Season 2, Episode 6: How to Pay for College and Still Afford to Buy Nicer Cheeses

Why college tuition isn’t as terrifying as we think it is, the best strategies to save for it and how to support young people’s education without living on ramen for the rest of our lives

Do you have a 4-year-old daughter or 15-year-old niece that you hope to help pay for college, but also would still like to have money for other things like toilet paper and health insurance, and feel like the two things are mutually exclusive ? Stop freaking out - we just might be able to pull this off.

We know - we already did an episode about saving for college last season. But this time we invited a real life college finance mastermind!

Our guest expert Ann Garcia is so expert that she actually wrote a book called…wait for it…How to Pay for College. Not only does she blow through all the myths about college saving making tuition more expensive, she explains what a list price is, and how what they say college costs is different than what college actually costs (in a good way).

Also, all the programs and scholarships and other things we never knew about that lower tuition costs and help students choose the right school.

After you listen, check out all of Ann’s wisdom and resource-sharing on her website http: howtopayforcollege.com. And, to get even more of her specialized strategies, take her College Financial Plan Masterclass. Women on the Verge of a Financial Breakthrough get a 10% discount!! Just enter promo code: WOTV10

Ask us your dumb investing and finance questions for Season 2 on our Ask Us page!

This episode was edited by our co-producer Kelly West. Music by Bad Bad Hats and Devmo.

Transcript for Season 2, Episode 6: How to Pay for College and Still Afford to Buy Nicer Cheeses

Caitlin Welcome to Women on the Verge of a Financial Breakthrough, figuring out finance, one dumb question at a time. I am Caitlin Meredith, a mediator and coach based in the Bay Area. And I'm the dummy and this is our expert.

Sara I am Sara Glakas. I'm an investor advisor and founder of Black Barn Financial and the Austin Women's Investing Group, which can be found on Meetup.

Caitlin So we have a special guest today who's an expert in something again. Sarah is not the expert in everything, which is always a shock to me in financial matters. But we've invited somebody else Ann Garcia, who is an actual expert in how to pay for college, which is something that's on everybody's mind that I know who has small kids. Medium kids, big kids. All the kids. Because it's so terrifying. So Ann why don't you introduce yourself? You just wrote a book, How to Save for College. Did I get the title right?

Ann Garcia How to Pay for College

Caitlin Yeah. Oh, I said save. Yeah, pay that. Both of those are important.

Ann Garcia Saving is a big part of that. But. But there are lots of pieces of how to pay for it. Yeah.

Caitlin So tell everybody about your background, how you came to this, etc..

Ann Garcia Yeah. So I'm a fee only financial advisor. I have a firm in Portland, Oregon called Independent Progressive Advisors and we work with a lot of mid-career professionals. Early in my career as an advisor, I noticed I was talking with a lot of two groups of people. You know, one were parents who just couldn't figure out how they how to even approach this thing called college. And another was young adults who were struggling to do kind of any of the basic building blocks of adulthood that we think of, you know, buying a house or saving for retirement or even setting up an emergency savings because they had taken out so much, taking on so much student loan debt that their student loan payments were just taking all of their you know, really taking all of their free all of their free cash flow. And then Sam and I, I sort of realized that if I could help that first group of people, you know, the parents who are struggling with this question, I might minimize the number of the second group of people who who were who were out there by by helping families make better decisions about how they're going to how they're going to get their kids educated in a way that that works for for everyone. And so I started out, you know, I realized I was answering the same questions again and again and again. And so one year as a New Year's resolution slash self-improvement project, I decided I would start a blog where I would just kind of write all the answers to all these questions that I was getting all the time. And so.

Caitlin It's so generous of you.

Sara I know. It's amazing.

Caitlin Yeah, I love that idea that you're like everybody. These frequently asked questions that are in everybody's head. And then you turned it into, like a blog where you're giving away freely all the wisdom that you have about this stuff that's stressing everybody out.

Ann Garcia You know, honestly, that's something I feel really passionate about. I mean, I feel like, you know, as advisors, we talk so much about changing lives and making people's lives better. The people who need our help the most are the ones who don't have access to to people like us. And and so if there's an opportunity for me to provide good financial guidance, I feel like that's part of just being a good human and a good citizen.

Caitlin You're one of us and love it. I think that's also so important because it's so scary that like by the time someone's Googling it, they have so much angst, like built up, like it's such a brave move to even Google it. So they found your blog and actually got really well-researched, good advice. That's just such like that's amazing. I'm very glad that exists. What's the name of the blog?

Ann Garcia So originally it was called The College Financial Lady, and now it's called How to Pay for College. So my website is How to Pay for college dot com. There's tons and tons of free college planning resources there over time. So I've been writing this blog for almost a decade now, like my self-improvement project, I guess I didn't know. And it became a little bit unwieldy. So, so I, so I wrote a book out of it and sort of. Just came out right now.

Ann Garcia It came out in July of 2022. July of 2022. Yeah.

Caitlin So this is like the most accurate it will ever be is like the financial information that it has it at right now.

Ann Garcia Exactly. Although, you know, I feel like, sure, there are numbers and nuances to it that change on an ongoing basis. But conceptually, how you approach a goal like college, you know, from a big picture perspective is going to be the same, whether it's post FAFSA simplification next year or pre FAFSA simplification this year. You know, like.

Caitlin The strategy part stays the same. Exactly, exactly. Because the numbers part. So I was looking at your website, which is just amazing, has so much useful information in it. And I had to like read this section three times. Cost increases in the 30 years from 1986 to 2016, public university cost of attendance increased by almost 500% and then private college costs increased by a mere 467%. The same time period, median household income increased by 13.6%. We have a numbers problem there. I closed down the website and I was like, Oh no.

Ann Garcia Keep it. Here's here's the good news. You know, the headline numbers we see the list price of college tuition has gone up by 500%. You know, as as I said, however, very few people pay the list price of college. There's another number that's more important, which is the net price. And the net price is what you actually pay. Net of scholarships, grants, tax credits and all kinds of other things. And the net price of college has actually remained constant for about since the since the financial crisis. 2829.

Caitlin What about that list price, though? I want to understand that. What does that mean? Like, if I went on the University of Texas at Austin website and said, how much is tuition with that number I got for 2020 to be their list price?

Ann Garcia That is the list price, right?

Caitlin Yeah. And then the net price is after I apply, my kid applies for financial aid like all the other take all the other variables take in consideration for my individual child, my own, our family. Price is going to be different than other people's family price.

Ann Garcia Correct. I mean, college is a lot like travel. You don't ask the person in the airplane seat next to you what they paid for their ticket. It's not going to be the same number as yours. Same thing. Don't ask the person sitting next to you in your college classroom what they paid, because it's going to be it's going to be different from yours. And to give you an idea how big that gap between list price and net price can be. So the average there's a statistic that's called the average tuition discount rate and it is more than 50%. So more than 50. So. So. So people actually pay less than half. Of what's charged in the form of in the form of college tuition.

Caitlin So what does that list price about? It's for rich people like it so they can get as much money as they can from people that actually have that cash. Exactly. Okay.

