Aaron Puckett, MBA, CFP®
Recently, one of my clients said, “You can only be as happy as your least happy child.” While I’m not certain that I completely agree, the point that she was making certainly hits home. For those of us with children, our hearts are bound to them and we desire very strongly for their happiness and well-being. When your child enters their junior year of high school, and you begin the journey of selecting a college or university for them to attend, don’t underestimate the influence of your heart. Why? Because no matter how much you’ve planned ahead and saved in a 529 college plan or elsewhere, at the end of the day your desire for your child to be happy will often undermine your ability to select the college that offers the most value for them over the long-term.
What many parents and financial planners fail to recognize when saving or planning for college, is that while the college decision has large and lasting financial implications, the final decision may rest more on non-financial motives. So before you schedule a college tour at that pricey private school, ask yourself these questions…
What is being purchased?
If the area of study and concentration that your child desires to pursue does not necessitate a particular school being selected, then it is reasonable to assume that a community college, online college, or state university may represent a superior financial value. However, in most cases those interested in a more expensive college option have put a price tag on much more than the final diploma or education being received. So the question becomes, “How much are you willing to spend on the ‘college experience’ which encompasses more than the actual degree or area of study?” This is where the rubber hits the road for the parent/child conversation, and it allows the decision to be more honestly evaluated.
What will we think of this decision in five years?
Driving the beautiful new car off the dealer’s lot feels great, but after it has lost its shine, the car payment will sometimes cause the owner to feel much differently about their decision. Too often, college graduates have the same buyer’s remorse when the college years are over and they realize that the student loan will prevent them from pursuing many of their other desires. I believe asking the “five years” question is helpful because it forces the student and parent to think about life as they hope it will exist post-college.
Have we exhausted all of our options?
The truth is that many private schools with large price tags are also the most willing to offer scholarships and financial aid. It is very important for the student to apply to many institutions so that you limit the risk of overlooking a school that could be an excellent option. In the same way, every year many scholarships go unclaimed because of a lack of applicants. The process of applying for scholarships may be time consuming, and application fees sometimes dissuade students from testing the waters, but relative to the potential savings, the extra time and money is often a wise investment.
As a financial planner, it is my job to help my clients work toward their long-term goals and assist them with their financial decision making. What I’ve observed is that our hearts often rule our minds. In many areas of life, this is good, however, it can be quite dangerous when making a financial decision with lasting consequence.
When it comes to helping your kids decide which college to attend, don’t let your heart lead the way. It is a very difficult decision because we do find satisfaction in our child’s immediate happiness, because what we are really paying for is sometimes unclear, and because the excitement of the moment can often cause us to lose sight of what the decision will feel like when the shine has faded. The advisors at Puckett & Sturgill Financial Group are happy to help as you navigate this complex decision!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC.