College Planning: Jeff Boron

Jeff Boron, a college planning specialist with The Financial Guys, joins A New Morning in studio to discuss strategies for paying for college.

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We're kind of pulling back the costs of college this morning Jeff boron is joining us in studio certified college planning specialist. From the financial guys in from send your kids to college Jeff right now. Those tuition bills are in the mail right. Try to serenade their start a pop and I'm certainly it's a little last minute panic calls from parents don't fortune some of these parents didn't really go through planning process. And you know it's it's amazing they they look at colleges they tours colleges. They have their son or daughter applied these schools that go through the whole thing and all of a sudden say oh my gosh how are we gonna pay for this. And that's when all sets and right when you get that bill in the mail it is it's it's it's a sticker shock to many elbow shouldn't be but it's. You know it's just like everything people tend to procrastinate. And now come hits in the face so you've got parents scrambling to figure out how who opt out of how to best pay for us. I mean other strategies that parents can take. To lessen that sticker shock. Sure you know unfortunately if you're just getting the bill for college now it's a little the little late to put in strategies. You know it's kind of like. We do debris retired saying hey do I have enough money to retire what to do about it if I don't. On if you start early there's a lot of strategies at this point now. It's a matter. Where is that money gonna come from. So if you think about money for college first of all. What I always remind parents is your paying those bills with after tax dollars so what I mean by that is let's say you you've got to show up 30000 dollars. Well you might have to make 4045000. Dollars in income. To pay that bill after tax so that's the first thing to consider an arsenal in some ways actually pay for college pretext but heck it's very involved. You're looking at funding college either through income at that point. Through assets that you have. Or through debt. And student loans. You know increasing debt we did a little bit I was on the show the financial guys show Saturday we talked a little bit. About student loan that I actually had someone who. Ran a collection agency that just targeted student loans and the thing that just sticks in my mind is. You know parents generally after they take the direct loans have to co sign for loans let's see go to Sallie Mae or citizens Bancorp one of those other institutions. Arm they're not gonna give your son or daughter. That kind of loan without having some security so it's a co signer. And he said we didn't even bother calling the student anymore we we as debt collectors just call the parent because if they cosigned. It's their loan just as much as it is the student's loan is it the majority of students paid for college through some sort of loan. Yeah you know right now a great a great percentage of students and up out of college with student loan debt. And his various statistics out there who believe this one I saw was approximate 37000. Dollars in student loans upon graduation. On most students take out what's called the Stafford loan or direct loan. And that'll totaled 27000. Dollars over four years 5500 your first year so if your son or daughter is going to school they're starting their first year. The Mac's loan that they can take out. Just in their name is 5500. Dollars and leaving after that. Is not just students I'm going. Do's and don'ts when it comes to loans student loans there's a lot of do's and don'ts one of the things in how people tend to gravitate to shop for just great. But what you wanna look at it if you're co signing for your son or daughter's student loan. You wanna look at what are the provisions where after that student gets out of school has a good income. That you can be removed his co signer. Here's what a lot of people don't understand as you cosigned for their loan it's gonna be under credit report. It's gonna affect your credit score is gonna affect your ability to get future. You know mortgage home refinance car loans etc. Because that affects what's called your debt to income ratio so. If you are parent co signing just know that that loan basically is your loan. Just as much as as student. So how can we get off that what are the programs what are the provisions. But that lending institution has also watch for various fees especially the banks make money you know other than just pure interest rates. But you know watch for some of the origination fees and some of the other fees with that. On no rates are gonna be credited and that what I saw I would say an average somewhere 78%. This year. What I was seeing for prime loans. Are so a lot to get sued the loan paying back strategies how you should prepare. And much much more all with Jeff for on a certified college planning specialist joining us live in studio. We're talking about college costs this morning with Geoff boron and studio Jeff as a certified college planning specialist. With send your kids college and the financial guys in Jeff you know what it that we are talking about college costs of tuition bills are coming in right now. And the appearance again in these big Bill Sammon like he's that are saying