No matter how well you planned, did you plan to spend $48,510 a year on your child’s higher education?

Are you sitting down while you read this? Please sit, because I don’t want you to faint. College costs roughly triple from the time a child is born until the day he/she moves into the dorm.

The cost of college today gives every family pause. Especially if you have been paying private school tuition for any number of years. Tuition and fees for a bachelor’s degree from state colleges and public universities cost approximately $10,230 this year. Campus housing and the mandatory meal plan cost an average $11,140. That’s $21,370. Per year. Don’t do the math on how much you’d be paying per meal. ($9 for breakfast, lunch, and dinner. Ouch! For what? For a bowl of cereal or a container of yogurt?! Do your kids even eat breakfast?)

And that is a bargain compared to private colleges and universities, where tuition and fees average $35,830 a year. Housing and meals are pricier on the private school campuses, averaging $12,680.

Today, 71% of American students borrow to pay for college, averaging $37,172 per loan. Parents may be eligible for federal educational tax benefits where it maxes out at $2,500…but a student loan debt is a terribly heavy burden for many. Federal loans offer the best rates, regardless of the student’s income or test scores. Repayment plans are based on a grad’s salary and the federal government has a student loan forgiveness program.

Not to worry. There is LIGHT at the end of the tunnel, and I don’t mean the one heading in your direction. While college costs continue to outstrip inflation, I have good news for you: 58% percent of college students receive scholarships and/or grants. Only 12% of students actually pay sticker price at the private universities. That’s a huge relief, because every dollar you borrow will cost $2.00 by the time you pay off the debt.

No matter how well you planned, did you plan to spend $48,510 a year on your child’s higher education?

I promise that you and your child won’t have to stand on the street corner and sell pencils. My goal is to help you navigate through the minefields of financing higher education, but I want you to read this very carefully: saving for your retirement should be your number one priority.

Parents who save for both college and retirement will have more money available for retirement than parents who save for retirement and take out a loan to pay for college. College 529 savings accounts offer a way to invest even with a modest amount and the investment is sheltered from taxes. 529 withdrawals are tax-free when used for college expenses.

Answering the Financial Aid Question
“Will my child qualify for financial aid?” There is not a simple answer because there isn’t an automatic income cut-off that disqualifies students for need-based aid. Expected Family Contribution (EFC) is a dollar figure that represents what a financial aid formula has concluded that you should be able to pay per year for your child’s higher education. This is calculated based on your income, your assets, your marital status, and the number of people in your household. There isn’t a ceiling for high-income parents.

Example 1
Cost of In-State Public University – $22,000
EFC – $35,000
Demonstrated financial need – $0

Family EFC exceeds price of state school so student won’t qualify for need but might for merit.

Example 2
Cost of College – $60,000
EFC – $35,000
Demonstrated Financial need – $25,000
Student would be eligible up to – $25,000.

58% percent of college students receive scholarships and/or grants. Only 12% of students actually pay sticker price at the private universities.

Tools You Can Use
The College Board has an Expected Family Contribution calculator on their website, www.CollegeBoard.org. As a lesson in financial literacy and an introduction to financial planning, check that out with your teen before your child falls in love with any school. And while you’re at a computer together, Google both the name of a school they are considering and “net price calculator.” Be prepared to provide figures from your income tax return and non-retirement investment statements. This calculator may also require your child’s grade point average, test scores and, sometimes, class ranking. A thorough net price calculator should take you around 15 minutes to navigate, but some colleges provide inferior online financial aid resources compared to others.  That’s well worth noting as part of your family’s consideration of each school.

Free Application for Federal Student Aid (FAFSA) College-bound students must file at least one financial aid application. It is the federal financial aid form that roughly 20 million Americans complete a year. The federal government relies on FAFSA to determine who qualifies for federal grants and is a requirement to get a loan.

CSS Profile
This is the College Board’s financial aid application used by roughly 200 universities. Financial Aid officers use this secondary application to dig deeper into a family’s finances to determine who qualifies for their institutional aid.

Parents who save for both college and retirement will have more money available for retirement than parents who save for retirement and take out a loan to pay for college.

How Investments Impact Financial Aid
Good news! Not all your investments are considered when Financial Aid officers calculate your family’s  financial needs.

FAFSA’s aid formula ignores: Primary home equity, retirement accounts, Annuities, and the cash value of life insurance.

Schools that use the CSS Profile typical ignore: retirement accounts, qualified annuities, life insurance cash value.

