Saving and Paying for College | Podcast | Charlie Toole, Victor Colella and Andrew Busa
An Adviser You Can Talk To Podcast

Get Smart: Saving and Paying for College

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You can borrow to pay for college; you can’t borrow to fund your retirement.

Charlie Toole, CFA, CFP®

Vice President, Portfolio Manager

You may not be able to count on the stock market always going up, but there’s never a bear market for college costs. Tuitions continue to climb—having an education savings plan is more important than ever.

Join Portfolio Manager Charlie Toole and two of our financial planning leaders as they discuss how to weigh the characteristics of 529 plans and UTMAs, financial aid considerations and making adjustments to these investments as your future scholars grow up.

Thanks for listening. And to learn more about Adviser Investments' financial planning services, please click here.

Want to read more about 529 plans? Click here to read our exclusive report!

Featuring

Episode Transcript

Victor Colella: Hello, this is Victor Colella and I’m a financial planner here at Adviser Investments. Welcome to another The Advisor You Can Talk To Podcast. Today, I’m joined by two colleagues of mine: On my right, Charlie Toole.

Charlie Toole: Hi, Victor.

Victor Colella: Hi, Charlie. Charlie is a vice president, and he wears two hats here at Adviser. He’s both a relationship manager that works directly with our clients and a portfolio manager who helps manage our dividend-income strategies. We’re lucky to have both hats here with us today. Then, Andrew Busa is back again.

Andrew Busa: Hey, Victor.

Victor Colella: He is a financial planner as well here in our central planning group. Today, we’re all here together to observe May 29th or “5/29 Day” as it’s known—by the nerds in the financial planning industry, at least. We’re going to talk about 5/29 accounts, but more broadly, education planning.

Victor Colella: To tackle this broad topic of education planning, we’re going to frame this podcast as a story from the perspective of Francesca. We used Francesca, because Andrew and I both had nieces born this year named Francesca, so shout out to Frankie and Fran out there. Again, we’re going to do it from the perspective of Francesca, who was just born this year, and we’re going to grow up with her in essence and say, “What planning points do her parents have to make—her parents, grandparents, whoever her guardians are—who want to pay for college? What points do they really have to stop and think about related to how to do education planning?”

Victor Colella: We’re going to start first with the year that she’s born: This year. That’s our first planning point. Then, we’re going to move to her junior year in high school, when Frankie or Francesca is about to start applying for colleges. Finally, we’re going to move to our third planning point, which is the summer before her freshman year when the first tuition bill is due. Each part of the story is an opportunity to do financial planning related to education. That’s where we’re going to stop, and we’re going to move pretty quickly here. We’re going to cover 18 years in about 30 minutes, so if you’re in one of the later stages, you may want to skip ahead and perhaps look at the part that’s more relevant to you.

Victor Colella: Our hope is that you’ll take away a few key things today: One, an understanding of the different ways that you have to save for college. The second is a basic understanding of how financial aid even works. That’s a complicated one that we’re not going to be able to go all the way deep into because there’s a lot there. Finally, what to think about when the time comes to actually pay for those tuition bills. That’s the third point. One thing to point out is that we have a piece that we’ve put out. It’s a white paper and called “Smart Ways to Save (and Pay) for Education.” A lot of the content that we’ll be talking through today you’ll see in that paper with maybe some more detail in different places than we’ve spoken about today.

Victor Colella: Alright, to dive right in, our first planning point is Frankie/Francesca is born. She’s got a new crib. Mom and dad are sleep-deprived, so what better time to start thinking about financial planning? There are three main sections here: How to save, so what types of accounts to save in; how much to save into those accounts; Then, last but not least, how should I invest my savings? Let’s kick it off—who wants to talk how to save?

Charlie Toole: Well, I can talk to that, Victor. I mean, there’s a number of different accounts that Francesca’s parents need to think about or evaluate in terms of how they’re going to save. Obviously, we’re here to talk about 529 plans and that’s probably the most popular way to save for college, but there are a number of other ways that parents, grandparents and guardians can save for their children’s college education. There’s also UTMA accounts, and that stands for the Uniform Transfers to Minors Act. You can see why they shorten it: It’s a mouthful.