Ann Garcia Yeah. I mean, think of it this way. If you're if you're deciding if you're at Stanford and deciding what tuition is going to be next year, and you say, well, let's see, this year we're charging $82,000. And we turned away 20,000 people who were willing to pay $82,000. What should we charge next year, $85,000 or $75,000?

Caitlin So they're pricing it as high as they think they can get away with to still get a significant proportion of applicants that can actually can and will pay that.

Ann Garcia Yeah. Because lots and lots of people are willing to do that. And I think that's one of the really unfortunate things that we don't talk about when we talk about why college is expensive. College is expensive because lots and lots of people are willing to pay a lot of money to send their kids to college.

Caitlin And I like an idiot. I've just been thinking. It's like, well, gas prices like that, it's been like anchored in real inflationary costs, like paying that many people infrastructure for a university. But it's not they they're profiting by an alarming amount. I mean.

Ann Garcia You have so you have three groups of colleges, right? You have the private nonprofit colleges, which are like the Stanford's the Ivy League, you know, the four year degree granting institution. So they are nonprofits, but they might have administrators who are paid millions of dollars a year. And then you have public universities. They are likewise not running a profit, but they're paying some pretty nice salaries to a lot of administrators. And then you have the private for profit colleges, and those are the ones that are always in the news about defrauding students and stuff like that. Those guys are running big profit.

Caitlin Right. Right.

Ann Garcia Everyone else is. Yeah. Making money off of students, but paying it out, you know, somewhere else, somewhere else along the line. And, and, you know, one way to look at it is if you've got this pool of people who is willing to pay.

Caitlin 80.

Ann Garcia Something thousand dollars a year to educate their kids, and by collecting that money, that opens up a pool. Of dollars to provide scholarships to all the people who can't.

Caitlin Effectively subsidize the tuition for people that can't pay it. Mm hmm.

Ann Garcia And but you know what I would like people to take away from this is. You know, so many people are like, well, it's $25,000 to go to my in-state school or $80,000 to go to a private school. No, it's not. You can find a college that will educate your child at whatever price you're willing to pay. Where you get into trouble is by saying, it's really important to me that my child goes to an Ivy League, or it's really important to me that my child goes to X, Y or Z school because every school has its own priorities for how they allocate financial aid and scholarship dollars. Some will allocate them to your child. Others won't. You know, my son attends an out-of-state public university. It costs the same for him to go there as it went to go in-state. My daughter attends the world's most expensive university, and it was her second cheapest choice once all of the financial aid and scholarships were or layered in.

Caitlin Can we know the names of these institutions?

Ann Garcia Yes, I have actually disclosed them privately. So my son is at the University of Arizona. In fact, I was just down there visiting him and my daughter's at the University of Chicago.

Caitlin The University of Chicago is the current most expensive university in the world.

Ann Garcia It is.

Caitlin But as their list price as.

Ann Garcia Their list price is the high and well. And the other thing that that I find kind of interesting with their list with their list price is this is a college that is extraordinarily generous with all of its students. Colleges can only offer scholarships for things that are part of the cost of attendance. So, for example, they include health insurance in the cost of attendance. So if you have health insurance, you opt out of the health insurance and you're paying $5,000 a year less, you know, coming out of the gate. So. So every college has its own way of how they calculate what their cost of attendance is, too. Just to further muddy muddy the conversation. Here's the good news. Every college is required to have on its website a tool called a net price calculator and the.

Caitlin Price calculator on hand.

Ann Garcia And you can punch in all of your family's financial info into that net price calculator. And it'll tell you what students like.

Caitlin You.

Ann Garcia Paid to go to their college in in the current year.

Caitlin So they're super transparent about it.

Ann Garcia They're super transparent about it. They're not you know, this isn't a binding offer of financial aid. But I know for my daughter applied to a lot of private schools and doing the net price calculators was part of the process for her because we sure as heck weren't going to pay $80,000 a year for her to go to college. But we felt like as a student, she was a really good fit for for a private school. So we did all you know, we did net price calculators for all the schools she was interested in. And and everywhere she was accepted, her offer came within $2,000 of what the net price calculator had had told us.

Caitlin Okay. But wasn't it for you kind of personally and professionally, you're like, Oh, I'll take them. Show me your list price, University of Chicago. I'm coming for you. I'm the college finance lady. Were you secretly hoping she'd go for the most expensive one like this personal challenge to see what you could get the tuition down to?

Ann Garcia Well, you know, it's funny. It was funny as I dragged her to U Chicago, to look at it, because she was interested in a different college that was in Chicago. And I was like, We're not going all the way to Chicago to look at one college, so find some others. And then we'll talk about going there. Like, I don't know any other ones. I just have a friend who goes to this, this school and loves it. So. So I was like, Well, I know  UChicago. I'm a financial advisor. I use DFA Funds. We'll go there.

Caitlin And she ended up wanting to go there.

Ann Garcia Yeah.

Caitlin And you got to use your like you hone your professional skills for your personal benefit in this case, too.

Ann Garcia Exactly. And I mean I mean, there are lots of reasons why U Chicago ended up being less expensive than than other colleges that she was looking at. A big one is they use the FAFSA as their financial aid form, not the CSS profile.

Caitlin And you just quickly go through what, you know, what.

Ann Garcia The heckre you talking about?

Ann Garcia So there are there are two financial aid forms that that you use when you apply to college. One is the FAFSA, and the FAFSA is the free application for federal student aid. So if you want any penny of financial aid or if you want to take out a student loan or if you want to be considered for work study, you have to file the FAFSA.

Caitlin And you choose the you in that you.

Ann Garcia Is the student and the parent.

Caitlin Okay? And there's two different like the parent gets their copy and the student gets or electronically.

Ann Garcia The student has a set of questions they answer and the parent has a set of questions that they answer. So, so you so so everyone who's going to college files the FAFSA, and they have a set methodology they use to calculate what's called your expected family contribution, and that's being renamed to be the student aid index. Because people logically assume if. That's my expected family contribution. That's what my family should expect to contribute to college. And in fact, that's just.

Caitlin What.

Ann Garcia Their calculation says. You could pay and schools can do whatever they want. With that really important point, college is under no obligation to meet or to meet your financial need. So even though you filed a FAFSA apply for financial aid, that doesn't mean you're going to get it at your top choice college. So there's a second financial aid form called the CSC Profile, and the CSC profile is used by about 400 private colleges. In addition to the FAFSA and the CSA, profile collects a broader range of information from families. So there are a couple of really important differences. One is that if your parents are divorced, only one parent has to complete the FAFSA. Both parents have to complete the profile. If you the profile has questions about things like what's the value of your home equity? It includes some assets that aren't included on the FAFSA. So almost every family will have a higher expected family contribution from the CSA profile than they will from the FAFSA.

Caitlin But if that's only if your kid is applying to a private institution that requires that's yes. Aspire of that. And when you're hoping for well.

Ann Garcia And when you're hoping for talking to people that aren't.

Caitlin Great. Yeah. Okay. Right. Yeah. Okay. So already I can feel people be really scared because they're like, yeah, well, I have a house in Austin or the Bay Area that happens to have like appreciated, like crazy, but that has no bearing on whether I'm.