Note that the FAFSA and CSS Profile both consider these assets:  non-retirement savings and investments in the parents’ and the child’s names, including: checking, savings, brokerage accounts, 529 college accounts, and custodial accounts. Yes, Israel Bonds count.


Mark S. Gardner spent 23 years at Bear Stearns, overseeing the local Wealth Management department. Gardner has managed over $175 million for high net worth individuals and families in Dallas and at his boutique, family-run firm, RetireWellDallas, the mission is helping people retire happy! Offering the same blue-chip services of Wall Street giants, but with personalized attention and a focus on retirement income strategies, RetireWellDallas helps clients design tax advantage strategies and retirement income plans that optimize their Social Security benefits and investments, as well as plan long-term care, college funding for children and grandchildren, and much more. Mark is widely consulted for his financial insights and has provided commentary on ABC, CBS, NBC, and other network television and radio programs. For a complimentary assessment of your financial plan, contact Mark via email at MarkGardner@RetireWellDallas.com or call (214) 762-2327.

How the FAFSA Assesses Assets
The FAFSA treats parental assets less harshly than the student’s when calculating a family’s eligibility for financial aid. I believe this indicates that the federal government supports parents funding their retirement.

Let’s say Hayley’s parents have $100,000 in non-retirement accounts. Now, imagine that Hayley’s very responsible and forward-thinking parents have been investing money in a brokerage account in her name for 17 years. Let’s say they saved and grew a nest egg of $100,000 for her. Yay, Hayley’s parents!  Right? Yes…and no.

Parents are assessed at 5.64% and prospective students are assessed at 20%. If Hayley’s accounts show assets of $100,000, then her family’s expected financial contribution is increased by $20,000. If the money is in her parents’ names, even in a non-retirement account, the formula is Amount x 5.64%. In this example, Hayley’s family’s expected financial contribution = $5,640. That amounts to nearly $15,000 her parents can put toward their retirement…and to more financial aid opportunities for Hayley. 

There is an allowance and formula that, depending on the age of the parents, can help offset contributions.

Now, aren’t you glad you sat down? Has this got your head swirling? We haven’t even looked at CSS Profile assessment of assets, nor Grandparents and Financial Aid. Another consideration is: will your child graduate and go to work or are the next four years the prelude to Law School, an MBA, or a long stretch of Medical School?

Each college and university is unique in its approach to distributing aid. Working with the individual college and university is the best way to understand how aid works at that school. Financial aid is evaluated each year to match any tuition increases. It’s critical to know and meet the Financial Aid deadlines for each of the schools to which your child applies. Missing deadlines can be devastating.

RetireWellDallas helps parents save money and keep their sanity during the college search and financial planning process. Our goal is to help you focus on finding and funding the right college for your child. We offer private consulting, as well as educational workshops and classes that guide families through the tricky minefield of picking and paying for college, even at the late stage.

Every parent wants better for their child then they got. My suggestion is to throw the net further out and consider a wider pool of schools than the famous few. There is so much focus on elite schools such as Harvard, Yale, and USC. Remember: there are many great universities across the United States, even right here in Texas. Consider Rice. Consider SMU. And don’t be tempted to think UT Austin is somehow lesser because it is a public university.  You may believe that UTD, which is right here in our backyard, may have started as a commuter college…but that’s not true. The University of Texas at Dallas, which is strategically situated in the North Texas Telecom Corridor of Richardson, was founded as a research arm of Texas Instruments. It was originally exclusive for upperclassmen in math and science. Today, UTD is an internationally-acclaimed university that offers more than 140 academic programs to nearly 30,000 students who enjoy a uniquely elegant campus. UTD has an endowment of more than $532 million. A world-class public university that offers generous scholarships, a great dorm life, and your kids can have Shabbos dinner with you as often as they want! What’s not to love?

I have complimentary resources to share with you about financial planning for higher education. Please email me at markgardner@retirewelldallas.com. Meantime, here are a few leads to help your family research schools and begin generating ideas:

College Scorecard (collegeboard.org) This site provides in-depth information on individual schools, including academic majors offered, location, types of career paths pursued, and alumni salaries.

College Board (collegeboard.ed.gov) Showing the average need-based and merit-based grants that each school offers.
Educate to Career (educatetocareer.org) This site provides data on college admissions, educational attainment, and career outcomes.

Niche (Niche.com) Student reviews of colleges discuss academics, campus, athletics, Greek life, and food.