Victor Colella: Yeah, exactly.

Charlie Toole: There’s also just a straight taxable or savings account, where you can have an account at a brokerage or a bank and you save money there. There’s also Roth IRAs, Coverdell Educational Accounts and EE Educational Bond Accounts.

Victor Colella: There’s a lot of options there, and the way that I like to simplify or maybe structure those in my head is you have a spectrum. On one end of the spectrum, you have flexibility—dollars that you can spend on anything. You could spend it to take your family on vacation, or you can choose to spend it on college. On the other end of the spectrum, you have tax benefits. Let’s start by talking about the tax beneficial side of that spectrum. 529 accounts are usually where we like to start there.

Andrew Busa: 529 accounts are one of the most popular vehicles to save for college. I think that’s because of their taxable nature. This is a tax-advantaged account that we’ll save for Francesca’s education, and the nature of the taxation is really going to be similar to a Roth IRA, except where a Roth is primarily going to be used for their retirement goal.

Andrew Busa: 529s are going to be used for college expenses and now recently due to the change in the tax law, you can use them for K through 12 expenses. Your contributions are going to be made with after-tax dollars. Investment growth is tax free, and if the money is used for qualified education expenses. Those withdrawals are tax free as well.

Victor Colella: One way that it differs from your Roth IRA, using your example, is that there isn’t that contribution limit from an income-tax perspective. You do have to pay, or you may not have to pay, but there are some gift-tax and state-tax implications if you give large sums of money—but up to , let’s say $15,000 a year, which is the exemption in 2019, you can really contribute as much as you want there.

Andrew Busa: That’s a good point, right? There’s no phase-out limitation with 529 accounts, so you can earn as much as you like. You can still contribute.

Charlie Toole: One other thing to consider is that those accounts have a limit on how much money can be in them. While you have essentially unlimited ability to contribute, those accounts can grow to exceed a certain limit. It varies state by state.

Andrew Busa: Right, and the reason for that is because 529 plans are state-sponsored, so you’re free to use any 529 state plan that you’d like. You aren’t limited to the state that you choose to have to go to a college in that state, but in terms of which 529 plans to choose, you’re going to have to weigh the investment options and fees that these different state plans have. One other consideration is that, if you use your home state’s 529 plan, you may be able to get a state-tax deduction for some of the contributions that you make.

Victor Colella: In some states you get the deduction whether you used the home state’s plan or not. There’s a lot of complexities state by state, so I think the best recommendation is to start with your state, take a look, and then if you’re unhappy with it, either because of the investment options or something else, then start investigating other states that solve that problem for you without having to give up much tax advantage.

Charlie Toole: Victor, when looking at another state’s plan or when evaluating any of these plans, I think that there are a few things that you should look at. The most important is fees. Is the plan a low-cost plan? Are you not going to be paying as much as some other plans or your own state’s plan when you invest in this? Then, I think the other criteria you should look at when evaluating these plans is the investment options. Are there a broad range of options for you to choose from? Who’s the sponsor? How are they managing these? Those are some of the things that you should look at when  evaluating these 529 plans.

Andrew Busa: There are a couple other special considerations that come along with this kind of account. One that we get a lot from clients is, “If I open the account, can other people contribute to it?” Anyone can contribute to the account, so it doesn’t matter if Francesca’s parents own the account or the grandparents.

Andrew Busa: Now, there are other implications that come into play from a financial-aid perspective with who owns the account. We’ll get into that more later in this episode, but just know that anybody can make contributions to the account.

Victor Colella: Some of those state by state details… One note here is “Smart Ways to Save (and Pay) for Education” has some additional detail around what different states look like. We highly recommend you visit that piece.

Victor Colella: Just a quick summary: There are tax-beneficial 529 plans. They’re transferable, so if one child finishes school and you have more money left, you can transfer that money to the next child or some other qualifying relatives. That can be advantageous for financial aid. One of the cons though is that once you give the money to a 529 plan, you can’t take it out and use it for something else. That flexibility has gone without some penalties that you’ll have to pay. You can’t use it for all expenses, and you do have some limited investment options in 529s, as well.