Ann Garcia Going to come, whether I can pay for college or not. I'm certainly not going to sell my house to pay for to pay for college. Yeah. And, and the thing with this profile, so, so with the FAFSA, it's like, here's what here's the data that we collect and here's how we calculate your expected family contribution. And you can go and they have a worksheet that shows it so you can calculate it all yourself and you'll get the exact same numbers when you actually go to go to go to file it. With the CSA profile, colleges have a great deal of latitude in how they use those numbers. So home equity is a great example. Some colleges just completely disregard that because as we all know, we're not selling our houses to send our kids to college and others will cap the value of your home equity at a multiple of your income.

Caitlin I don't know what that means, but do I need to? Not necessarily do, let's say.

Ann Garcia Well. So let's say you own A because you're in the Bay Area and you're in Austin and I'm in Portland. Let's say you own $1,000,000 house and you own it free and clear. So technically, you have $1,000,000 of home equity.

Caitlin Right.

Ann Garcia If your salary is $100,000. Many colleges will say we're not going to look at the whole million dollars worth of home equity. We're going to look at one point, two times your income. So we're going to only consider $120,000 of your home equity as an asset. So it's very opaque. Colleges can do lots of different things. I mean, when you when you actually filed a profile. Colleges can add supplemental questions like I mean, one of them asked what cars we drive and whether we own them or leased some know. And another one asked whether we had spent any money for our kids to have a summer job. I'm like, do we have to include the gas that they use to drive their.

Caitlin Wow. Is that really getting into a level of upper middle class privilege to like even the playing field that like, yeah, your kid achieved all these things, but you are really bankrolling the whole thing.

Ann Garcia Or you know, I think I think there's a degree of that whole wow. You worked in, you know, such and such medical research lab. Oh, because you did it wasn't really a job. It was a summer school program that you applied to. And actually, you were paying to do the job, not the job was paying. So I think, you know, I my my guess would be that yeah, it is to identify what is something that the that the student actually earns on their own versus something that they had access.

Caitlin To.

Ann Garcia Because of who their parents are.

Caitlin Yeah. I am feeling very threatened by all of this. Not that I have all the millions that I'm trying to hide, but I can imagine feeling very vulnerable, putting your assets on one of these forms because you don't know what's going to happen to the information. It feels like it could be used against you or your kid might not like. So I could imagine. Like, is it illegal to lie on it? I'm not suggesting anyone should lie about like, okay with you.

Ann Garcia One of this stuff certifying that the information that you provided is accurate. So, so, so yeah, it is important to provide accurate information. Now, there are people who don't want to do you know who who don't want to file the FAFSA. I would say so. So a couple of things. One is they're not necessarily sending all of your information to the schools. The schools will get what your expected family contribution is, and they'll get certain of the data fields that came through to, you know, to calculate it. They're not getting access to your full tax return. They're not getting you know, they're not getting actual statements from your investment accounts. They're not they're not you know, the FAFSA ask of what's the asks, what's the total value of your assets, not what's in this child's 529 what's in that child's you know, what's you know what other what other specific things. Things do you own. So. So it's not it's not as invasive a process as as it might seem like it would be. Now, another thing that's really important to remember, because so financial aid.

Caitlin Is.

Ann Garcia You are eligible for financial aid if your expected family contribution or student aid index is less than the cost of attendance at a college.

Caitlin Right now. I need to hear that again.

Ann Garcia Okay. So the FAFSA or the cost profile calculates a number called your expected family contribution. And right then, this is the number we think that you.

Caitlin Based on what you got.

Ann Garcia Based on all that information that you that you put in it, it's largely based on your income. So if that number is less than the cost of attendance at a college, the list price of attendance.

Caitlin Then my family, the college my kid wants to go to is $25,000 a year. But my the FAFSA says I could probably come up with 10,000 a year. So there's a gap between the.

Ann Garcia Gap in your house when you show.

Caitlin Me how much I could do. Yeah.

Ann Garcia Exactly. If your expected family contribution is higher than the cost of attendance, then you are not eligible for need based financial aid. So think of it like a student applying to a public school. Public school list price $25,000. Expected family contribution $30,000. That student is not eligible for need based aid. That doesn't mean there's nothing for you.

Caitlin Right?

Ann Garcia It means they're going to need to look for merit scholarships.

Caitlin Okay.

Ann Garcia So my son, for example, gets a merit scholarship at his college. And and that makes it cost about the same for him to go there as it would cost to stay in-state and go to University of Oregon. It has nothing to do with our ability to pay. It has to do with him being a good student.

Caitlin Okay.

Ann Garcia And very, very many colleges offer merit scholarships. Every college offers some form of discount. It might be on the basis of need. It might be on the basis of merit. It might be both.

Caitlin Or just like we need a, like, field hockey player.

Ann Garcia Mm hmm.

Caitlin Like. Right. Like the sports is a huge.

Ann Garcia So sports, merit.

Sara Based.

Ann Garcia Sports are very a sport. A sports are very commonly misunderstood. You are more likely most students are more likely to get advantages in the admissions process than they are to get scholarships for for their sports. There's a short list of sports that provides full ride scholarships to every student on the roster. You know, for men, that's football and basketball. For women, it's basketball, tennis, gymnastics and volleyball. Most sports, most college sports, and only at the D1 level. So most college sports are what's called equivalency sports. And an equivalency sport means we've got X number of scholarships. You know, the NCAA says you can have this number of scholarships on this team. So I think for soccer, it's like 9.9 scholarships. There might be 25 or 30 students on the roster and there's less than ten scholarships that get divided among those 25 or 30 students.

Caitlin So you can't count on that.

Ann Garcia So, no, you can't you can't count on that. Where where athletes do do well is by going to, for example, D3 schools where they don't offer athletic scholarships at all, but they can offer merit scholarships to those students. So like my nephew was a soccer player and he got a great merit scholarship at a D3 college.

Sara That's what I did to go to college. I played at WashU

Caitlin For your basketball? You got a scholarship?

Sara Yeah, because I played at Division three school, Washington University in Saint Louis. We were in the University of Chicago's Athletic Conference. We played them twice a year, and most of my tuition was need based and merit based. There's not I mean, but there's not an athletic scholarship in Division three. But, you know, they want to be able to field teams. So most of the kids that play sports at WashU receive financial aid of some type.

Caitlin Were you told that when you got in, like you're admitted and this is how much will pay towards your tuition?

Sara Yeah, absolutely. I think that's probably the case for every student that.

Caitlin Okay. Yeah.

Ann Garcia So yeah. So a few years ago they changed the FAFSA. So you used to fill it out in this in January or after you'd done your taxes a few years ago? They they changed it. So now you fill it out in the fall. So you're submitting your FAFSA and your CSS profile with your college application and your financial aid award comes with your acceptance letter.

