THE FATHER LIFE » college savings

Selling College to the Kids

Don Harrold — Tue, 02 Mar 2010 08:02:20 +0000

Editor’s Note: We are honored to welcome guest columnist Don Harrold from practicaldad.com. This article is the second in his three-part series exploring college planning. The first column, published in January, is “Rethinking the College Model.”

The experience of choosing a college is very different when you’ve got a teenager and are looking at it from the other side of the divide. What’s struck me – like a two-by-four – is the extent to which the kids are marketed by the multiple institutions and the technological savvy that is employed in their pursuit. Some things – the traditional high school college night – haven’t changed, but some are wholly new and tailored to the techno-savvy teens.

Why? Because the institutions are desperately trying to gain enough paying students to offset the significant funding cuts that are taking hold. State colleges and universities are losing government monies while private colleges are further seeing their endowments whacked. The intent is to enroll students and keep the cash flowing as long as possible while they work to stop the hemorrhage. Faculty and programs are being cut and construction projects are being either reevaluated for necessity or shelved.

Given the stark circumstances, how has student recruitment changed from then to now?

Mailing Lists

The practice of trolling for possible students from mailing lists isn’t new. For years, colleges gained the names from the rosters of students from the College Board’s PSAT/SAT lists and American College Testing ‘s PLAN/ACT exams. This continues today but the net has widened considerably.

If you remember the thick books with the names, addresses and criteria for various scholarships, you’ll be pleased to know that these are now online and infinitely easier to use. Examples of such sites are www.scholarship.com, www.studentscholarshipsearch.com and www.findtuition.com . You – and/or your teen – can register and complete a surprisingly detailed questionnaire; when I first saw it, I was relieved that my daughter would be using it lest it ask for a sperm count. Questions not only pertain to your kid, but also you and the mother and relevant past history. Did any parents or grandparents serve in the military? Do you belong to any civic or professional organizations? Are there unfortunate family circumstances? Let’s face it, your infirmity puts your child ahead in the financing race. My going blind and dying in the course of saving whales would be the scholarship Powerball for my kids. The end result of the questions would be to match them against keywords for each of the thousands of available scholarships in the database and advise which would have some potential for application.

Mailings can also emanate from specific interest sites that your kid has visited in pursuit of their interests. Our eldest has also received targeted mail from an institution that knew of her specific interests. In one case, a women’s college with a writer’s program contacted her about their curriculum. Eldest is a published teen poet/writer and out of curiosity, I contacted their admissions department to find how they obtained her name. The admissions counselor acknowledged that her name had been on a purchased mailing list, but was unable to state where that mailing list originated. Since she’s submitted articles and poetry via various online sites, my best conclusion is that these sites are compiling the personal data onto mailing lists and selling them.

College eHarmony Sites

There are collegiate eHarmony sites such as www.zinch.com and www.christianconnector.com. I refer to them that way since their principal reason for existence is to match students with any number of institutions that meet their criteria – which might or might not change over the course of the next week. Again, their system uses the responses from an online questionnaire to match against multiple colleges that have offerings which would be of interest to the potential student.

What’s interesting about a site like www.zinch.com however, is the way in which they’ve developed a social networking component akin to Facebook. Students can also upload photos of themselves and complete a profile and then tag it to the various colleges which are of interest; they can then see who else is considering that particular college. Students with similar interests can tag others and thus refer to them as their “dweebs”. Wanna see a college dat’s da choice 4 teens with frizzy hair and tongue bolts? Heer’s da place for U! Wassamatta U!

If you remember your teen years, you might recall wondering who in the hell would ever be interested in an acne-riddled, geeky, spastic hulk like yourself. The colleges play to that adolescent insecurity by also noting their interests with “loves” that they send to students on the site. Hey! We know that you’re there and we think that you’re special! If you wanna talk to one of our own students, we’ve got some who’ll answer your questions – replete with photos of smiling, handsome kids who give some hope to the teens that they, too, might survive their teenage years. For the benefit of parents who lurk the site, all of the college student photos show them as sober and fully clothed.

Some college websites also present testimonials of students that demonstrate the physical and intellectual attractiveness of the student body. These videos indicate that the students will more closely resemble Gregory Marmalard and Douglas C. Neidermyer than Kent Dorfman.

But that’s just my take.

Summer Scholar Programs

While they do serve a legitimate purpose, some institutions also use their campuses in the summer to hold “summer scholar” programs for high school students. The college offers courses for high-achieving students for a several week period in the summer; there is a several thousand dollar fee and the kid has the opportunity to see what college life is like. Again, my observation has been that these offers have come from colleges who’ve already targeted my kid with other correspondence about their existence.