Victor Colella: Depending upon the state, your investment choices can vary pretty dramatically. That’s 529’s in a nutshell. What about UTMAs?

Charlie Toole: UTMAs are the other option, and you talk about flexibility versus tax advantages. UTMAs give much more flexibility. When you contribute money to a UTMA account, it is considered a gift to the child, so it’s outside of your state. You’re basically just a custody for these assets until the child reaches a certain age, and that can be as early as 18 or as late as 21. That varies by state. That’s something to be aware of. In terms of some more flexibility, there are really no contribution limits. You can pretty much put as much as you want into these accounts, but there will be state-planning and state-tax issues if you exceed certain thresholds.

Charlie Toole: There’s another thing to be cognizant of when you’re establishing these accounts, but the investment options are much more broad: It’s basically a brokerage account. You can have this account be managed by your adviser. You have basically whatever you can buy in a brokerage account at a custodian. You combine this account, whether it’s stocks, bonds, ETFs, mutual funds. You have the range, or the full gamut, of options there. There are some special considerations for these types of accounts. You do have to be aware of the tax issues. There is the kiddie tax.” There’s no tax advantages like a 529, but there’s also no penalties. You can be flexible in terms of what you use the money for in the future, but this can hurt financial aid. This is something that you need to be aware of.

Victor Colella: Charlie, you mentioned this, but one of the biggest things to remember here is that at 21 (or whatever age applies for your state), your child can go to Vegas. That money is theirs effectively, so sometimes with the 529 plan, it’ll be favored because that money does have to be used for qualified education expenses. That’s sort of a way to control the gift once the gift has already been given, and with UTMAs you give up some of that.

Victor Colella: Again, just to summarize, the pros are it’s a flexible instrument, you have a ton of investment options and you can really spend the money anyway that you want. The cons though: No tax benefits—there are tax disadvantages even. The “kiddie tax” basically means that the children may actually get taxed at less advantaged rates than if you kept the money in your own account. It can be harmful for financial aid.

Victor Colella: UTMAs and 529s… We see those two as the most frequent accounts here. The next one is how much to save. Once you’ve begun by deciding which type of account you’re going to save for Francesca’s education within, then you have to decide how much you should be contributing to these vehicles, when and how. This one all starts for us with how much you can afford. Different people have different attitudes towards college funding. Some of our clients are folks that we talk to and they say, “I want to find every penny. I had student loans and it was unpleasant, so I want to give that gift to my kids,” but our general advice, even for folks who feel that strongly about it is don’t forget about your retirement and other goals.

Charlie Toole: Yes, Victor, you can borrow to pay for college, but you can’t borrow to fund your retirement.

Andrew Busa: That’s a great point.

Victor Colella: That’s a great way to look at it because for student loans that money is available and out there for your kids if you need it through a variety of different types of loans. Back to the point of how much you can afford, this usually will tie back into a broader financial plan, which we obviously are in favor of—including an assessment of what your cash flow looks like now. If you have a lot of money available early on, so we’re still in this first planning point where Frankie was recently born, it may not make sense to put it all into a college-funding vehicle because you’re going to have other expenses like daycare, food and clothes for this new child.

Victor Colella: There are a lot of other expenses that you should be thinking about. Once you’ve figured out roughly what you can afford, you’re going to want to formalize and think about what is your strategy? Are we going to pay for 100% or 50% of college costs? Are we going to pay for that percentage of a public institution or for a private institution? There are pretty dramatic differences that come into play, whether it’s private or public, 100% funded or 50% funded. Once you figure out the answers to those questions, it makes sense for you to then work backwards from that number basically that you’ve come up with to the amount that you should be saving either by front loading or doing a big chunk of money.

Andrew Busa: There’s a helpful calculator online at SavingforCollege.com. You can go here and say, “This is how much I want to fund. How much do I need to contribute monthly?” It’s a rudimentary way to get to that monthly amount that will help you drill down on what it should really be, but it’s a good starting point.

Victor Colella: To Andrew’s point, there are two strategies here: Either you can put a lump sum up front and do less on a monthly or annual basis—or you can work backwards into how much do I need to save monthly from now until Francesca is 18 in order to get to the number that I want to get to. It could be a hybrid.