Caitlin Okay. Wow. I have so many questions. I know Sara does, too. And I want you to go over strategy and like what people like us are supposed to do. But I feel like I saw this on your website. And of course, it was like my among my top five questions that I knew I needed to ask you before even looking at your website. And I think it's probably the number one that you get. but it can never be stressed enough how many people think that you your kids are penalized if you save for college, that they will not qualify for any financial aid if you have a 529. I couldn't listen to this whole thing, all the amazing things you're talking about, if I had that in the back of my mind the whole time, like, this is all for naught. Because if I have that, my kid's not going to qualify. So let's just tackle that first and then go on to your strategies. c 

Ann Garcia Yeah. So so when the FAFSA calculates your ability to pay for college, they look at parents income, parents assets, students income and students assets. Parents income is, in almost every c ase, 95% of your ability to pay. Assets are calculated at 5.64% of their value. So. So every thousand dollars you save will will reduce your financial aid eligibility by $56. So. So there is a tiny tiny loss of aid eligibility.

Caitlin For every thousand dollars you save in a 529. Mm hmm. That translates to a $56 reduction in the financial aid your child might qualify for.

Ann Garcia Correct. Correct.

Caitlin And yet we are freaking out about it.

Ann Garcia Yeah. And people. You know, people engage in so many shenanigans to not save for college. The more you save, the more choices your child is going to have.

Caitlin That just got rid of all of my excuse. Like, you know, I just don't want to jeopardize her. So really, it's really a comfortable defense from feeling the pressure of having to save for college, to think that, like, you're actually doing a good thing for your kid by not.

Ann Garcia Yeah, you are giving them more choices. The more you save, the more choices your student will have. And that's really what we want, isn't it? We want our child to have good college choices. So my daughter's a perfect example. She was a great student. You know, we call her a D1 mathlete. She had a full tuition scholarship to University of Oregon. We live in Oregon, which was which was in many ways a great option for her. It was not a good school fit for her. Had we not saved, that would have been her choice. Because we'd saved, she was able to go to University of Chicago, which offered her also a very generous package, but not room and board only, which is what you know, which is what Oregon would have would have cost her. And and she's had a phenomenal time there. She's had experiences there that she wouldn't have had access to at University of Oregon. She's met people from all over the world. She, you know, their student to teacher ratio is tiny. So all their classes are these little tiny discussion classes where she doesn't have to come home and talk to us about Nietche.

Caitlin No, wait, I want to do all those things because she gets to talk about that. With all I'm just saying, they're not mutually exclusive. I went and learned all about Foucalt in my small private, a liberal arts college, and I came home to try to talk to my parents about all of it. So it's not exclusive, but I get your point. Okay. So by having the savings, it didn't jeopardize the amazing offers that she was getting based on merit and need, whatever. You don't have to go to that. But that it gave her that extra oomph to be able to then have some choices even when she was getting aid offers.

Ann Garcia Exactly. Exactly. So, you know, if if you if you if you want your child to have more choices, you need to save for college. It's college colleges too big of an expense not not to save for and and and frankly, the people who it seems like talked the most about trying to you know not save to be eligible are the people who aren't going to get financial aid anyway. So you're so so really you're shooting yourself in the foot by not by not saving. More importantly, you're you're you're curtailing your child's options by not saving.

Caitlin Alright, you're really laying it on thick here. Okay. Why don't we try to answer your question? I mean, because we talk about it in this podcast all the time, like what our priorities are supposed to be because like, you know, I'm still paying my own student loans. So as I told her, it like it feels crazy that I'm supposed to be paying, chipping away at my own student loans while saving for hers while during retirement and my emergency fund. It's sort of like I mean, the whole thing is just one big bucket go. You know, there's all these buckets. So I do think that it's interesting to think about like where that shows up in your priorities and sort of the order of operations for working to get there. And what in your answer to how do we save for college, how do we pay for college, where that shows up?

Ann Garcia Yeah. So I think it's a great question and it's one that frankly most of us struggle with, right? Because there just aren't as many dollars as things we would like to do with those dollars or things that we need to do with those dollars. So my rule of thumb is this if you don't have emergency savings, you're not you don't have college savings. If you're not saving for retirement, you also shouldn't be saving for college. You know, retirement needs to be the first priority, but college is too big of an expense to totally overlook. So if you're so once you've got emergency savings and you started doing retirement savings, if you are not maxing out retirement, you shouldn't contribute more than 10% of what's going into retirement, into college. So if you're saving $5,000 a year towards retirement, you can save $500 a year for college. If you want to save more for college, increase your retirement savings rate in order in order to do that, if you're someone who's fortunate enough to be maxing out retirement and still has extra dollars to save, that's when you can start looking at doing more, more for college. I think a couple of things can be really helpful. You know, one is. Use surpluses, bonuses, gifts, stuff like that to fund college. So if people give your kid money for their birthday, take half of it and put it in their college savings account. It's going to be more meaningful to them as an 18 year old than it is as a five year old. If you get a bonus, use that to increase your your 529 contribution. And I think to every year on your child's birthday, that's a great time to sort of, you know, as you're thinking about the year that's been and planning the party, it's a great time to think about the person that you want them to be and the opportunities that you want them to have and to look at your budget and say, hey, maybe there's another $5 a month that we can scrape out to add to their add to their 529. Every little bit helps. In fact, there's been a bunch of research done on this topic, and one of the things that was very clear was that kids who have college savings enroll in and graduate at higher rates than those who don't, even when it's a minuscule amount of savings. So $500 of savings is is is a number that would make a child more likely to enroll in college and more likely to graduate from from from college. And, of course, you can argue cause and effect there, right? Because of course, if I if I'm saving for college, I'm probably talking with my kid about college and probably creating that expectation that they're going for that they're that they're going to college, too. But, but part of the reason why we have almost $2 trillion in outstanding student loan debt is that people don't save for college and then expect their kid to go. And, you know, kids can't come up with $80,000 or $100,000 to an.

Caitlin We can't. I am also. This just makes me think so much about first generation college kids. Like both of my parents went to college. Like that path was a known one. Sara, I don't know for you. What did both of your parents go to college?

Sara One of my parents went to college.

Caitlin So it was enough. There was somebody who had walked that path before. It was a known culture like it was. And that is also such a big part of I feel like those same studies that looked at if there was a 529 also did want at least one parent in the household go to college because this is even more intimidating. It's like this experience that someone might not have had, their parents didn't have it, and it costs $300,000. And we're supposed. So I'm curious if you if there's anything in this planning, maybe it's the same as everybody else. But for first generation students that are going to be going to college when they're, you know, their parents didn't have the opportunity or lived in a different place, how that changes the perspective a little bit.

Ann Garcia Yeah, well, you know, I think it's I think that's one of our huge societal failings is that we've really put the onus on the family to make education a priority. At the same time that we've transitioned to this knowledge based economy where a college degree is really essential for the vast majority of well-paying jobs, it's it's it's tough for students who don't have family support, whether it's because this is a totally unknown entity to the family or whether it's because the family just chooses not to not to support them. That being said, there are lots and lots of great programs out there that can help students get through the college the college process. You know, most states offer some form of free community college that, you know, where students can at least get their first couple of years done at no cost. I think the other thing that a lot of students aren't aware of is that the the more the more selective, the more prestigious private colleges are often really aggressively trying to enroll first generation and nontraditional students. And and those are the students that they've reserved the most generous financial aid packages for. So know Stanford, UChicago, most of the Ivy Leagues, offer full rides to students whose family incomes are below certain, are below a certain threshold.

