Are You Up To Date on College Planning?

I got this article (below in quotes) from a blog from Vance Howard of Howard Capital Management who always has good insights. This in my mind highlights a few important things that I talk with my clients about for those of you have kids planning to go to college:

1) Have an understanding of your Expected Family Contribution (EFC) for various schools well in advance of filling out FAFSA forms in their senior year. Use all appropriate strategies you can to get those numbers as favorable as possible. These are areas I can now provide insight for you on Contact me and I will have you complete the Data Form on that site to get that information.
2) Make sure you talk with your kids (by middle school or early high school) so they have realistic understanding of the costs involved and your ability to help cover costs based on your situation (and as it relates to your retirement, etc.). Along those lines try to avoid debt as much as possible (see the chilling chart below).  I know many kids are coming out with degrees with low pay potential and student loans that will be with them for years and years.  I recently spoke with a couple with $175,000 in student debt.  That’s a tough hole to dig out of.
3) As they get closer to college (ideally in Junior year) invest in working with an organization that can help your kids identify their strengths and career objectives and match them up with an appropriate school that can match up well with them in those areas as well as financially. Minimizing the likelihood of a 5th or 6th year of college due to changing majors is a huge cost saver, but also the whole experience should be more effective for them with that work done up front. Too many kids seem to go to the wrong schools for the wrong reasons. I can help you get connected with a quality organization for that.
4) Make sure you begin saving & investing appropriately as soon as you are able. I have a great College Planning & Savings resource guide that I can email you if you would like me to send it. Email me at

“Below is an excerpt from a press release form the New York Federal Reserve from November 27, 2012. We found it very interesting and thought you might also. We have included a chart showing the growth in the cost of a college education against the average earnings of graduates with bachelor’s degrees in real terms. The cost and benefits of a degree have really gotten out of sync. The cost of a college degree is going through the roof while wages have actually fallen in real terms.


NEW YORK – In its latest Quarterly Report on Household Debt and Credit, the Federal Reserve Bank of New York announced that in the third quarter, non-real estate household debt jumped 2.3 percent to $2.7 trillion. The increase was due to a boost in student loans ($42 billion), auto loans ($18 billion) and credit card balances ($2 billion).

The Quarterly Report on Household Debt and Credit is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative random sample drawn from Equifax credit report data. During the third quarter of 2012, total consumer indebtedness shrank $74 billion to $11.31 trillion, a 0.7 percent decrease from the previous quarter. The reduction in overall debt is attributed to a decrease in mortgage debt ($120 billion) and home equity lines of credit ($16 billion), despite mortgage originations increasing for a fourth consecutive quarter.

“The increase in mortgage originations, auto loans and credit card balances suggests that consumers are slowly gaining confidence in their financial position,” said Donghoon Lee, senior economist at the New York Fed. “As consumers feel more comfortable, they may start to make purchases that were previously delayed.”

Outstanding student loan debt now stands at $956 billion, an increase of $42 billion since last quarter. However, of the $42 billion, $23 billion is new debt while the remaining $19 billion is attributed to previously defaulted student loans that have been updated on credit reports this quarter.1 As a result, the percent of student loan balances 90+ days delinquent increased to 11 percent this quarter.2

Other highlights from the report include:
• Outstanding auto loans ($768 billion) are the highest in nearly four years.
• Auto loan balances increased for the sixth consecutive quarter.
• Mortgage debt at $8.03 trillion is at its lowest level since 2006.
• Delinquency rates for mortgages decreased from 6.3 percent to 5.9 percent.
• HELOC delinquency rates remain high by historical standards (4.9 percent).
• New foreclosures are returning to their pre-crisis levels, as about 242,000 consumers had a new foreclosure added to their credit report, the lowest in nearly six years.
• Mortgage originations, which we measure as the appearance of new mortgages on consumer credit reports, rose to $521 billion, the fourth consecutive quarterly increase.
If you would like to learn more, you can go to the New Federal Reserve’s web page to view the report.”