Andrew Busa: Right, you can do a hybrid there.

Victor Colella: This is really the easiest of the three. Where you run into difficulty is in the first parts of this. How much should I be contributing? Where you’re trying to determine how much you can afford and really how much you want to fund because you have to do some self-examination there.

Victor Colella: That covers how much you want to save. I think we should defer to the investment expert in the room. We’re using Charlie’s second hat, I think it is, to answer the question, how should we be actually investing the funds that we’re saving here?

Charlie Toole: As Andrew said, each state is sponsored by somebody different. Depending on who your state’s 529 plan is sponsored by, that’ll determine what the investment options are. For example, here in Massachusetts, Fidelity is the sponsor, so we have Fidelity funds available in the 529 plans in Massachusetts. If you go to a state like Utah, that’s sponsored by Vanguard and there are Vanguard options available in that state’s plan. It varies by state. It also varies by the types of funds that are available. There are active funds that you can choose from, actively managed, so there are portfolio managers within those funds that are making changes depending on what they see in the market landscape and there are index funds.

Charlie Toole: Typically, most states will have age-based options, and what that means is the fund is invested based on how old the child is, or when that child will be turning 18 and theoretically going to college. One thing to be careful of when you use those age-based options, you can use 529 plans to pay for K through 12 private tuition. If you’re doing that you don’t want to be in an age-based product for those children only because those accounts would be more aggressive. When your child is six and going into kindergarten, if you’re going to use that money, they think that the age-based option funds don’t plan on that money being used for college for another 12 years.

Andrew Busa: One size really doesn’t fit all along those lines. One size may fit you now, but it may not fit you in a couple of years, so you can’t just set the investment options and then not look at them again, because what happens when you decide to go to the private school and pay for tuition from the 529? You’d hate to get in the position where the market goes down two years before you were planning to re-look at the investments and it doesn’t recover in time for college.

Charlie Toole: Unfortunately, tuition doesn’t drop with the market, right?

Andrew Busa: That would be great, but it doesn’t.

Charlie Toole: That’s right. One of the other sort of a unique factors of these 529s is that you’re limited in the amount of changes that you can make per year. Most plans only allow you to make two changes per year in those investment options. You can watch it, but you can’t actively trade these accounts.

Victor Colella: Let’s dive into our second planning point. Francesca is a junior in high school and a drum major in the marching band. We’re all very proud. She’s in all the student organizations. She has built herself a great resume, and now we’re looking down the barrel of a road trip to go visit all these ivy league schools that she wants to apply to. Now, they’re great schools but they’re not known for being inexpensive per se. A few factors here: number one, be careful with investments. I’ll let Charlie take this one in a second. Then the second is that now is the time when you really need to educate yourself about the financial-aid landscape.

Victor Colella: We have a few suggestions there that Andrew will take us through. Charlie, kick it off with investment considerations.

Charlie Toole: As Francesca’s in high school and getting closer to college, you definitely want to be cognizant of how those 529 assets are managed. If they’re aggressive, you want to start to dial back the risk because you’re going to be using that money in just a short amount of time to start paying tuition. If you haven’t been keeping an eye on your 529 plans now is definitely the time to look and see how those funds are invested. Should changes be made to make the account a little bit more conservative as kind of start drawing on it and paying for tuition?

Victor Colella: One last thing to add there is that this is a good time for you to take a look and say, “What kind of shortfall are we probably going to have?” This is a good time where I think most advisers, but also you, would probably be able to look at it and say, “We’re going to have it covered or we’re not going to have it covered,” which really does lead us to the next point here.

Charlie Toole: You definitely want to take stock of where you are, what are you expecting to pay and how much do you have in your 529 and in your other options.

Victor Colella: That leads us to our second, really important conversation here, which is financial aid. Financial aid: There are three primary sources that we want to cover here. One being, federal and state aid, and this is typically needs-based, and Andrew’s going to talk about the FAFSA form, which determines a lot there. The second is college merit and needs-based scholarships. Colleges and universities oftentimes will have their own scholarships that may be available.