Caitlin So yeah, in my my undergrad liberal arts school, I'll need blind admissions, which I understood as if you get in, they'll figure out a way to pay for it if your family can't.

Ann Garcia So that's not quite so.

Sara Wrong Caitlin

Caitlin No.

Ann Garcia It's but it's a common, it's a common misperception. So, see.

Caitlin I'm doing it useful for all of our listeners. Mean,.

I did this, so you don't have to. So need blind admissions really just means we're not going to consider your ability to pay in deciding whether or not to accept you. There's a subset of colleges that have need blind admissions that meet 100% of of need through scholarships and grants.

Caitlin

Ann Garcia Yeah. So there are definitely there are definitely colleges that colleges that that do that the vast majority don't though. So it's really important as your you know, as you're going through the college research process and starting to look at colleges that you're doing those net price calculators and seeing what families like yours pay to send a student to to that college. And you can also just Google colleges that meet 100% of financial need and you will get a list. It's a changing list.

Caitlin Cut to the chase here. Let's just post that list.

Ann Garcia You know, I wouldn't just take it on faith that that's always true, because colleges can change their financial aid policies at any point. But those are definitely colleges that that students who don't have, you know, from families of limited means should be looking at those at those colleges because there are great, great opportunities there. And, you know, when I look at the resources that my daughter has at UChicago available to her and and compare them to what my son has at a public school, all the same things are there for for all the students. But in those small private schools, they're really pushing it down on you and making sure that you get it and take full advantage of it. Whereas at a public school, it's kind of incumbent on you as the student to go out and find those things and and make them and make them available to yourself.

Caitlin Yeah.

Sara And I just want to say, I think this message is really, really important for a lot of parents out there because, I mean, so often I see that the high list price discourages kids from applying to a whole swath of schools. But whether it's Ivy League or, you know, more expensive private schools because you just look at the list price. And so I think this message is incredibly important to really emphasize for people from all income brackets and asset base is that. What you see is not what you're going to pay. So I just wanted to thank you for that because I think it's incredibly important.

Ann Garcia Yeah, I agree. It's so it's such an important piece of it. I mean, I see so many people who are like, Oh, we're just not going to bother with those because blah, blah, blah or people are like, Wait, you're the college financial lady and your daughter goes to UChicago.

Caitlin Like, Yeah, because like you got it wrong.

Sara Because you sold so many books that, you know.

Caitlin That was before her book came out.

Sara That's right. That's true. Yeah.

Caitlin So, can a kid? Okay. You're going to have to tell us about 529 and what you think about them and all that. When you're telling us about that, can you tell me if a kid can start their own, you know, a first generation kid who's like, I have a high school job, whatever? I mean, high school seems late, so I get that you'd want to do it earlier, but can't. How old do you have to be to open one? How does that work?

Ann Garcia Yes, I think I think the account owner has to be 18, but a parent can open a 529 and the student can fund it.

Caitlin Okay. Okay.

Ann Garcia And like here in Oregon, our our tax benefits our tax benefit for 529 is a refundable tax credit. And so kids can contribute to their own 529 file an Oregon tax return and get a tax credit for it.

Caitlin Well, that's a good deal. Okay.

Ann Garcia So so 529 is a dedicated college savings account. It has a couple of benefits. Everybody gets tax free growth and withdrawals for qualified higher education expenses, which is tuition, room and board books and supplies, required fees, a computer, all kinds of things like that. Many states also offer a tax benefit for contributions. All but about 15 offer tax benefits. Of course, some of those 15 are the biggest states. So. Okay. But the thing that's really great about 529 is that isn't talked about as much is when you take a distribution from it. So so a lot of people say, well, I would rather save in a taxable account because I don't know if my kid is going to go to college or. Right. I hear that a lot. And so when you take money out of a taxable account, you are liable for capital gains taxes on it. But that also adds to your income when you.

Caitlin So the scenario here is I say I'm not going to do a 529. I'm going to do a Roth IRA to save for the college, because then I can use the money for the college or not. But then they do go to college. I'm taking out that tuition and whatever I take out of the Roth IRA that I'm not reported as in taxes.

Ann Garcia You're not paying income taxes on it. If it's in a Roth IRA, but you are reporting it as income on your FAFSA and with income, $0.47 of every dollar is considered available to pay for college once you get over a certain threshold. So so people who put $5,000 in a Roth IRA because they don't want it to be an asset on the FAFSA. They're saving about $27 in assets, but they're, well, maybe $100 in assets. But when they take it out there, they're losing aid eligibility by 47% of the value of what their of what they're taking out, because that gets added to their income. So that's getting into the weeds of how the FAFSA works. But if you have a taxable brokerage account, for example, so you set up an individual account or a joint account, and you're going to use that to save for college. Chances are good that if it's not 2022 and you've been saving in the account for a long time, you have you have capital gains. So when you take that money out to pay for college, first of all, you're going to pay capital gains taxes on it. So you're reducing the the total number of dollars available to pay for college. But secondly, that's going to flow through to your tax return as income, all of that gain. And that is added to your ability to pay for college. When you take money out of 529, neither of those things happens. So 529 is super efficient, not just for tax free growth and distributions, but for financial aid as well.

Sara That's really interesting to think about how the withdrawals from the different accounts hit your income statement versus your assets. I can just I know this is like a minuscule point, but I'm so fascinated by this. So if you if you made a payment directly from a retirement account to the school, does that still is that still reported as a withdrawal from that account that shows up?

Ann Garcia Not sure that you can do that.

Sara No.

Ann Garcia I mean, I think if you're taking money out of your Roth IRA, you you're taking money out of your Roth IRA, you're getting the money and then you're sending a check to to to the school. So you're going cash distribution?

Sara Yeah.

Ann Garcia You're taking a cash distribution and sending it on it. But a lot of people don't understand how that formula how that formula works, where where you do, even though it's taxed, even though a Roth IRA, you know, taking your contributions back out of your Roth IRA is a tax free distribution. It is still considered income in the FAFSA. So the FAFSA and the cost profile look at total income, not taxable income, not adjusted gross income. So you include all that untaxed income. So not just Roth IRA contributions, but contributions to your retirement plan. Get added back to your pretax retirement contributions. Get added back to your to to your income.

Caitlin Wow. So they're just looking at all the dollars coming in. They don't care what's tax because we're making choices. What to do with those dollars. We're making a choice to put it in a correct.

Ann Garcia Correct. You do get to subtract your actual tax liability from your income. So that's where a Roth IRA contributions can help, right? Because you're basically as long as it's in an income year, that counts for the FAFSA. And tell me if we're going too far into the weeds of how the FAFSA works. The first income year for your FAFSA is the year that starts January 1st of sophomore year of high school. So FAFSA used what's called prior prior income year. So. So when you're a senior in high school filing the FAFSA for your freshman year in college, you're using the income year that went from January 1st of freshman of sophomore year to to December 31st of junior year. To put that in a little bit more concrete terms, it's fall of 2022. Right now, a student who's applying for college and to start in 2023 is using their 2021 tax return to to do that. So so so you have these FAFSA income years that don't necessarily line up with college years that most of them are before you even get to before you even get to college, where this matters for parents who are thinking about taxable accounts or a Roth IRAs is if you have multiple children, it's a long ways out in the future before you can  into that money without reducing your eligibility for financial aid. Now, not all families are eligible for financial aid. Even among families that are eligible for financial aid, some students choose to attend colleges where they get merit scholarships instead, In which case all of that is moot. But as a parent who's, you know, maybe has a ten year old and is planning how to save for college, you really don't know. so I always feel like if you have two college educated parents who have a couple of kids, the likelihood that no one in that household is going to college is pretty low.