Understand that with more than 4100 accredited colleges and universities in this country, the competition will be intense for new students. Since most teens are technologically ahead of the folks and colleges are loaded with teens, the methods might escape our notice. A study by Most fathers – and mothers – tend to step back from the technologically savvy teen, but a little awareness of what they’re seeing can help you guide them in a direction that’s not ruled impacted solely by emotion.

Rethinking the College Model – Part 1

Don Harrold — Thu, 21 Jan 2010 04:13:36 +0000

Editor’s Note: We are honored to welcome guest columnist Don Harrold from practicaldad.com. This article is the first in his three-part series exploring college planning.The second article is “Selling College to the Kids.”

Orthodontists and College. No two words scare me more since each involves kids and significant amounts of money.

But college is the scarier word. Orthodontia might or might not be required, but if the kids are going to have a leg up in the world, then some form of higher education will be required. The data is clear that adults with a higher education will – on average – earn a larger income than those with only a high school diploma. The Census Bureau reported in late 2006 that as of 2004, the average American with a high school diploma earned $28,645 while the average American college graduate made $51, 554. With some form of advanced degree, the average income rose to more than $78,000. This doesn’t mean that your toddler won’t be another Gates or Limbaugh, financially successful without the sheepskin, but the odds aren’t leaning in that direction.

So what do you need to understand?

First, college planning has to be addressed as part and parcel of overall financial planning. I was fortunate to have parents who paid for college in entirety; but that was long enough ago that my father had a career with a single company that provided a respectable pension. But pension plans are steadily declining as a source of retirement income. The number of plans and participants fell from 112,000 plans covering 22 million people in 1988 to 30,000 plans providing for 16.2 million in 2007. That means that the size of the typical firm offering a pension rose from 196 employees in 1988 to 540 employees in 2007. Small businesses have been forced to move away from pensions in order to survive and unfortunately, small businesses have been the primary job driver in that same period.

We’re pretty much on our own, guys.

Likewise, the costs of college continue to rise at rates outstripping the average cost of living. Since 1958, this cost has risen at a rate almost twice that of general inflation. Factor in that the typical investment returns are anticipated to be less in the foreseeable future and the mathematical reality is that the typical college savings plan will require larger and larger contributions to meet the projected cost of college.

Second, and this flows from the first, choosing not to pay for your kid’s education in entirety doesn’t make you a bad father. It doesn’t mean that you don’t care or that you’re negligent. It simply means that you also have a competing demand to prepare for your own retirement. I know of several older individuals without a pension who opted to pay for the entire college education and it has had a significant financial impact upon their elder years. Our preference is that we be able to provide for ourselves so that the kids can later provide for their own children. Whatever financing decisions you make should not be driven by a sense of guilt about your caring or capacity as a parent.

Third, college financing has largely become based upon the assumption of more debt, debt that is especially pernicious. If adults encounter catastrophic financial difficulties, they can opt for bankruptcy to escape their debts and allow them an opportunity to restart. But college debt cannot be discharged in bankruptcy and will continue to hang around them like stink on a skunk. Congress recently enacted changes which allow the education debt to be forgiven if it hasn’t been repaid within twenty-five years. However, the amount written off is treated as income for tax purposes and must be reported as such in that final year. While helpful, this doesn’t necessarily aid the financially struggling adult who at that point, probably has their own kids looking at higher education.

Future college financing will become increasingly difficult to obtain as much of that financing is provided by the federal and state governments. And these government entities are simply swamped by too many competing demands and too few resources to cover those demands. Pennsylvania and California are notable in having had recent difficulties with college financial aid programs. Pennsylvania assessed a premium on those who’d already purchased future tuition credits via their guaranteed tuition program while California simply mugged their 175,000 U Cal System students with a mind-boggling 32% tuition increase for 2010.

Fourth, remember that teens do not have your experience base. This is typically the first major decision of their adult lives and even if you’ve never chosen a college, you still have many more years of experience in evaluating alternatives and simply learning how to distinguish fact from nonsense. Thousands of institutions are competing with one another for students and have to fill their seats as surely as Ford has to sell cars. They’ve become adept at marketing and using technology to differentiate themselves and will punch all manner of emotional buttons to gain the teen’s attention and desire. One young adult was told by prestigious University A that certainly University B was an excellent program with a strong regional reputation but University A also had a strong program and it had a national reputation. The difference in final cost between the two was almost $20,000 in after-college debt. Most of us would now agree that in the long-term, where you receive the sheepskin doesn’t make a great deal of difference.

