ 50%
with $3,000 Allowance with No Allowance
Parent Assets Assessed at 5.6% Parent Assets Assessed at 5% with
with Exemption Allowance Lower Exemption Allowance Based
Depending on Age on Family Size
Parent Income Assessed Between Parent Income Assessed Between
22% to 47% 22% and 47%
Does NOT Assess Family-Owned Assesses Farm and Business
Farms or Businesses with < 100 FT Equity
Employees
Does NOT Assess Home Equity DOES Assess Home Equity
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12. Understanding Financial Aid
Financial Aid Formulas are INCOME Driven and Not Asset Driven
It’s Key To Understand the Financial Aid Strength & History of Each School
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13. Example of financial aid eligibility
EFC = $15,000
Formula:
Financial Need = Cost of Attendance - EFC
College Cost of Attendance EFC Financial Need
1. James Madison $21,000* $15,000 $3,988
2. Georgetown $54,000* $15,000 $38,880
*Source – College Board 2011
For financial aid candidates:
Your EFC is the primary determinant for your out-of-pocket college costs, NOT
the cost of the college!
Don’t eliminate consideration of schools with higher “sticker prices!”
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14. For the “Do it Yourselfer”
Sources for:
• Estimating EFC before hand. How much will you be expected to pay?
a. Finaid.org
b. CollegeBoard.org
• Strategies for increasing financial aid eligibility
a. Book: ―Paying for College Without Going Broke‖
b. Website: Finaid.org
• Resources for Finding Scholarships
a. Websites: FastWeb.com, CollegeBoard.com,
Petersons.com, ScholarshipCoach.com,
ScholarshipExperts.com, CollegeCashPros.com
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15. Planning for financial aid
Source Options
• School merit-based scholarships
Strategies that increase
Free • School need-based financial aid
financial aid eligibility will • Grants - Pell
reduce out-of-pocket college
costs, the gap and need for
Cheap • Subsidized loans – Stafford, Perkins
debt financing
• College Savings
Gap • Other loans: Private/PLUS/Home Equity
• Third party – grandparents, relatives
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16. Planning for Financial Aid
Effective planning for financial aid occurs before filing FAFSA/Profile – NOT AFTER!
Don’t enter into the process BLINDLY!
Analogy – Effective tax planning occurs before tax forms are filed, not after.
Requires an understanding of:
1. Forms required by the school (FAFSA, Profile) and the
information required
2. How the EFC is determined
3. Prudent planning strategies to increase financial aid eligibility
Need to know:
• What TO DO – can save you $$
• What NOT TO DO – can cost you $$
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17. What NOT TO DO:
The less you know, the more you pay
Fact: Gifting money to financial aid candidate will reduce financial aid eligibility
Result: Save the family $$$ in financial aid lost!
Example: Grandparents gift $10,000 to grandchild for college, may cost the family
as much as $7,000 in financial aid!
Lack of knowledge results in lost financial aid
Strategy:
Wait until after college to gift – help pay off student loans. No lost financial aid.
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18. Knowing WHAT TO DO –
the more you know, the less you pay
Facts: Family income of $57,000. Assessable assets of $200,000
Strategy - Reduce AGI below $50,000 by contributing to retirement accounts
Result - Family qualifies for ―Simplified EFC.‖* Assets of $200,000 are not
included in financial aid formula and family qualifies for significantly more
financial aid. * Note: Assumes filing a 1040EZ or 1040A
May save parents $$ over four years!
What will savings on college costs AND increased retirement account
contributions mean for retirement income and quality of life?
