Many people invest in professional services.
They pay a MD for medical help, a CPA for tax prep, a JD to represent them in court.
If you’re stressed about how you’re going to pay for college, you may consider hiring a Financial Advisor (FA) who specializes in education planning, like a Certified College Financial Consultant (CCFC).
But you may be wondering, “is it worth it?”
After all, you’re already staring at a huge bill ($100k+ per kid), why spend more?
To help with that decision, there are two factors you might want to consider:
- Financial
- Emotional
The Financial Consideration
The first consideration is straightforward.
It’s just math.
If a FA/CCFC can save you at least as much as the cost of their fee, or generate a positive return on investment (ROI), then it 100% makes financial sense.
Let’s say their fee is $3k.
If they can find savings of $3k in ways like helping you invest in a 529 plan, saving/paying for college in tax-optimized ways, finding schools that will give your child big scholarships, help you with a successful financial aid appeal, or finding loans with low interest rates or favorable repayment terms (saving you a bunch of interest in the long-run), then it’s worth it financially.
If they save you $3001, they’ve given you a positive ROI (“put money in your pocket”).
If they save you $30k, they’ve given you a 10x ROI.
Which is like if you gave them $1 and they gave you $10 in return
Would that be worth it?
Yes, of course.
But here’s a bit of a mystery.
We can almost always find $30k+ in savings per kid.
Yet, many parents will balk at the idea of spending $3k for a college plan, even if it means they will save $30k+.
Why?
Perhaps it’s “price paralysis.” Again, parents are staring at a huge tuition bill so maybe their initial reaction is “I already have to pay for college! I can’t afford $3k more!”
But perhaps this is the thought: “I can do this on my own.”
So, can they?
My answer is: maybe, maybe not.
Maybe they can get it right, but maybe they’re being “penny wise and dollar foolish.”
The more important question, imo, is: Should they?
My answer is: maybe, maybe not.
This last question leads to the second consideration…emotional.
The Emotional Consideration
What is the impact on my emotions to DIY v. hire someone to help?
To help answer this question, ask yourself the T.R.I.C.K. question(s), which stands for:
- Time
- Relationships
- Interest
- Calm
- Knowledge
Time
Do I have the TIME to do this?
You will need to do A LOT of research because college planning is complicated.
To figure it all out, you will need to research:
- How 529 laws work, including tax laws, and strategies for investing inside them
- How the Student Aid Index (SAI) is generated and used
- How need-based aid differs from merit-based aid
- How gift-aid differs from self-help aid
- How income and assets are assessed by the FAFSA and CSS Profile
- How to create a realistic and comprehensive budget (tuition + fees, housing, etc.)
- How the pricing formula impacts the net cost (COA – SAI = FAE)
- How scholarships work (renewability, stackability, etc.)
- How to find the biggest and best merit awards
- How to make a successful appeal for more financial aid
- How to pay the bill in the most efficient way
- How student loans work
- How to find the best loans (lowest rates, most favorable terms)
- How to figure out the optimal student loan repayment plan
- Etc.
Yes, you can figure out all of this, but it will take a lot of time and energy.
Relationships
Can I do this without it taking a toll on my RELATIONSHIPS?
One of the most frustrating things about college planning for many parents is that they end up fighting with their kids, and often their spouses (and ex-spouses), too.
This happens for two reasons.
One, teenagers are lazy and hate their parents (ok, I’ll be charitable: teens are distracted and more focused on friends).
So parents have a hard time getting them to do what needs to be done. This leads to TGTCCN (The Great and Terrible Constant College Nagging).
Two, teenagers don’t have a good understanding of how much college actually costs. It’s funny money to them.
So, naturally, many gravitate toward the most expensive colleges, especially if you live in an affluent area and their friends are looking at fancy schools.
The peer pressure to go to an expensive “brand name” school is enormous (“omg, Breighlin, Paxton is like totally going to Gucci U! I’ll just die if I have to go to an in-state school. I will seriously like be, it’s TRAUMA!!!”).
To make matters worse, parents often allow their kids to look for colleges without establishing a budget first. “If you get in, we’ll figure it out” are the most dangerous words in college planning.
It would be like if your child turned 16 and you told them, “go visit all the car lots in the area and find the car you love!”
