Why Clients Need a Financial Plan for College

Key Takeaways

• Whether your client has young children of their own, teenage grandkids heading to college, or wants to help finance college for someone else in the family, it’s wise to encourage your clients to create a financial plan for doing so.
• Having a knowledgeable financial professional can help empower clients and can even provide a greater return on investment.
• There are many strategies to consider, depending on your clients needs.
  • Savings Plans: 529, Coverdell, UGMA
  • Tax considerations
  • Overall financial planning
  • Financial aid counseling

Why Clients Need a Financial Plan for College

Sending a kid to college is a huge milestone in a parent’s life. An activity that brings a lot of excitement and joy, can also bring a lot of fear and stress when it comes to figuring out how one is going to pay for the experience. According to Student Loan Hero, “Among the Class of 2019, 69% of college students took out student loans, and they graduated with an average debt of $29,900, including both private and federal debt.”¹ Not only that, but 14% of parents also took out Parent PLUS Loan.¹ There is no doubt that a lot of money is involved both from the student and parent end in regards to college planning. To help minimize stress and better prepare your clients for the future, they may want to consider utilizing a financial professional to help with their college planning.

Financial professionals empower clients at each step in the college planning process

Starting a college savings fund is a big investment, especially when you’re trying to manage day-to-day expenses, plan for retirement, and have an emergency savings fund. There are many ways that financial professionals can help their clients in each step of the college planning process and provide value along the way. Clients will likely have many questions that a college financial professional can help with. Some common questions could be:

• How much should they be saving each month?
• When should they start saving?
• How do I apply for financial aid?
• How does a college savings plan affect taxes?

Whatever it is, having a knowledgeable financial professional can help empower clients and can likely provide a greater return on investment.

The stats don’t lie either – according to Scholar’s Edge 529, many parents have found great value out of using a financial professional for college.

• “86% of parents with a financial professional have started saving for college.”¹
• “64% of families said their financial professional keeps them on track to meet college savings goals.”²
• Close to 30% of parents also said that they’d like a financial professional’s help when determining their college major. ²

Most students apply for FAFSA (Free Application for Federal Student Aid) to apply for loans, grants, work-study, and more. FAFSA can be used either for undergraduate college or graduate programs. Financial professionals can help families with financial planning for student loans. They can also help fill out their FAFSA each year, which will help eliminate errors and cut down on the time it takes to file. A trusted financial professional can also help find scholarships and other ways to help pay for college.

College is one of the biggest investments that your clients will have throughout their lifetime. Whether it comes to initial planning, tax strategy, financial aid, or understanding savings plans, you can help educate your clients to make the best possible decision for whatever their situation. Establishing this trust and value to your client will go a long way in strengthening your relationship with them throughout the years.