Kids and Education

In this article, we discuss maximizing financial aid for college.

A child’s college education can be a big family expense

72% of US college students receive some form of need-based financial aid according to the National Center for Education Statistics (link opens in new tab). This is good news, because according to Trends in College Pricing (link opens in new tab) research by the College Board, in about 10 years college is expected to cost over $142,000 for 4 years at a public university, and over $324,000 for 4 years at a private university, including tuition, fees, and room and board. These figures assume an average college cost inflation rate of 5%.

Planning for college expenses should typically start when children are young, so any savings have longer to potentially accumulate compound interest. I wrote another article (link opens in new tab) about some fun ways to contribute to a child’s education savings account.

FAFSA & CSS calculate a family’s expected contribution to college expenses

But what about all the other assets a family has when it comes time to apply for financial aid? Typically, the first step in seeing if a student qualifies for financial aid is to complete the FAFSA, Free Application for Federal Student Aid. Some schools require the CSS, College Scholarship Service Profile. These forms calculate the family’s expected contribution to college.

To complete either form, the family and student must provide many details about their financial situation, such as income, savings, debt, other children also in college, net worth, and more. Each application looks at the previous year’s financial information. So for example, if a student was beginning school in the fall of 2021, the family would fill out the aid form in 2020 based on the 2019 tax return.

Ways to potentially maximize financial aid

Here’s an article (link opens in new tab) which looks at some ways a family and student may be able to maximize financial aid for college by doing things like paying off car loans and credit card balances, moving funds into retirement accounts, and using earned student income over a set limit to pay for things a student would need in college like a laptop, rather than keeping it in a bank account.

Read the full article here (link opens in new tab). And talk to your financial advisor about your specific situation.

In this article, we consider ways of teaching kids about money.

I often talk with clients about how to teach their kids about money.

I’ve also had many conversations with my husband about ways to educate our son about money. I don’t want him to be spoiled, or overly focused on money. But I do want him to understand that we work hard for the money we earn, and we can’t afford to get every new toy that catches our (his) eye, because we have other things we need to use our money for. I also don’t want him to be constantly worried or thinking about money, because that’s not his job.

It’s a tricky balancing act. And then there’s an allowance. How to do it, whether to do it, how much to give, etc.

I read a couple articles recently that offered up some tips on teaching kids about money.

This article (link opens in new tab) mentions the benefit of paying an allowance (about the amount in dollars of your child’s age), and requiring them to allocate a that allowance by percentage to charity (10%); immediate spending or quick cash (30%); medium term saving such as saving up for a bike or laptop (30%); and an amount towards future expenses like college (30%).

This article (link opens in new tab) gives some concrete examples of how to teach kids about money at different ages. The early childhood timeframe can be an opportune time to start the teaching. The article mentions letting kids mess up, for example, let them regret a spending decision and sit with that feeling. And also, for a child who’s not a natural saver, perhaps offering an incentive to help them save – like matching every dollar they save. And doing it with actual dollars and coins, rather than electronically, can be another way for them to learn.

I’m also reading a good book right now about allowances and how they can be used to teach kids many lessons about money in a very immediate and practical way that can change over time. The book is called The Art of Allowance, by John Lanza.

I’d love to hear from you too; how do you teach your children about money? Click here (link opens in new tab) to post your ideas and tips in the contact us message form.

In this article, we will discuss how to make contributing to a child’s education savings account an enjoyable gift.

College is expensive now, and it’s getting ever more costly.

According to The College Board (link opens in new tab), in 10 years the projected cost of a 4 year public college degree is expected to be over $142,000, while a 4 year private college degree is projected to cost over $324,000. Will the important children in your life have the funding they need for college?

There’s a lot to love about giving the gift of education

For that special child in your life, consider giving the gift of education this holiday season – or during any gift-giving moment like birthdays. How about making a contribution to an Education Savings Account for that important child in your life?

An Education Savings Account is a type of account that is typically funded with after tax contributions, and if used for qualified education related withdrawals, can be withdrawn without any taxes owed on the withdrawal, meaning, tax free growth. There are different types of accounts like a Coverdell Education Savings Account and a 529 Account, and not all accounts work for every situation. Consult a financial professional before opening an account. Read more about the details here (link opens in new tab) and here (link opens in new tab).

The kid won’t like this gift, and besides I want something they can open and play with!

I came across this blog article with some really creative ways to make a contribution to an education savings account more fun to give as a gift. I love the idea of a science kit/art supplies (or whatever your child’s special interest is) along with a note about your contribution helping them be able to study their special interest later. Pairing one of these ideas with the gift of education seems like the best of both worlds.

Read the ideas here (link opens in new tab).