oh boy how to repay for this. But you like the idea of kids having some responsibility. And the kids themselves the students having some of those. Loans and absolutely. I've seen what happens often times when when the students don't you got to remember you know these are. Fairly young adults another eighteen years old and they have a new found sense of freedom especially those that are going away in storming off at school. They have to know that they've got a stake in this game. And you know I think it's important that parents and students really communicate. About what this is really costing so that the student understands. I've seen it on the wrong way where the students to schools often things while the so called vacation. In Allen and I'm gonna sit in my dorm room play Xbox against the guys an extra room. And I don't have to go to class it's it's okay here's your meals are all very I mean it's not luxurious but still your way you have all this freedom. Think the student has to know that paid there's a cost to this end. You know part of what we're paying force me to go away give me education's going to come on get a job so I don't do well. Well I know for me that waking up to eight there's a cost for this came about six months after I graduated and it first though loan bills. Came in the mail oh what do you tell students who might be out of counts when it's time to repay these loans as far as a strategy to kind of and make sure they're not overwhelmed by the payments every month. Right often times what will what will look at is doing a consolidation look and looking at where the interest rate you know some loans out there that I've seen. Are at a pretty good interest rate better than we can consolidate but I'm consolidate to make things simpler sometimes bundle. Get a better repayment terms there's there's all different types of strategies and different loan providers that you can work with. I want to make life simpler and and hopefully a little less expensive. When you first get out of college got to remember you know your income probably isn't as high as it will be 1020 years down the road from now. It's all about cash flow. So we're gonna look at what those student loan payments are gonna be the first year out you know and hopefully that students getting an apartment you know has a car. And has a lot of other expenses to make sure that it's all gone and opera and you know we don't and that the negative income situation. I think a lot of people would agree with you when you said having a stake in the game it's important for students to realize that wall it's not a game it's something that they are you know it's supposed to be very directly involved with. Is there a fine line though as you know financial experts say in your own right of having somebody at the age of 1718. Years old. Commit to spending this amount of money and repaying the amount of money that. College cost so I mean that can be overwhelming and at times. I don't think most people are kids know exactly what they're doing. You know if you bring to mind I I publish something called the top ten college planning mistakes. And the first one and how unusual scenario I have parents come in with student and there they're almost oblivious enormity of this so while it's his or her choice. And one of my top ten is don't let a seventeen year old make a quarter of million dollar decision. You know when you think about it. I'm sure they're great kids they've quote earned if they've done very well and academics but. Be involved. Because at the end of the day you don't want that student come to an graduate from college and say hey mom and dad. I don't know how I got in this situation I can't afford an apartment I've got to move back home. You don't want it to happen no fat diet and out father and daughter come and then you know they didn't seem need to do the planning work at a time. She had over a 100000 dollars for the student loan debt. And shift PNC titled issues making twelve dollars an hour. And you know I looked at the father and I and you know try to be courteous but I really wanted to say. How could you let your daughter get in this situation and how you come to me. Where if you know what are we gonna do about it I'm probably going could I could give me advice on is similar models basement. Yeah I mean at that point it's really kind of too late I'm late should be doing before absolutely we like to see students and parents. When they're in their freshman sophomore and then finally your junior year. Often times we're seeing parents come in one Nam when there's a panic and tomorrow night. Tomorrow Tuesday. 6 o'clock we're doing a workshop in Tripoli and Amherst and international. And shared drive so it's 6 o'clock it's not too late give our office of college 633. 