Caitlin Okay.

Ann Garcia And so and so a 529 is a far superior savings vehicle. For college than than any of the others. The other thing is you can use 529s for a lot of things. You can use it for trade schools. You can use it for community colleges. You know, it's not just limited to four year colleges. My friend's son is is an apprentice electrician and he's using his 529 for all of his coursework and buying his electrical, you know, his tools and things that he needs. That's all coming from 529. I had a client who sent me saying, yeah, and a client whose son didn't go to college and had 529 dollars. He took the distribution because he needed a car for his job. So he took a distribution. He did pay income tax and penalty on the growth in the account, but he wasn't making any money. So his tax rate was really was really quite low and has, you know, maybe it wasn't his parents first choice of of where he would have spent the money, but he was able to buy a car with his 529 money. And he was he was thrilled to have that.

Caitlin So that's so helpful because you started this whole series with like a lot of people don't want 529s because they say, like, what, what if my kid doesn't go to college and then we're stuck with this chunk of money in an account we can't use? And essentially you're saying that's not true, the kid can use it. There's a wide range of things. If they if they don't end up doing it, there's a tax consequence, but not big enough to be a deterrent from using it at all.

Ann Garcia Right. Exactly. Because you have a lot of choices for how you do it and you can even just, you know, set the money aside for a grandchild if your kid doesn't go to college. I heard of one I heard of one parent who made himself the beneficiary of his kids' 529s. There are some extra dollars in it. And he found a college that had a PGA golf camp.

Sara That's so clever.

Ann Garcia And he uses he uses kids 529 so he could take golf classes.

Caitlin Okay. I think I from the scarcity mindset, I'm like, I'm not putting money in an account that won't definitely be used, like in the way that it was supposed to be used and the amount of years it was supposed to be it. So there's like a fear around that. Like this isn't just like funny money that, like, I'm like, where should I put it? Like, those are active dollars that are not going into my Roth IRA, IRA or in my own investing account. So there's something about being like that. It's not like, oh, just forget. Oh, did I still have that $30,000 in that account? I totally forgot. Like, I will be thinking about that money every day it's in there.

Ann Garcia And that's why it's important to balance your college savings with your other financial priorities.

Sara Well, that's what I wanted to come back to about kind of like a big picture approach to paying for college, because you mentioned this at the beginning, right? That okay, like if you need to have retirement planning on track first, right, and then figure out what, you know, your rule of thumb, the 10% that then could be kind of set aside for education, whether it's a 529 or otherwise. Right. So so how do you how do you guide people through kind of, I don't know, just like this pretty basic question that you must get all the time, which is like, how do you parents figure out like how much to spend? Like what can they afford? Or how do you help the kids figure out like how much they can afford?

Ann Garcia Yeah. So there's, there's a few pieces of, of the college funding puzzle. I mean, I think there's this, there's this sense that I have to have the whole cost of college saved before I go to college. Most people use a combination of savings, spending out of pocket tax credits if they're eligible, potentially student loans. You know, there's scholarships out there, you know, outside scholarships that students can get as well. I think a more helpful approach than saying, oh, college costs $80,000 a year if you want to go to private school. And so four times 80 as well. And so that's this much per month. Figure out what works for you for saving as you go through your kid's life. You can make some projections about how much that savings rate is going to result in when they hit 18. The nice thing about colleges, you might not know what it's going to cost, but you do know when it's going to happen. So then look at your whole financial picture and say, okay, what can we, on an annual basis contribute to college in addition to our savings? And then you can say, are we eligible for the American Opportunity Tax Credit because that's another 20 $500 a year, and that's for households with adjusted gross income under $160,000 if they're married or 80,000 if they're if they're single. Am I okay with my student taking out student loans to pay for undergrad? Now, I know there's there's so much negative info out there about student loans that, you know, basically they're a one way ticket to the to the poorhouse. And I know there are plenty of people, you know, plenty of adults like Caitlin who are balancing you know saving for their own kids college or paying for their own student loans. The direct student loan for undergraduates is is a perfectly reasonable tool if it's what closes the gap for you. On on college funding, there's a cap on how much students can borrow every year. The interest rates are pretty reasonable. The maximum amount you can borrow over four years is $27,000, and that translates into about a $325 monthly payment for ten years, and then you're done with it. So if that's the difference between going to college and not going to college, that's then taking out that loan as a good choice. So all of this by way of saying those are sort of the layers of of the college funding, you know, the college funding plan. And so you as a parent, you might, you know, say my kid's eight years old, here's what I'm saving, here's what I think I could pay out of pocket. Here's kind of these other pieces that gives me a budget of about this much. When they get to college. Now, are there things in my situation that might change? Yeah, I might. You know, assuming I continue working, my income is probably going to grow. I'm not going to be paying for club soccer anymore or, you know, I'm not going to be paying for violin lessons. So that's a little, you know, a little bit more money that would that would go into the pot. If that doesn't seem like it's going to work for you, if that's not going to give you the set of choices that you want, then you need to look at your overall picture and say, okay, where can I find some additional money for savings? What other types of scholarships might my kid be eligible for? Does your employer offer scholarships? What types of scholarships does are available locally in the community? You know, whether it's things like Rotary or, you know, my daughter found a terrific scholarship that her high school computer science teacher recommended that she apply for. So she gets $5,000 a year from that. My son plays on an E sports team in college and he gets a scholarship for that. So there's, you know, yes, every teenage boys dream, he has a scholarship for playing video games.

Caitlin He can't get in trouble for it anymore because he's making money from it for college like the best scam kids came up with ever I. So let me understand these three tranches. So the first is like savings. Now my kid's eight. So the savings I put in 529 now. So that's the one sort of area that can help her. The second might be money that she takes us to a student loan. Those have to start be paid after she assuming she graduates in four years, like the next year after that. And those payments make the max. Those payments might be, from what we understand, with dollars now is around between three and $400. Well, I might be making enough more by then where I don't have an extra $400 a month right now to put in or 429. But I'd have it then to help her pay off her loans every month and so that my future projection for my income could help us there.

Ann Garcia Or to help just support her on an ongoing basis with with out of pocket.

Caitlin I could pay for her books so that wouldn't come from the 529 I pay cash from my income for her books and that and then oh sorry. So I mix the two. So the other one would be student loans that she takes out. And then I help do the payments there because I might have more money, my retirement might be more secure then and so I'm making more and can help at that point along the way.

