College Planning Services: Are They Worth the Cost?
Presented by Wealth Strategy Group
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Finding ways to save enough money for college tuition can be challenging, especially since costs continue to increase at a rate greater than annual inflation. Parents are also faced with many other college-related choices and tasks, including helping their children choose the right school and fill out applications, securing funding through scholarships and loans, and positioning assets in order to receive the most aid.
Given these complexities, many families are turning to professional college planning services to help guide them through the admission and financial aid process. But are these services worth the expense? The information below may help you determine which services you actually need and how to evaluate the qualifications of college planning providers.
According to the Department of Education, more than 70 percent of Free Application for Federal Student Aid (FAFSA) forms are submitted with errors, which can add weeks to a process that is already very time sensitive. While federal financial aid is not affected by the timing of the FAFSA submission (provided the form is submitted before the deadline), some aid is awarded at the institutional level on a first-come, first-served basis. For example, work-study programs and the Federal Supplemental Educational Opportunity Grant may not be available if a student applies too late. Having to fix an incorrect FAFSA form and resubmit it can mean losing out on much-needed aid.
In general, college planning services can be well worth the cost if they result in a larger financial aid package. By helping families stay organized, even the most basic services may offer significant benefits, especially if the family is unfamiliar or uncomfortable with the college admission and financial aid process. Most services provide a college planning checklist, which includes important deadlines for forms and applications, as well as a timeline for all events, from application to enrollment.
Assessing your planning needs
Although a wide range of services are available, most college planning firms offer guidance in the following core areas:
- Completing the FAFSA and other financial aid forms
- Calculating the estimated family contribution (EFC)
- Providing recommendations to reduce the EFC
- Completing student loan applications
- Reviewing the federal Student Aid Report
- Evaluating and explaining award letters
- Providing guidance and sample letters to appeal financial aid awards
- Assisting with scholarship and grant applications
Some firms go beyond this operational-type support (completing forms and applications) to provide more qualitative services, such as:
- Help creating a list of potential schools that are aligned with the student’s needs, interests, and qualifications
- Assistance preparing strong application essays
- Admission interview coaching to help students highlight their personality and strengths
- Specialized financial counseling to help parents maximize financial aid eligibility
- Career counseling to help students target colleges based on a particular career interest
- Ongoing telephone and e-mail support for both parents and students throughout the admissions process
Selecting the right provider
Evaluating college planning services is similar to evaluating any other major purchase or service provider. Often, these businesses offer a wide spectrum of services, and it’s important to identify clearly what you hope to get from the firm. If you choose a firm that offers more than you really need, you may overpay. On the other hand, if you choose a firm with a limited service offering, you may not get the guidance you require.
When evaluating college planning firms, consider the following questions:
What are the qualifications of the firm’s staff? The qualifications and professional experience of people who call themselves college planners can vary widely. To date, there is no formal designation or license that an individual must have to offer college planning services.
Some college planners use the Certified College Planning Specialist (CCPS) designation, which is offered by the National Institute of Certified College Planners. Typically, a CCPS focuses on advanced college funding strategies, such as examining parent and child tax-planning opportunities and creative borrowing strategies that work in concert with the family’s retirement and estate planning. Candidates for the CCPS must possess a financial certification or designation, such as the CFP®, CPA, or ChFC®, or they may have a professional securities or financial license. They are also required to complete 24 hours of professional continuing education per year.
Does the firm have former admissions officers on staff? Some college planning practices place less emphasis on financial matters and focus on helping students get into high-profile universities. These types of firms typically do not have financial planning professionals on staff; instead, they leverage their admissions expertise to help students with activities such as narrowing down their college choices, crafting effective applications essays, and preparing for interviews at top colleges.
Families who have a financial plan in place for college expenses but are concerned with the student being accepted into a prestigious university may place a higher value on this type of service.
Does the firm use career testing? The goal of career testing is to help students decide on a career interest before choosing colleges. Many students spend more than four years in college because they change their major while in school or choose a major late in their college career. Career testing may enable the student to pinpoint a major ahead of time, choose a school that specializes in that field, and finish in four years—helping control tuition costs.
Keep in mind that career testing is a controversial topic and has been disputed by some in academia, particularly educators from liberal arts institutions. Critics argue that some students discover their interests (and themselves) several semesters into their time at college; choosing a major based on career testing while still in high school, they say, could prevent these discoveries.
Does the firm offer various levels of service at different price points? As noted, some college planners have a specialized practice, whether it’s a focus on admissions coaching or financial planning. That’s why it’s worthwhile to determine what your needs are before choosing a college planner. Families who aren’t certain of their needs should consider looking for a practice that offers a wide range of services at different price points.
For example, some college planning practices offer a basic service level, which may include a personal interview with the student and parents, as well as help with the FAFSA and loan forms. Basic services may also include an evaluation of the family’s assets and advice on how to best position assets for financial aid qualification. Premium packages could include a complete financial analysis and recommendations for covering the family’s portion of college costs. Companies may also offer services, such as application essay review or career planning, on an à la carte basis.
Exploring free alternatives
Before evaluating college planning services, it’s a good idea to research the information available for free on the Internet to determine whether you need additional help. A number of reputable websites, including www.finaid.org and www.studentaid.gov, offer a wealth of content to help parents and students with the college planning process.
Families who feel that they need customized financial planning for college expenses, as well as assistance with financial aid and loan applications, may not be able to get all the help they need from the Internet, however. If that’s the case, you may benefit from paying for college planning services from a well-respected firm.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
IRS CIRCULAR 230 DISCLOSURE:
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Rich Tegge is a financial advisor located at 300 South Front Street Suite C Marquette, MI 49855. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (906) 228-3696 or at firstname.lastname@example.org.
© 2015 Commonwealth Financial Network®