1515. Or you can just pop in Tripoli just uneasy it's a big room. And we're gonna talk about the three facets of college planning which is career major college selection. SE TE CT prep and then finally I speak I'm paying for college and how to reduce the cost us to run its its pocket Triplett. All right Jeff moron is our in studio guests will talk a little bit more about the cost of counsel of the new ideas being kicked around by. Colleges for how to play it his ideas are and what colleges are suggesting now. We're joined in studio by Jeff more honest certified college planning specialist with the financial guys and send your kids to college Jeff we're talking a little bit earlier this morning about the new idea. From a couple colleges that to me sounds like the worst idea ever if your student answering couch but so many people. Concerned about student loan debt taking on that dead seem so intimidating. So this is out of college in Vermont to nor which university. Announcing it will become the latest school. To offer type of contract they'll pay your tuition. If you offered them a percentage of your future salary and income. To me that sounds like the worst possible idea what do you think I. I could imagine you know that's like signing up for an adjustable rate mortgage when you know mortgage interest rates are going up right. Because you got to college in that you typically doesn't feel so bad in that deal you can lower salary lowering commute on a lot of work experience but then. As you tend to move out hopefully you're doing well that colleges prepare you hearing comes rising rapidly. Well he shouldn't have to pay a lot more back to the student loans because of that it's almost like being penalized for being successful. Rest that's a great point. Idea I was saying after if it's a five year contracts. Fine take. The eight dollars a month and that'll be fine if notes that 10% go what will tour Europe for awhile back pack rat any single longer than that it just seems crazy but these are some of the ideas right because kids are hearing the stories in a lot of times dealing with that. Initial sticker shock of how am I going to pay for it that he and sometimes you can and in trouble like this down the road in the future. Right and you know unfortunately there's a lot of people that that didn't do the planning process back. When her son or daughter was in high school you know maybe a sophomore and junior high school. And they just what the student make a lot of these life decisions. And now it doesn't work out but it's a little too late you know because student loans can't be forgiven. So you can't just charge him in bankruptcy right now. If you sign up for these loans they're gonna follow you and and you know until that. You're saying students and their parents didn't do the work when should they be doing this. Ideally. Sophomore year he's a very very Goodyear really should call us. We're we're working with mostly juniors because. You know I don't know how parents weigh Koppen and they say oh my gosh I never knew this day would come here we should be prepared for this for a lot of years. How we start as early as freshmen. In high school with a full program that we do. Sophomores is kind of ideal. Juniors. We do a lot of work with. Some strategies we can implement for some strategies it's too late. There's yet remember financially forms right now when we're looking at doing how we're gonna pay for college and planning had. They're looking back two years so if your son or daughter is going to college in 2019. Re using 2017. Data and that changed just happened a couple of years ago so we shifted and everything has to go back. A year earlier to really do proper plan. I think you mentioned it before it's may be the only type of debt that can't be forgiven you can't declare bankruptcy because of student loan debt is that a good idea could that change in the future with so many people facing. Just this mounting and mounting debt. There is some talk of changing you know although I'm I'm not sure if I'm in favor that because you know letting people off of debt that they they signed up for. In the series valid reasons some loans can be just discharge you know for disability. If you're disabled you know policy get in the car accident he no longer able to work. Those loans can be discharged. On some loans that are parent loans can be discharged upon the parents' death so if you look at planning. You know I've had cases before where there's a large age gap between mom and dad and dads. You know getting up there in years spent time his son or daughter's on a college while that might be alone look at you know because let's face it none of us get out of this alive right. So how. But. We have one point five trillion dollars in student loan debt right now which is just it's it's to me it's the next. Mortgage crisis coming. In other tech keeps climbing. We've got about a 15%. Default rate right now so. One point 5000000000015%. Of that is defaulted on loans going into collections. On or hadn't general for problems solved. If if I'm a parent and thinking I can't let my son or daughter get into this situation. Absolutely and it's a pretty significant number there are Jeff Boren is with us another segment with Jeff coming up he's a certified college planning specialist. From the financial guys and send your kids to college. We are joined now live in studio budget for an certified college planning specialist c.s with the financial guys also. Send your kids to college Jeff we've been talking a lot about the cost of college and for some people they got so you know their ears perked up late last year. When they heard about the and you excelsior scholarship as it's being called basically free tuition. To SUNY schools for in state residents. But it's all it never is easy as it sounds right. No there there there are a few commitments that you have to make if you're going to get the excels through scholarship one is obviously residency in New York State. Four in the same amount