Victor Colella: Finally, you have private scholarships, grants, loans, those sorts of things. Andrew, I want to kick it to you and start with the federal and state aid and really it’s even broader than that.

Andrew Busa: FAFSA drives a lot of the financial aid that you’ll be receiving. This stands for Free Application for Federal Student Aid, and it’s used to determine what your child will get for grants, scholarships and loans. Remember, grants, you don’t have to pay back, so those are really the Holy Grail of financial aid, right? A lot of parents think they don’t need to fill this out or they don’t want to fill it out because maybe they won’t be eligible or they didn’t want to take on debt, but again, it’s not all about just loans. FAFSA is used to determine your EFC, that stands for Expected Family Contribution. That’s going to determine how much aid you receive for your college expenses. There are deadlines that you should be aware of when it comes to FAFSA. The window to file the FAFSA for the upcoming school year opens on October 1.

Andrew Busa: A lot of states’ deadlines are going to be on March 1 or around there, and the federal deadline is June 30th. Three deadlines. Really the most important thing for you to keep in mind as a listener is October 1—when the window opens. Just file it early. It’s important to file early because a lot of this aid is actually on a first-come, first-served basis.

Victor Colella: There’s no downsides to filing it early.

Andrew Busa: No downsides to filing early, and that first-come, first-serve basis is huge. The likelihood of receiving aid actually goes down over time if you wait too long, if you’re thinking June 30th you can get it done by then, we definitely recommend getting it done early.

Victor Colella: One thing to highlight here is that, a lot of folks are mystified by the FAFSA. It’s really all about that EFC, the expected family contribution, at a basic level. If you’re expected to contribute a lot, you’ll probably get less generous benefits, and vice versa, if you’re expected to be able to give very little for it, the college education, then you may get more benefits—more generous benefits. It’s all pretty simple, but I think for a lot of folks it’s a federal form that has an abbreviation that they don’t understand and it can be overwhelming. That’s very fair.

Victor Colella: All right, so I’m going to quickly run through the other two categories of aid here. College-based aid, which can be either based upon that EFC, through your FAFSA form, but also it could be based upon merit. It could be SAT or ACT scores. It could be based upon an essay that you had to apply proactively for. The real punchline with this one is ask the financial aid office. There are a lot of folks who just don’t know to ask, and you may have to be persistent. Let’s remember the incentives here: They’re giving away money. If they don’t give it to you you’re going to have to pay anyway, so you may have to push and be persistent with the financial aid office at your score.

Andrew Busa: Keep in mind too, if Francesca is applying to a reach school, she might not get as much merit-based aid. A safety school, there’s a much higher probability that she’ll receive merit-based scholarships.

Victor Colella: Yep, and all colleges are different, so call in, ask the questions, maybe even now, during your junior year when you’re applying to those different schools. Then, last but not least in this section, private scholarships. This one all starts with the guidance counselor. This is not provided by the college or university. It’s not federal or state aid, but it may be local foundations in your community. It could be wealthy benefactors who believe in funding education for kids who are either qualifying on a merit base, or based upon need or a combination of both.

Andrew Busa: This was big for a young Victor.

Victor Colella: You’re right, and really, I have to give a lot of this credit to my dad. When I was a senior or junior in high school, he told me, “You’re going to make a lot more money applying for these scholarships then you will washing golf carts at the golf course.” He ended up being absolutely right. I had to write a lot of essays. I definitely didn’t see the value at the time, but when I actually started to see those scholarships role in, it was worth every single moment I spent. I wish I’d spent more.

Andrew Busa: You didn’t play a lot of golf that summer.

Victor Colella: I still could have beat you, Andrew.

Charlie Toole: Who wants to be on a golf course in the summer, anyway?

Victor Colella: Yeah, exactly.

Charlie Toole: Who wouldn’t rather write essays?

Victor Colella: With that, I’m going to move on to planning point number three. Francesca has just graduated from high school and she’s recently received her random roommate notification from the university. She’s stressed out because she’s going to be leaving the house. You’re stressed out because you don’t know what you’re going to do when she’s not there. Let’s talk about our third planning point, which is, it’s time to figure out how to actually fund school. The first bill is due. That’s really the trigger here: You do have to pay in advance.

