Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, skills, insight and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in ten years or less. My guest today is Brad Baldridge from the website, podcast, business called TamingTheHighCostOfCollege.com.

Brad, do you think that children and paying for children's college is antithetical to financial independence or do you think that you can work out a plan where these two things can coexist? I think most families need to figure it out whether they like to or not. Welcome to the show, sir.

I'm glad you're here. Yeah, I'm glad to be here. So we're going to talk about college, which is a hot topic, and we're going to try to give as much detailed information as possible, some real meat for my audience, some ideas, both some mainstream ideas and some offbeat ideas.

But I'd like to start with your background. You come from the financial planning world and you've approached this as a financial planning specialty. How did you wind up becoming an expert in the area of college planning? Well, I started like most financial planners and I worked with just about anybody and everybody.

And I realized that I started resonating with parents and one of their big concerns was college and retirement. And as I learned more and worked on it harder, I realized that there's a huge need for families to really understand college as it gets more and more expensive in order to do it and do it well so that you don't mess up mom and dad's retirement, I guess, in general.

How long have you been practicing in this area? I've been a financial planner for about 20 years and about 10 years ago I started specializing and actually launched a couple of businesses around college planning. So let's start with the changes. Have you observed any cultural changes in our cultural attitude toward college and college planning in the last decade or two?

Absolutely. The biggest change was in the economic downturn where up until that economic downturn, most people pretty much said, "I'm going to go to school. I'm going to get that piece of paper and I'm going to get a good job and that's just the way it works." And then when the economic downturn happened and some graduates struggled with finding work, all of a sudden it became, "Well, wait a minute.

Is it really worth it?" And the answer for many is, "Yes, it still is very much is worth it." But not all degrees and not all people should be going to college in my opinion. I definitely saw that major change. It seemed like, and I guess you're probably right with regard to the timing of it, but it does seem that there was a dramatic shift in the last decade from that cultural idea of college is just the way that you set up a good life to almost a cultural disdain.

I don't know that we're quite there but at least among my generation, the younger generation, I would say there's probably more disdain than there is admiration for the college path. I've noticed a distinct age gap on this subject where when I speak with older people and they say, "Well, why are you so down on college?" You don't understand.

You're living in the world that existed 30 years ago, some people, but the world that's today is very different than it was for you. And so it's definitely been fascinating for me to watch. Have you observed the same age gap that I have in working with clients? Michael: Yes, absolutely.

I obviously work a lot with parents more than I do with the actual students. But even parents today are really examining it because it's getting so expensive that for many families, it's a big item now. It's a major decision as to whether or not we're going to spend the kind of money to go to that expensive private school or just go to the state school.

For some families, that's the type of decision. For other families, it's, "Can we afford college at all? And is it worth it if we can't afford it to borrow that kind of money to make it happen?" And those kind of decisions now are a case-by-case basis. It isn't an automatic, "Well, it always makes sense to do this." It's, "Well, it may make sense, but what are you going to do when you graduate?

And what's your earning potential? And are you willing to take on debt or not? And is there an alternate path to get to where you're trying to go that doesn't include college or it includes less of college?" So what's actually happening with college costs? What are the actual trends?

Right. So college costs are going up, especially what I would call the top-line price, which is the official published price where Harvard is now over $70,000 a year all in, which is tuition, room and board, books, fees. And there's a lot of schools in that realm between 65 and 70.

That's the high-priced name brand prestigious schools are all up there like that. And then we have the state schools where maybe 20 to 30,000 for the flagship state school in your state, maybe less than that at some of the low-cost states and maybe more than that in a high-cost state.

Then you also have the out-of-state situation where it's more like 40,000. So it's not nearly as bad as the high-priced privates. And then we have the low-priced privates that are 45, 50 comparable to the out-of-state prices. So there's a lot of different types of schools out there as far as kind of categories and how they work and whether or not you're going to qualify for aid, et cetera, et cetera.

And because it's getting so expensive now, I think most families need to spend a lot more time at it. A typical family would spend a lot less time planning for college than they would, say, planning a large family vacation. Yet now with college being so expensive, you really need to put some time and effort into it because it is a big decision and there's lots of consequences.

And if you can save 10 or 20% on college these days, it adds up. And ultimately, you want to get somewhere. I always, again, if you could talk about a vacation again, the way college was done in the past was kind of like on a vacation analogy, that would be, "All right, well, guess what, Josh?

We've got this week off. So I guess we're on vacation. So let's figure out where we're going to go. Let's go down to the airport and pick a destination. And then when we get there, we'll see if we can find a place to live and then we'll see if there's something fun to do." Most people don't do it that way for vacation because they've got limited time and resources and they want to make the most of it.