Ann Garcia And I think that's a really important point. I mean, so many people have a baby and they're like, oh, my gosh, we have to start paying for college right now, you know, saving for college right now. And they've got $2,000 a month of child care expenses in diapers and kids who outgrow everything, you know, every 15 minutes. It's great if you can start something right then, you know, even if it's five or $10 a month. But give yourself some grace. Give yourself permission to say I, just you know, I know given that I am spending this large chunk of money on child care right now, and that money is going at that expense is going to go away, I know that I can probably make up for this in the future, but be disciplined and intentional about intentional about making that change in in the future. And and and that's part of the reason why I think it's a great idea. You know, even when your kids are tiny, figure out what's the minimum monthly contribution that your five that your state's 529 plan accepts and just set that up. It's usually like $5, sometimes it's as high as $20. And and sometimes when it's $20, you can make it quarterly instead of monthly. And just, you know, figure out where you're going to carve out that small amount of dollars out because at a minimum, you're doing that. And it makes it so much easier to go back at some point in the future and say, oh, gosh, you know what? Money isn't as tight as that as it was a little while ago. Let me just increase this and then you're not like, okay, now I've got to figure out which account am I going to set up and where do I do it? And then it's just a matter of going in where you already are and and and building and building from there.

Caitlin I have a question for you about U.T. University of Texas at Austin has this program, and I really know few details about it. Maybe Sara knows more, but it's essentially like you can pay current tuition now. We'll fix the rate for the tuition now and then whenever your kid goes. You don't have to pay the difference between if you us now. What do you think about that approach?

Ann Garcia Yeah. So that's what's called a prepaid tuition program and it's a type of 529. And basically, instead of getting market returns based on the investment portfolio, you choose your account. You're you're you're buying tomorrow's tuition at today's prices. I think they I think they're a good choice for a portion of your dollars. They tend to have some some limitations. And they're especially good when you're really close to college, because if you're in a normal investment portfolio, 529 where you're, you know, they're going to move into something really conservative, where you're primarily going to be in, you know, in and short term bonds. You're not going to get much in the way of return there, whereas these you'll you'll get inflation, you know, inflation adjustments to it. So I think those are really great. They tend to be somewhat limited in a couple of ways. One is most are only it can only be used for tuition, so not for room and board. So chances are you're going to need some separate savings for room and board. And the other is for a child who's really young. So if your typical tuition is, you know, your typical tuition inflation is somewhere between three and 5%. A young child is probably you know, if it's not 20, 22, if it's not 29, you're going to get growth that is in excess of tuition inflation.

Caitlin You're saying that if you invested that same amount of money in a 529 that's not attached to a specific school or fixes the tuition rates. You taking apart our current economic environment? Where is the stock market? Is it behaving the way that we would like it to? That your gains from those investments would be high enough in many markets that it wouldn't? This you wouldn't actually you'd lose money by doing it the other way.

Ann Garcia Yeah. Typically you will get but in most years you will get higher returns in, you know, for a young child in an age based 529 investment portfolio than you will in a guaranteed tuition program. But the guarantee or sorry, with that prepaid tuition program where the prepaid tuition program is great is when you're close to college because you're going to you're going to keep up with inflation with no risk to what your to what your account is is worth. There's like I said, there's a few limitations to those programs, you know. One being typically they can only be used for tuition. There are some exceptions to that, but mostly they're only for tuition. The other is the programs are really limited and they're either limited by geography or limited by schools. So. So most 529 are run by states. And there's a small number of states that have a prepaid tuition option in addition to their regular 529 savings plan. Texas is one of them. Washington is one of them. I think Pennsylvania is one. And in many cases you are you can either only participate if you're a resident of the state or if the student is a resident of the state. Or you you in some cases, you don't get the full value of the tuition increase if you attend a school other than one of the in-state schools. There's another prepaid tuition plan called the Private College 529 and that has a pool of about 200 private colleges that participate in it. And and if you contribute to those and your kid goes to one of those colleges, then you get that specific college's tuition inflation. If you end up going somewhere else, you get a much lower rate. That's something like something like one and a half percent, which would be better than what your regular 529 did this year, but most years, but not necessarily all that you need. The other thing with them is a lot of them require you to have the dollars in the plan for three years before you can before you can take it out. So they can be a really good choice. You just have to understand what the limitations of the plan are when when you go into it.

Caitlin Okay. So I have a few like Rapid Fire question. I mean, my question will be Rapid Fire. The answer might be longer. But first of all, the question that maybe you can't answer, but like will tuitions like list prices continue to skyrocket? Like, I know there's all sorts of forecasting, but most of the parents that I talked to like this can't continue because we see the comparison to what tuition was, in-state, private, whatever when we went to now and then, if we add another ten, 15 years on that one, our kids are going to go, we're like the.

Ann Garcia It how does that even.

Caitlin Like will all own our own private yacht by then too. Like how is it physically possible to fit that number of digits in a line that with tuition? Do you have any sense for what might happen there?

Ann Garcia So I would say a couple of things. One is, sadly, there's a line of people out the door waiting to pay full price for a lot of these colleges. And so I don't see at the at the high end, I don't see that changing. I don't see the list price changing. I do see the situation we're in right now where the net price really hasn't budged. The average net price hasn't budged in about a decade. And I think that will probably continue to be the case because there's you know, although there is a line out the door of people willing to pay $82,000 a year for certain colleges there, there are plenty of people for whom that's completely off the table. So so I so I think list price will keep going up. Net price will probably keep staying pretty flat.

Ann Garcia So on the public school side, you know, where tuition, where cost of public education really started going up was where we started capping property taxes. And because, you know, state budgets pay for education and health care primarily and prisons and and stuff like that. And higher ed is the one thing that states pay for that has an alternate funding source called the people who use that particular service.

Caitlin Right.

Ann Garcia Similarly, there are tons and tons of scholarships available at public universities that that keep the costs low. But just, you know, just like the private schools, Berkeley doesn't have to offer big scholarships to get people.

Caitlin Right. People are going to school early. Yeah.

Ann Garcia People would gladly pay it.

Caitlin When I was in high school, my dad told me that if I got in and he paid, he'd figure out a way to pay for Stanford. And then he found out how much it was. And he's like, There's a lot of really good schools out there. I was very happy and I went to a great school, but I know my dad, that was the list price. You have no idea. I wasn't on the volleyball team, but who knew? Okay, so I get that like the money has to pay for these universities somehow. If it's not coming from property taxes, it goes tuition. Yet we still can't let that be a deterrent to be like I'll never be able to afford even a state school because there.

Ann Garcia I think one of the one of the tough things in our system is we've we've let the Stanford's and Harvards of the World control the narrative around college. And the truth is, the vast majority of colleges are actively trying to recruit and enroll students. And the way they do that is by discounting their tuition. And and and so, you know, if you're willing to look beyond that, you know, very top level, you're going to find lots and lots of good choices out there. And, you know, some of those choices may be things like free community college and then transferring to a four year college or dual enrollment programs where you're living on campus at the four year college, but attending a community college your first couple of years and.

Caitlin Paying.

Ann Garcia Community college tuition, it might be accumulating AP and IB credits while you're a high school student. So so that you can graduate in three years. Or it might just be doing all the legwork to find colleges that want to enroll students like you.