Victor Colella: This one is best illustrated if I set the table a little bit with the example. Let’s say that half of college is funded by a couple of 529 plans, you and your parents. Mom and dad and then grandma and grandpa both have saved in a 529 plan. You have some additional savings in just your brokerage account that’s going to cover some additional, but it’s not going to cover all of it. You do have some gap to cover for Francesca’s expenses.

Victor Colella: Andrew, where do we start?

Andrew Busa: In terms of how to pay, how to use your 529 accounts you mentioned, so in this scenario there are two 529s, there’s a parent-owned and a grandparent-owned. There are financial-aid implications to which account is making the college payments. When Francesca’s parents are the owners of the account, so this is going to be reported as a parental asset on the FAFSA. In that scenario, all distributions from the account and are going to be completely ignored when it comes to financial aid.

Andrew Busa: If Francesca’s grandparents are the owner, so if the money’s coming from that account, this isn’t going to be reported as an asset on the FAFSA. That sounds good, but distributions are counted as income to Francesca, and that hurts financial-aid eligibility a lot more.

Victor Colella: You may be wondering, why are we talking about the FAFSA again? That was in the last planning point. Really, it’s important to note that you have to apply for the FAFSA every year. It’s a reoccurring application that you have to do. It just doesn’t happen once, so the decisions you make in this strategy for paying do impact the following couple of years of tuition for school or financial aid for school.

Andrew Busa: In this example of Francesca’s freshman year, you’re going to want to start with the parentally owned 529 account because those distributions from the 529 aren’t going to impact the FAFSA. Once Francesca is a junior in college, then you can start to look towards the grandparents’ owned 529 because by the time that Francesca has graduated from college those distributions aren’t going to be reflected on the FAFSA just because of the reporting process. They use prior year reporting on the FAFSA. It’s a little bit too deep to get into here, but the main point is, if the grandparent owns the account, wait until Francesca’s junior year to start tapping that.

Victor Colella: This first point here is it’s all about you just have to have a strategy. Maybe you’re going to pay for tuition and fees out of the 529 accounts because those are qualifying expenses, but then travel to and from and maybe health insurance or whatever the case may be. You’ll be paying that from either your brokerage assets or maybe it’s a federal student loan. Maybe it’s a private grant or loan, maybe an interest free loan or something like that. Those are out there, so you need to have a strategy in saying, “We’re going to pay these fees with these dollars”—and you should probably stick to it.

Andrew Busa: As we mentioned earlier, you need to be very careful about what money is paying for what piece of the education. 529’s will cover the tuition. They’ll cover room and board. They can’t cover travel. They can’t cover health insurance. They cannot cover medical costs. They cannot cover application fees or testing fees. You need to be really careful that you using 529 withdrawals for qualified expenses. If you’re not, it’s a 10% penalty, and you have to pay taxes on those funds.

Charlie Toole: That hurts.

Victor Colella: There’s a common misconception there. You can’t say, “Well, we’re going to use the other money, not the 529 money because it’s more convenient, and then we’ll pay the student loans with 529 accounts later.” You can’t do that—at least for the time-being. You’d hate to go through college, not use much of the 529 thinking you would pay the loans later on, and then realize four years later that that’s not possible.

Victor Colella: Just be careful, to Charlie’s point, be careful in what you pay with what assets.

Charlie Toole: If you don’t use all of the 529 funds, remember you can transfer the beneficiary, so a younger sibling can be an inheritor of that account. Another thing: If mom and dad decide to go back to school, they can actually use those funds as well with no penalty.

Andrew Busa: If you are fortunate enough to have, if Francesca gets a scholarship, you can take that scholarship money out of the 529 without the penalty. You will have to pay taxes on that money, but if for whatever reason, say Francesca gets a full scholarship, you can take that money out without penalty.

Charlie Toole: Good point.

