Help Your Clients Fund College with Less Debt

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Perhaps some of your clients aren’t able to set aside money in 529 plans to fund their child’s education. In that case, they themselves or their children may have to take on debt to pay for college. The following tips can help clients in this situation take on a minimal amount of debt.

“It may not seem easy to graduate debt-free, but it can be done,” said Stuart Ritter, a financial planner and vice-president of Baltimore-based T. Rowe Price Investment Services in the Money magazine article, “4 Secrets to Graduating from College With No Debt.”

Have them explore if their kids can get a head start. Do your clients’ children have options to enroll in Advanced Placement courses or dual college and high school credit courses? Although college students are considered full-time students at 12 credits, there’s no way a person taking only 12 credits per semester can graduate in four years, unless they have some college credits going into college. Money magazine reported that earning credits at local community colleges then transferring to a four-year institution might be a better financial bet.

Have their kids plan out their courses. Fred Amrein, ChFC®, shared on Investopedia.com that clients should ensure their kids are planning their courses appropriately to be sure they are on track to graduate on time. He suggested mapping out courses at the end of each semester while registering for the following semester.

Ensure kids pick the right major. Amrein wrote that changing majors is a costly proposal. Ensure your clients’ have a thorough discussion with their kids regarding their choice of major and if it’s appropriate for them. Also include in this conversation whether their kid’s major and career choice can adequately cover any student loan debt they might incur.

Explore tax strategies with your clients. Things have changed with the new tax bill, and your clients may have access to more tax benefits than before. It’s up to you to help them figure out whether they can utilize tax strategies to help them pay for their child’s education.

“Examining cost, debt, and potential income are important parts of the college decision-making process,” Amrein wrote on Investopedia.com. “At the end of the day, having your child graduate on time with manageable debt is a great accomplishment.”

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Ana Trujillo Limón is associate editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org. Follow her on Twitter at @AnaT_Edits.

One thought on “Help Your Clients Fund College with Less Debt

  1. Good suggestions here, but perhaps the best one is to search for colleges where your student can get the most aid, whether that be needs-based or merit-based aid, and don’t attend schools that will force the student and family to incur crushing levels of student loan debt. Start first by eliminating schools from your list that will cause you to incur too much debt. Then, stick with some of the low cost schools on your list or expand your search to other colleges where your student can maximize aid and minimize debt. You need to look past sticker price.

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