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19. Knowing WHAT TO DO –
the more you know, the less you pay
13 Strategies for Increasing Need-Based Aid:
Controlling or Changing the Position of Assets
Some Examples: -
• Don’t Hold Assets in Your Child’s Name
• Maximize Non-Assessable Assets: IRAs, SEP IRAs, Roth IRAs, 403bs,
401ks, Annuities, Cash Value Life Insurance
• Don’t Overestimate the Value or Your Home, Other Real Estate or Business
• Restructure Your Debts (Ex. Refinance Credit Cards to Lower Home Equity)
• Pay Off Debts or Make Needed Purchases = Show Less Cash
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20. Knowing WHAT TO DO –
the more you know, the less you pay
12 Cost-Cutting Strategies for Every Family
Regardless of Financial Need Status
Some Examples: -
• Take Tests for College Credit
• Advanced Placement (AP) Tests (see www.CollegeBoard.com)
• College Level Examination Program (CLEP)
• Proprietary Self-Study Option: DSST (see www.getcollegecredit.com)
• International Baccalaureate (IB) (see www.ibo.org)
• Go to a Local State School for A Degree or Transfer Credits
• Use the Hope and Lifetime Learning Tax Credits (see www.IRS.gov )
• Pursue Private Scholarships like Kiwanis, Rotary or Free Resources
• Pursue Merit Scholarships (see www.Petersons,com)
• NOTE: Private schools offer more than public (Ivies do not offer)
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21. Planning for high income late starters
Source Options
The cumulative effect of
Free • School merit-based scholarships
implementing and coordinating
the right strategies can be
significant savings on out-of- •
•
Savings strategies
Cash flow strategies
pocket college costs •
•
Income and asset planning strategies
Strategies for business owners
Gap • Strategies for grandparents
• Tax credit strategies
• Gifting strategies
• Loan strategies
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22. Example
Facts: Parents income too high to qualify for education tax credit. Limited benefit from
personal exemption. Plan to liquidate appreciated assets to pay for college OR ―write a
check.‖
Effect: Parents will pay capital gains (can increase real cost of college), no benefit
from tax credit. If paid with after tax income, the real cost of college is twice the ―sticker
price‖.
Better Strategy: Gift appreciated assets to child to help pay college costs. Child
fulfills requirement for tax independence during college years and qualifies for
education credits. Child pays NO tax due to deductions
Better Results:
•Parents maintain control of asset until senior year of H.S.
•Increased cash flow – don’t use after-tax income
•Student qualifies for education tax credit
•Tax savings
•Parents – on capital gains = $$$
•Student - education tax credits – as much as $2,500/year based on 2010 maximum credit.
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23. Savings and Funding Strategies
Consider savings and funding vehicles that meet the following objectives.
1. Funds for college
2. Savings for retirement
3. Minimal impact on monthly cash-flow
4. Appropriate for college AND retirement - flexibility
Goals:
1. Return exceeds college inflation
2. Tax-deferred growth
3. Tax-favored access for college
4. Favorable for financial aid
5. Can be used for college AND retirement
6. Tax-favored access for retirement
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24. Comparison of Options –
how do they rate?
Rate of Tax Deferred Tax Favored Favorable for Use for Tax Favored
Return Growh Access for financial Aid College AND Access for
VEHICLE College Retirement Retirement
Coverdell Education Savings 3
Cash
529 Savings Plan Wow, So many
Roth IRA options, but
Traditional IRA which is the
right one for my
Retirement Accounts family?
EE Bonds
Zero Coupon Bonds
Municipal Bonds
Grow th Stocks 529
Fixed Annuities
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25. Comparison of Options –
how do they rate?
