529 Webinar Replay by Strategic Insight and Legg Mason from March 29, 2017

By Paul Curley | paul.curley@strategic-i.com | June 12, 2017

Do your clients think using a 529 plan will hurt their chances of receiving financial aid? Get the facts.

On March 29, 2017, Strategic Insight hosted a webinar with Steve Jobe, Director of College Savings Business Management with Legg Mason, on how to develop an effective college funding strategy.

‘529 Essentials’ Learning Objectives were:
– Understanding 529 Benefits and Financial Aid Impact
– Explaining the 4 Types of Financial Aid
– Demystifying the Financial Aid Eligibility Calculation
– Five Steps to Successful Savings

To watch or listen to the replay of the webinar, click the link here. Questions, feedback and suggested topics for future presentations is welcome and appreciated, and you can read part of the transcript from the event below.

Steve Jobe: “I don’t think it’s any news to anybody frankly that the cost of college has skyrocketed.  This is a pretty dramatic chart.  We’ve actually cut this to a more manageable timeframe, but if you go back to 1978, which is the year I graduated from high school and started college, the numbers are even more dramatic; in fact, that’s when the Bureau of Labor Statistics started keeping these stats, and college cost since ’78 has risen 1111%, but in this short time frame when most of you folks probably have been out of college since 1990, the cost of college has risen 347%, as compared to the overall CPI you can see there, it is only 81% which is already a staggering number.  So, you can see that college cost has risen at a rate at various times in that period significantly outpacing inflation.  So, that’s the problem of course, and what has that resulted in?  Unfortunately a mountain of debt for families and their kids coming out of college.  We all know that if you had college debt, you know what a burden that is, but it’s also a burden on society.  It means people put off having kids until later, buying a house, so it has economic impact not only to the individual but the whole country.  So, we would love to do whatever we can to help our clients help their children or grandchildren, and ultimately help the whole country.

This is a quick glimpse at the specific college costs.  These are averages.  Today, four years of public school, on average, will cost you $96 000; but you project that for a newborn today and that cost rises to $221 000.  Pretty staggering numbers, and of course goes up even more dramatically for private school.  So, these are real numbers, real problems for our clients, and we need to do whatever we can to help them with these challenges.

This is of course how most of us Americans pay for college.  We’ve chopped it up into three categories here, the top two being a big focus of ours today: financial aid, which comes of course in the form of loans, but also scholarships and grants if you’re lucky; and work study if your child or grandchild is willing.  But, we like to say that the foundation of any college plan, of course, is savings.  We’ll talk a little bit more about that as well.

So, let’s focus now on these varied sources of financial aid.  As I mentioned, they come in a few flavors: scholarships, and everybody thinks their kid is the most talented athlete or the brightest in class, I certainly did, I’m one of the few who was right, but scholarships, I will tell you, are few and far between.  They are often needs-based, but if it’s merit-based, for academic, or based on a student’s athletic abilities, they are rare, and they rarely pay all of college.  So, that’s something we need to manage our client’s expectations about: that is, scholarships are not as plentiful as they might think, even if they do in fact have a kid who’s as smart as mine.”

Editor’s Take: It is critical for financial advisors to work with their clients to develop an effective college financial planning strategy. Not only will creating and executing a plan improve college affordability and reduce the student loan burden of your clients, but it will also help you to develop a deeper relationship with current and potential clients as well. Have the college financial planning discussion with your clients today.