They would, of course, fall in love with the $75k F-150 (if you live in my area. If you live somewhere else, it’s probably a $75k BMW).
Parents, out of love, want their kids to “chase their dreams.”
But when they realize the dream school is a financial nightmare, the parents try to rein it in and get serious resistance (read: tantrums).
I’ve seen it happen a lot, and it’s an awful scene.
The other way college planning can put a strain on RELATIONSHIPS is between spouses and ex-spouses.
This is highly stressful.
The usually happens is one parent wants to give their child the world (“We can’t crush her dreams!!”), while the other parent tries to be more responsible (“I’d like to retire at some point – and what kid needs a $200,000 degree? She’ll probably just go there and party for 4 years, anyway!”).
And some of the worst fights I’ve seen are between ex-spouses/co-parents, with children suffering the consequences.
If a couple divorces while the kids are younger, each parent might make a pledge to pay for college later. But it’s all-too-common for one parent to see the eventual price tag and back away (“What?! I’m not paying $100k so she can go be in a sorority at Big Outta State U! I can’t afford that! She’s on her own!”).
Of course, our “kiddos” are usually adults (18) when they go to college – and so the ex-spouse has no legal obligation to pay.
This is highly stressful for the other parent, who then feels the pressure to take on the responsibility of paying for all of it.
Needless to say, sometimes having a professional as a neutral third party to mediate (or an expert to lower the cost burden on the parent who agrees to pay) can be worth its weight in gold.
Interest
Am I INTERESTED in doing it?
Do you find it fascinating, or is it dreadful?
Does it give you energy, or drain you?
The reality is that college planning is going to take a lot of work.
If you like the work, great, have fun and do it!
However, if you aren’t, let’s be honest, you’ll avoid it like the plague (or putting away the laundry).
It’s just human nature.
Calm
Can I stay CALM?
Is this stuff stressing you out? Is it keeping you up at night?
Are you feeling guilt or shame about not having saved enough, or getting angry about the “injustice” of the system?
Making smart financial decisions requires a calm, cool head. If you get overwhelmed with negative thoughts, you risk making bad decisions that can cost you dearly.
Furthermore, sending your kids to college should be a joyful time in your life, not a stressful one. But for many parents, college planning is stressful AF.
So if doing this kind of work is stressing you out, it might be worth handing it over to someone else just for your mental health.
(*NOTE: this is 100% why I hire a CPA to do my tax returns, which I could DIY. I prefer to hand them my shoebox of receipts and go fishing.)
Knowledge
Am I KNOWLEDGEABLE enough to get it right and avoid mistakes?
College financial planning is complicated. Every situation is unique, every school is different, and every kid has different grades/scores and goals.
Like hiring an attorney for a complex (and expensive) legal issue, it may be smart to hire an expert guide to advise you on your best options.
Most importantly, if you make a mistake, it can be costly.
- Are you artificially inflating your SAI by having assets in the wrong places?
- Are you looking at “meets need” schools when you should be “chasing merit”?
- Are you wasting time applying for scholarships you won’t get, and missing out on ones you could get?
- Are you taking out bad loans that will haunt you for decades, thereby forcing yourself to work an extra 3-5 years before being able to retire?
Expertise is often priceless when the stakes are high. And given the complexity and risk of making costly mistakes with long-term implications, paying for college is very much high stakes.
So, should I hire someone?
Now you have an easy “decision matrix” (sorry, I’m a nerd) to the question of whether it’s worth it to hire someone.
If you can’t break even on the financial side, and you said hell yes! to all of the T.R.I.C.K. question(s), then you should/can 100% DIY.
However, if the FA can save you more than the fee (generate a positive ROI) and you said no! to any of the T.R.I.C.K. questions, then you would clearly benefit from hiring an expert.
They can take it off of your plate and save you a lot of money – not to mention your sanity and possibly your relationships.
We only have so much time and money in life.
Spend both wisely.
*The content contained herein is intended as education and entertainment, and does not constitute investment, tax, or legal advice. Please consult the relevant advisor before making any decisions. Additionally, any opinions expressed here are solely those of the author, and do not represent the opinion of Leetown Advisors or its affiliates.