9 Ways to Save FOR College – Systematic Savings Options to Use
Some Examples: - Each has advantages and disadvantages
Option Pros Cons
Roth IRA Accessed Penalty Free Earnings May Be
Counted as Income for
EFC
529 College Savings Growth Tax-Deferred & Assessable Asset for
Plan Withdrawals Tax Free Financial Aid
CollegeSure CDs Low Risk / FDIC Insured Assessable Asset for
Financial Aid
UTMA / UGMA Taxed at Child’s Rate for Subject to ―Kiddie Tax‖ if
first $1800 generated account generate >
$1800/year
Retirement Plan at Work Tax-deferred / Loan Distributions fully
possible taxable
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26. Tactical Planning - college admissions and
financial aid process
The Process and the Challenges
Identify prospective schools and apply
Apply for financial aid
Receive and analyze financial aid awards
Choose school and accept award
Strategies for covering shortfalls
The process is overwhelming for many families
Lack of knowledge or mistakes may cost your family thousands of dollars:
•Choosing the wrong school or curriculum
•Financial aid
•Loan strategies
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27. The Solution – College Cash Pros
A hands on college admissions and
financial aid service
Offers parents with college-bound juniors or seniors:
• Personal coaching
• Hands-on support
• Targeted, strategic and tactical guidance throughout the
college admissions and financial aid process
Goals:
Best college fit for student
Save money on college costs
A plan for the family that yields confidence
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28. Families have two choices:
1. Go it alone – To achieve a best outcome requires
• Time
• Effort
• Expertise
• Patience
2. Help and support from qualified experts
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29. How we help you and the results
How College Cash Pros from Clear View can help
Diagnose your specific situation
Prescribe appropriate remedies – college planning and
funding strategies
Find the Best College at the Right Price
The Results: An action plan that helps you to better accomplish your goals:
1) Help pay for your child’s education
2) Reduce the cost of college
3) Save more for your retirement
Expertise + Experience + Personal Help can yield a better outcome for family
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30. Achieving the best outcome
College admissions and
financial aid process
Begins junior year in high school
College financial planning – newborn through senior year in high school and extends throughout college
years
College Planning Client Care Center
Timeline
l l l l l l l l l l l l l l l l l l l l l l
Age of child 0 1 2… 17 18
Help you work toward a best outcome
1. Lowest out-of-pocket costs for family
2. Best college fit for student
BEST COLLEGE at the RIGHT PRICE … without you
going broke or busting your retirement nest egg
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31. Whether you “do it yourself”
or team up with experts
―You can pay me now, or pay me later”
Legendary marketing slogan
The COSTS of waiting - procrastination:
1. Available cost reducing strategies decrease over time
2. Available savings and funding strategies decrease over time
3. Cost of borrowing may increase – increased debt and interest rates
4. Reduced parent resources
5. Less available for retirement savings
6. Increased stress and frustration
7. Procrastination and a lack of knowledge can cost you significantly
more on your college costs
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32. Review of Key Concepts
The KEY CONCEPTS Cheat Sheet:
1. Paying for college is as much a retirement problem as anything else.
2. There are 3 college planning time periods: Saving, Spending &
Recovery. Without balance among all three, there will be pressure in one
or more of the other two periods.
3. College is expensive but still worth it – especially if you can lower your
out of pocket cost or reduce your cash flow pressure
4. College inflation is running about twice the level of regular CPI
5. There are only 4 ways to effectively pay for college: Save, Pay-As-You-
Go, Borrow or Let Someone Else Pay
6. Four types of Financial Aid Available: Need-Based, Merit-Based,
Discounted Tuition and/or Negotiated Rate
7. Your Expected Family Contribution (EFC) determines what you need to
pay. Knowing how to calculate this number is KEY to Financing.
BEWARE the College & Parent Financial Aid GAP!
8. Procrastination and a lack of knowledge can cost you significantly more
on your college costs
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33. Informed or Uninformed
__
You Have a Choice
__
Which type of buyer of
a college education will
you choose to be?
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Clear View Wealth Advisors, LLC, A registered investment advisor.
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34. Informed or
Uninformed – Which
buyer of a college
education will you
choose to be?
Uninformed buyer!
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Securities and advisory services offered through LPL Financial, A registered investment advisor. Member FINRA/SIPC
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35. Next Steps – CLICK & CALL
1. Visit www.ClearViewWealthAdvisors.com
2. Select 
3. Complete “Data Form”
• You’ll receive an initial assessment
• Arrange for your free assessment phone call – 978-388-0020
We’ll Help Show You The Money
More Info at the Clear View website or blog:
www.MoneyLinkPro.Wordpress.com
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