Part of my job – and my wife’s – in the process will be to help them ask and answer the questions that go beyond the marketing schtick and I fully expect some pushback as the nascent adults flex their muscles. But they at least need to have as much information available in order to make the best possible decision.

I once had a conversation with my daughter about making decisions and how to tell which was the right decision out of the options available. She was discouraged when I responded that sometimes there was no one single right decision from those options. But greater involvement can help prevent the selection of a clearly wrong choice with the heartache that it brings.

Image credit: Marcelo Moura

Upromise: Free Money for College

Steve Otto — Fri, 07 Aug 2009 03:38:50 +0000

Upromise is a very easy way to save money for college. There are several ways in which you can save money, and the great thing is that, you don’t even have to think about it. Once you sign up and register your credit cards (don’t worry it’s safe), you just go about your normal spending habits and save money.

Here’s how it works. Basically you register your credit cards, shoppers club cards, etc., for any company that is part of the Upromise program. When you buy certain products or eat at eligible restaurants, a portion of the purchase price will be deposited into your Upromise account. It’s that easy.

Amy and I have been doing it for probably about 6 years and we have $300 in our account. Now maybe you were expecting more money, but again, we signed up 6 years ago and I forgot about it until I received a recent email statement. The great thing is that I haven’t done anything different in these last six years to try to help Upromise. In fact, I should probably have a lot more, because for about half the time I forgot to update Upromise with my new debit cards we receive routinely from the bank.

Another great feature is that you can have family and friends sign up as well. For example, your parents can create their own Upromise account and pass their savings on to your little one.

What if you don’t have a child yet? Are your kids already through college? Doesn’t matter, you can still start saving now, and then when you do have kids or grandkids, you can move that savings into a 529 plan that can be used for their college expenses.

I’ve spent probably about 1 hour on the last six years on Upromise signing up, and registering new cards. That has earned me $300. I suppose if I spent a little more time actively finding places to spend my money that support Upromise, I’d have much more, but I like the idea of not having to do anything extra to earn free money.

Check it out – it will certainly be worth your time.

[LUDWIG@HOME] Infant Embezzlement

Howard Ludwig — Thu, 11 Sep 2008 05:00:48 +0000

Think taking candy from a baby is easy? Taking cash is even easier.

My eight-month-old son didn’t cry when I emptied his savings account last month. In fact, he’d never have known about the crime had I not decided to use this space as a confessional.

My inauguration into embezzlement came shortly after baby Peter celebrated his baptism. In the thank-you cards, I told attendees their gifts of cash would be used to start a college savings fund for the newly-anointed Catholic.

This was my intent until I heard the steady drip, drip, drip of rainwater collecting on my stovetop. Water was leaking in from the vent above the range as well as in several areas upstairs.

Prior to the leak, we knew our roof needed repair. The brittle, gray shingles had more cracks than an elephant with dry skin. We saved about $3,000 in anticipation of a new roof and hoped it would suffice.

Unfortunately, the bill came to $7,600. We briefly considered putting the balance on a credit card, but decided stealing from our infant son came with a much better interest rate.

It’s been about a month since the roof was removed and replaced. It’s held up well against some fierce summer storms. It looks good too, though I am pretty sure I’m the only one that’s noticed.

And yet, the guilt lingers. The baby may not know his parents raided his piggy bank, but I do. I called Chris McNeil, a local financial services provider, looking for a bit of solace.

“The last year has been the most difficult year in my 11-year career in the sense that people are having to make some really difficult choices,” McNeil said.

The economic downturn has forced many of McNeil’s customers to pull money out of retirement accounts and other accounts they previously considered untouchable – including college savings accounts, he said.

In the short term, the roof repair may not have been a bad investment. Had I followed through with investing Peter’s baptismal earnings, the value would likely have fallen 30 percent, whereas the new roof is a fixed cost, McNeil said.

“What you have done is not the worst mistake in the whole world,” he said.

After making me feel like the next Warren Buffett, McNeil reminded me that college savings isn’t a short-term investment. The important lesson here is not only to replace Peter’s pilfered savings but also establish a regular pattern of putting money aside for education.

McNeil applauded my plan to set up a monthly payroll deduction, essentially establishing a forced savings mechanism. Though that’s going to be a stretch since we don’t have $100 per month to spare.

Still, setting up such an account seems like a fair way to tackle the repayment. That plus about a dozen Hail Marys and a couple of Our Fathers is an appropriate penance.

Article image by: clspeace, Flickr

Rethinking the College Model – Part 1