of time that you get the scholarship so few gifts if you get these cells who scholarship for four years you're committing to remain in New York State. After you graduate for another forty minutes. That is may be a bigger commitment and you might realize now as you can going to college thinking you know this is my home this is where I'll come back but a lot can change in those four. A lot can change you know maybe the job market for your particular skill set. Isn't going to be in New York State Orrin buffalo back home and you get some great offers elsewhere well then what happens is that scholarship money. Reverts into loans. And I think it's going to be interesting to see how New York State. Can handle this administratively. You know how they're going to be able attract people how they're going to be able collect because this is not something that that they've I think sent out yet. But he will be obligated to pay that money back. Has the excelsior scholarship really changed the landscape around here much for now you know. I look at the excelsior and I see I say it's it's more hype than reality. But I did get a nice email from someone who worked with. Last year they're sound was awarded the excelsior and she texted me and said that his met bill is 400 dollars. He's gonna going to be going to UB. And by time you know attack kicked in and an all the other money's in a little bit of merit money. It they're writing a check for 400 dollars so that is a good story. But what I see is a lot of parents kind of depending on this colony on it as if it's a given. And you've got to remember that there are not enough of this scholarship money your cells your money. To go around for all the applicants they grossly misjudged the amount of people that would apply and be eligible. And there's just not a big enough pocket money that is until they raise our taxes again. There are so. Something to watch operates never quite as easy as. Sounds that the now the other thing too is you cannot take breaks or you have to take and in complete. Full course loans to qualified. Which has been criticized because a lot of people who might really need this money. You know they have they might have young families at home they're going back to school they can only take. So many classes a semester. And they're just not gonna be eligible. If they're working it you know they take part time or full time and trying to go to college. On the sign that won't always work that there won't work you won't qualify you that you have to. He would take a full course load and complete a full course load. Which is another thing is difficult. One of the biggest cost college right now is the fact that you know we're changing majors changing careers mainstream changing colleges midstream. So now if you look at the statistics graduated from the State's school. You've got. About a one in three chance of actually graduating in four years whose parents plan for four years. Private schools about a 5050 chance graduating four years so now we are schools publishing their six year graduation rate. And that's after a masters that's for for your degree so get out and six for for your degree I was tell parents the most expensive year of college is your fifth year. Because you didn't anticipate those costs and you're losing the income that you should be earning in the fifth year. You know with I've got to going to college this fall and right as one that that they they tell you is that the plan the goal is to help your child graduate in four because. More and more it's happening has taken in and I can't. Necessarily always blame the schools for further you don't Matt graduating students in four years students are going in. And they're not prepared and you're gonna members 1718 years old. They're changing majors changing careers changing colleges. Every time you do that usually is a setback. And creates more time in school which means more money so that's where our program tries to I can't say we eliminated but we do hope to a lot of that planning work. That excelsior scholarship covers tuition but that's only a fraction of the cost would talk about the old bill right you look at you know states schools are notorious for saying our tuition didn't increase. But they they failed to mention that their fees did. So a big component of you total bill of the State's school is fees and obviously room and board in a room boy right now is averaging somewhere between. Twelve and thirteen thousand dollars a year. Which I think this kind of excessive considering the fact that they're not living there for a full year they're there for two semesters. And a lot of breaks. Right absolutely hey Jeff good stuff and again you're having a college planning night tomorrow night at the AAA isn't. I'm churning dry. Charity drives 6 o'clock tomorrow AAA if anybody wants ten you can pop in or you can call our office to reserve a seat at 6331515. One last plug. Scholarships for our organization so you're just a scholar out of college. Are due July 31 if your son or daughter's in high school please have them apply for a scholarship. Goes send your kids to college that. All right so a lot of great info me and Joseph learns something he owes money for the fancy football classic took in college I took the recorder. In college so we were still working I'm paying that back Jeff boron certified college planning specialist who live in studio.