I am a child of the 80s. I grew up on Happy Days, Falcon Crest, and Family Ties. In between these shows, inevitably a commercial would come on with a child being pressured into using drugs, refusing and looking into camera and saying no. Read more
Back-to-school season may seem expensive but it’s nothing compared to when that will include tuition and room and board. However, saving for those future education costs can be confusing since education planning doesn’t get as much attention as other topics like retirement and there are a lot of different education saving options out there. Let’s take a look at some things to consider: Read more
With the rising cost of college, more students and their parents are rightfully looking at their of college in financial terms. In that spirit, I saw this report on the best “value colleges” by “return on investment.” This can be a much more useful measurement than simply looking at a school’s general “ranking” but there are a few thing to keep in mind: Read more
Very often, I talk to people who have financial concerns that are weighing on them. I’ve noticed a correlation between the age of the person and the concern. Lately, a lot of people who are within a few years of retirement have been concerned about the stock market and relatively new hires who are just establishing a career have been concerned about their level of debt impairing their ability to make progress toward their important life goals. Those are two mini-trends I’ve been seeing lately. Read more
That’s what a high school senior named Ronald Nelson did to accept a free ride at the University of Alabama. While very few students will be in Nelson’s enviable position, many families will have to decide between a more expensive higher-ranked school and a lower-ranked but less expensive school. With both education and student loan debt increasingly important factors to many young people’s financial well-being, this is not always an easy decision to make. Here are some things to consider: Read more
I had a conversation with a young man in his early 20’s recently who had just started his first “real job” and was about 60 days from his student loans going out of deferral. He was panicking because there are a whole lot of options to repay student loans today that didn’t exist when I had student loans. (My son would like to add that they also didn’t have electricity or cars when I had student loans.)
Looking at the options in front of him, I could understand his dilemma. I had 2 options when I graduated – a straight 10 year term loan and a “graduated” payment plan that started with small payments and increased every 2 years to a level well above the standard monthly payment. Both of those options still exist today, but there are also many other choices. It is a very tough decision, and it can impact the next 10-20 years of cash flow. This is one of the biggest financial decisions a new graduate will make.
The young man I talked to had about $80,000 in student loan debt and had no idea what to do. So he came in and we talked through some options and did some number crunching. Here are a few of his options, along with some financial highlights:
When looking at student loan repayment options, know that the world has changed. These options are available through the Department Of Education and there are other newer options out there like www.SoFi.com, where borrowers can refinance without a bank being involved through peer-to-peer lending. This can be a great way for borrowers to get out of high-interest student loans. What I learned during my conversation with him is that the right answer is going to be different for everyone. There is no single “best option.” Factors like current income, expected future income, cash flow constraints and other goals (buying a house or car) should be considered as well as things like affordability today, total interest paid over the loan’s life and total lifetime payments. It’s a complex web of options, but if you understand which factors are most important to you, the right repayment option should become clear once you start analyzing your real numbers. This post was originally published on the Financial Finesse column on Forbes.com.
Should you focus your financial plans on funding your children’s college education out-of-pocket or through parent loans? This is a question on the minds of many parents that I speak with on a regular basis (and also a question that I personally have to deal with having a third grader and a kindergartener growing up too fast). The retirement vs. education question gets even more challenging when children reach high school and the time horizon to save gets shorter. Read more
Today I met a man who is taking a rather practical approach to teaching his kids about college planning. This gentleman has three kids, the oldest of which will be going to college in a few years. He said something rather profound that made me reconsider how I’ve been talking to my own kids about college. He said, “College is not a right.” Read more
During the holidays, I had so much fun visiting family as did many of my colleagues. So as we all got back into the groove of working, we shared stories of those sometimes amusing family encounters. Tania, our Atlanta-based CFP, talked about how it was wonderful seeing her cousins, who only a few years ago she was bouncing off her knee, now that they are all taller than she is (which isn’t a stretch since she is barely above five feet tall). Here’s her story: Read more
I read this article about parents shouldering a massive burden for student loan debts for their children.This is currently a huge problem in the middle class. Lower income families receive significant financial aid. Higher income families can support the cost of college out of cash flow. It’s the middle class that is getting hammered with this and it’s creating some ripple effects into other areas of life. I have talked with countless couples who are delaying retirement for 5-10 years in order to pay down student loan debt. They all hope that their employers keep them around that long and that they don’t get caught up in a downsizing or have serious medical bills like the family in the article. Read more