Victor Colella: Frankie and Fran, we’re crossing our fingers. All right, and then this has been sort of my drum that I’ve beat for clients in the past years. Don’t forget about scholarships once you are at school. Again, I could thank my parents for this. When I was at school they said “You don’t have to work.” They helped with some of the expenses, but they said, “Your job is to apply for scholarships continuously.” I ended up funding a pretty good part of my junior and senior year purely because that money was available and most folks didn’t ask for it because they already had their loans. They already had their school funded in some way, shape or form.

Victor Colella: There’s still opportunity on the table once you’re already at school.

Charlie Toole: Another point we didn’t really have time to dive in to too deeply is that there are tax credits out there that are designed specifically for educational expenses. Just ask your tax preparer. We’ll talk to you about it. There are opportunities out there for a tax credits as well for educational expenses.

Victor Colella: Good point. Andrew, Charlie, I think this has been a pretty good conversation.

Charlie Toole: Very good.

Victor Colella: It’s something that is on the minds of so many folks that we talk to—especially around these three planning points for folks who have kids like Francesca, who either recently or in high school or about to start college.

Andrew Busa: It’s a big topic for a lot of parents.

Victor Colella: It is, so there’s a lot more depth here than even we were able to talk about. I will refer you to that piece that we’ve linked to here, which is

Charlie Toole:Smart Ways to Save (and Pay) for Education.”

Victor Colella: That’s another good place you can go to follow up on this conversation. Lastly, I want to summarize some of our key takeaways here. Guys, jump in if I miss anything. I’ll start with, and this one may seem obvious, but have a plan and then commit to the plan. There are a lot of opportunities for analysis paralysis with this, and I think whether it’s a 529, a UTMA account or your brokerage account or any of the other options that Charlie talked about, once you choose and you figure out how much you want to save over time, start contributing and then you could pretty much set it and forget it.

Victor Colella: This doesn’t have to be something that you have to worry about continuously.

Charlie Toole: Except for the investments: You don’t want to set and forget the investments. You want to stay on top of those.

Victor Colella: Exactly, because we’re lobbying for the tuition to go down with the market, but so far, we’ve been unsuccessful. I think the second one here is that it’s less overwhelming if you start early. Having this college-planning conversation with folks who have kids early in high school is a much more urgent and stressed out conversation than if they’ve recently had a young Frankie or Fran. Just start earlier and you’ll be happy that you did—even if it doesn’t feel like you’ve got a ton of cash flow now. You don’t have to fully fund it early on, but you’ll be happy that you started earlier.

Victor Colella: Last but not least, at least on my end here is the planning isn’t done once you set up the 529 plan, it may be done for a while, but there is a lot to know about the changing landscape of financial aid, so those second two planning points with Francesca, what about the FAFSA form? Is that going to change over time? What does it look like today for this university from a financial-aid perspective? What are federal student loans looking like today?

Victor Colella: There is so much to know there, and I think the earlier you start on that topic as well, the better off you’re going to be.

Charlie Toole: On that train of thought, file the FAFSA early—right? We talked about that October 1 window opening for the following school year, so open it as soon after that October 1 window as you can. Second takeaway from me is just thank you to Victor’s parents for all the scholarships that you received when you were in college.

Victor Colella: They remind me from time to time–thanks mom and dad, Frankie’s grandma, grandpa!

Charlie Toole: There you go.

Victor Colella: We talked about a lot here, so I do want to remind you that in the show description you’ll see…

Charlie Toole:Smart Ways to Save (and Pay) for Education.”

Victor Colella: That really is a good piece. It talks about some of the differences, state by state, and it has a lot of information that we couldn’t cover in this format. Dive in and take a look. Guys, thanks again. This has been Victor Colella, Charlie Toole and Andrew Busa, from Adviser Investments, and we thank you for listening to another The Adviser You Can Talk To Podcast.

Victor Colella: If you’ve enjoyed this conversation, please subscribe and review our show. You can also check us out at AdviserInvestments.com/podcasts. Your feedback is what drives so many of the topics that we cover here, so it’s always welcome. If you have any questions about this episode or perhaps topics or ideas for future episodes, we’d love if you emailed us at mailto:info@AdviserInvestments.com. Again, that’s mailto:info@AdviserInvestments.com. Thanks again for listening.

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