Caitlin Perfect segue way, because I have a question is, is finding financial aid grants, scholarships, is it the kids job? Is it our job as parents? Is it the high school guidance counselors job or is it the college that they get into this job? Like who's? Because for me, there was like one book in the guidance counselors office that was like well-thumbed. That was from, you know, four years before that had like literal post office boxes where you'd have to later read a letter of inquiry that was there are very few kids that were organized enough to do that. So I went to college just having no idea about this realm. And so I'm just curious, from your perspective, who is that? All of our jobs? How is this going to happen? When does it start?

Ann Garcia So I think it's something that's important for parents and kids to do together. I think that's an important role for the parent is clarity and transparency about their their ability to financially support the child's college. And I think that is best done in a goal oriented way, which is not you can only go to a public school because that's all we can afford but it's maybe more like we can, you know, we can afford. It's a priority for us that you graduate from undergraduate with no student loans and we have enough money that you can do that at one of our public schools. You might be able to find other scholarships or other colleges that will meet that budget. And we're happy to support you in that journey of finding of finding them. There are lots and lots of great tools out there to know what college costs. And on my website, how to pay for college, I have a worksheet that's as downloadable called the College Selection Worksheet or the College Research Worksheet or something like that. But it has a it has a line in it for you to enter what the net price calculator from the college says it's likely to cost you two to go there. So. So when you apply to a college and file the FAFSA or the success profile, if needed, you're automatically applying for financial aid at that college. And most colleges have scholarships that they award automatically without additional applications as a next step, an additional step for students, once you've done the net price calculator is go and look at the college's financial aid website and see if there are additional scholarships that you might be eligible for and what the criteria are for getting it. Does it require an application or is it the kind of thing where. We have scholarships for students who have attended a high school within a 20 mile radius of our campus. And you just have to document that you've done that. So that's those are all ways you can do that. And then students should also, you know, students who want to attend colleges that are outside the family's budget should be looking at what types of outside scholarships are out there, too. So outside scholarships are offered by third parties, could be parents, employer, it could be, you know, this group that my daughter's computer science teacher put her in touch with, there loads and loads of scholarships for that. The best place to start looking for those is your high school guidance counselors office, because they'll have tons and tons of local scholarships or scholarships that are only available for kids in your community or at your high school. You know, there are big websites like Skully and Fast Web and whatnot that have huge databases of scholarships, that they have huge numbers of people who are looking for those scholarships.

Caitlin So overwhelming.

Ann Garcia Yeah. And so go for the local ones that the applicant pool is much smaller. I mean, my, my kid's high school had a scholarship for the women's tennis team. You know, there's like 12 people on the tennis team and they're not all there.

Caitlin So that's where you want to be. Oh, my God. This is Sara. Do you have any other questions?

Caitlin Oh, this is then so informative. And just. I just want to say thank you and for coming and sharing all of this with us. It's been just so much good information.

Ann Garcia Oh, my gosh. Thank you for having me. It's so much.

Caitlin And I just want to assure everybody we're going to put the link to your book, the link to your Web site, your professional website, all that stuff that has all these resources in the show notes so that everybody because just I can't emphasize enough the generosity that you have to share all this information. Yeah, it is. I it's just like so many people need it. And as you say, the people that need it the most are the ones that cannot can't afford to pay someone to give it to them. And so that's just part of our ethos. And I just love that all of that is there. And I just always want something to refer to people that I'm talking to at the supermarket or at my kid's school, like, Oh my God. And it's such an easy website. How to pay for college. Did I say it right this time?

Ann Garcia You did. How to pay for college dot com.

Caitlin How to pay for college. So thank you so much. And the last thing I wanted to do, I mean, we talked about when a kid was born, like for those parents who have teenagers now who just had a chaotic there were divorce, whatever, like financial stability is something they're still working towards. Is there anything we can share about, you know, that kind of guilt, the pressure. This feels like the stakes are so high to be able to get your kid to be more successful than you were or as successful. And that paying for college is like our job as parents. Like, but if you weren't in a financial situation to be able to like have that, then it's not the end of the story.

Ann Garcia It's absolutely not the end of the story. So there was a great study that was done about people who are successful as adults. And what about their college experience made them feel successful? It's called the Purdue Gallup Poll. And they surveyed they surveyed adults who who considered themselves successful and and to try to tie it back to their college experience and say, what about college made them successful? And what they found is it had nothing to do with what college they went to. It wasn't about public versus private. It wasn't about, you know, selective versus selective. It was about having some specific experiences when they were in college. And those were things like feeling like a professor cared about you, having a work experience that was related to your career, where you got to, where you got to apply what you were learning in college. It was working on a project that took a semester or longer to complete. It was engaging in extracurriculars. So all of those kinds of things are available at so many different colleges. There are so many good paths available to to students. So the fact that you haven't, you know, massively saved for college doesn't mean that a successful adulthood and successful education aren't available to your student. It does maybe mean that you need to do a little bit more legwork to find out what the best options are to navigate the system at the lowest cost. But but, you know, don't feel like, you know, there is this tendency to feel like, you know, my shoulders have constrained my child, you know, have have constrained my child to failure. And it's not the case that you do have you do have good choices out there. And. A great first step is is having a transparent and goals based conversation with your student about what you can and can't do to support them and, you know, and that you are their ally in this journey and that you're going to help it make it help make it happen for them. And and you're going to help them find the resources that will get them through college and and out the other end.

Caitlin And those free resources in addition to your website how to pay for college dot com are they're high school guidance counselors great counselors school counselors that do this every single year and are there to answer these questions and know the.

Ann Garcia Answers. Yeah. And at a bare minimum, you know, because I think a lot of guidance counselors get a bad rap, but they are they're terrific people who are often just, you know, desperately overworked based on the number of students that they have that they have to serve. But at a bare minimum, they can tell you, you know, how do you access free community college? How do you access scholarships, what state grant programs are available? Because oftentimes families who aren't eligible for aid on a federal, you know, on the federal scale are within their state. You know, think of high cost of living states like California, New York and whatnot that have additional funds available to students. So at a minimum, your guidance counselor can connect you with your state's programs so that you can understand all the different options that are that are open to you.

Caitlin Okay, so great. Thank you so much.

Ann Garcia And oh, my gosh, it's been a pleasure. Thank you for having me.

 Music transition by Bad Bad Hats

Caitlin Hey, before we go. Check out Ann’s website, thecollegefinanciallady.com. She offers a How to Pay for College Masterclass. Highly recommend. And Women on the Verge listeners get a 10% discount if they sign up for it with the code WOTV10.

Sara Do you have any dumb questions about investing or finance? Ask us on our website: womenonetheverge.com

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Sara If your partner is making you ask for money, giving you an allowance are not letting you know about family income. This could be economic abuse.

Sara Learn more at thehotline.org, or call one 800 799 safe.

Caitlin This episode was edited by our co-producer Kelly West and our music is by Bad Bad Hats and Devmo.

Music outro by Devmo

Devmo I know the first thing you notice is that I'm covered in gold, the flick of the wrist it could turn a hot bitch cold, to get what you want in life girl you gotta be bold. Now Imma die rich, and I know...

Sara This podcast contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this podcast will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.