But that's how college used to work, right? You'd say sometime in your senior year of high school, "I think I want to go to college." You visit one or two of the local schools, you pick one, you sign up and you just kind of stumble your way through it, which worked for our parents and grandparents.

But as we get into it today, we need to do more, in my opinion, again, because it's so expensive and you quite literally can lose tens of thousands of dollars because you made a mistake that you weren't aware of when it comes to things like financial aid, choosing the right loan, choosing the right school, or choosing not to go to begin with.

All those types of things can have a huge impact. I'm not convinced that college costs are actually increasing and I'll explain why and I'd love it if you could convince me one way or the other. The top line number does seem to steadily increase. It's very difficult to argue with that just given the simple data that you cited.

However, the actual bottom line number, I can't figure out a way to actually calculate that because the top line number includes, if Harvard is, what do you say, $70,000 a year, they're including room, board, books, everything in that number. But room and board are highly variable depending on where you live.

Also living on campus and using the college campus room and board is generally a more expensive way to live than can be accomplished through other means and mechanisms. Some of the colleges that have the highest upfront cost or the highest top line number also have the most generous student aid programs, the most generous grant programs.

Plus you have to look at the various scholarship programs, et cetera. If I wanted to – and if you look at the options, it's never been cheaper. I look at local community college options. It's never been cheaper. Even if you want to go through the official state college, it's never been cheaper to get tuition credits at a local community college if you're just focusing on tuition credits.

So is there a way or have you been able to pull out the data and figure out what the actual increase rate is versus just the top line number that's so easily studied? Are you aware of any data that pulls those numbers apart a little bit? Absolutely. The national database, I actually just did this.

I pulled all the net price by income for Wisconsin colleges. Obviously people that are listening are all over the country, but I live here in Wisconsin and work with a lot of Wisconsin families, so I chose to do that. You're right. The top line is going up a lot faster than the net line because at a lot of schools, they're offering scholarships.

So what's happened at a typical private school, let's say they raised their price in the last few years from $45,000 to $50,000, they may have also increased their aid by $5,000 as well. But the challenge is that $5,000 of aid, they get to choose who gets it and who doesn't.

So for the students they want, they'll still offer it. For students that they will accept but they aren't really chasing, that's where the rub comes in. So I have a lot of families that are looking at colleges and they're saying, "Well, I want to stretch. I can just barely get accepted at the name-brand school, say Notre Dame.

But if I get there, I'll probably have to pay full price because I'm just an average student in Notre Dame and their aid is reserved for the top students." That same student could then say, "Well, I could be an above average or a top student at a 'lesser school'." And I don't like the word.

I mean, there is no good school, bad school. This one's better than that one per se. I mean, that's a long drawn-out argument. But anyway, just as part of the story here, you could choose a school where you're a stronger student relative to the average class and go to maybe a more local private school and get a $10,000 or $20,000 or $30,000 scholarship.

And then, of course, if you really shop around, you might find a school where you're a rock star, right? Where this school over here has relatively low cost and offers very generous scholarships for top students and you're a really strong student at that type of school. But again, it doesn't have the name recognition.

It's not a top-tier school. There's many students and parents who essentially say, "Well, we've worked too hard to consider going to the 'no-name school' just because it's very low cost. We'd rather spend the money and go to Notre Dame or whatever that college might be." Which is fine if you have it.

But if you don't have it, then the question becomes, should we borrow it? Are we going to put ourselves in that much financial jeopardy just to get to Notre Dame? Or is another path a reasonable path for our student? Well, get to the planning question. I want to spend some time on that student loan question in a minute.

Before we do that, let's continue on this theme of name-brand schools versus non-name brand. If I'm seeking to do an objective economic analysis, meaning I don't care that my dad went to this school or that I'm a fan of this football team. I'm just interested in the nuts and bolts of the economic analysis.

And one of my primary goals for college is the income potential. There are lots of people who don't fall into that. They say, "Well, I'm trying to learn something else and earning potential and career potential is only one of the benefits of college." Got that. Set that aside. Are you aware of any objective data that would indicate to me a way that I could make the decision criteria between choosing an inexpensive, non-name recognized path versus a name brand expensive path?

Yeah, I don't know that that type of data. They're working on that type of data. But all that data is relatively useless because it's all averages, right? You look at, well, if 100 kids graduated from this school and did this and 100 kids graduated from that school and did that, great.

But that doesn't really matter because you're not 100 kids. You're one. And I think it has a lot more to do with how your student applies themselves and the majors they choose and how hard they're willing to work. So there's obviously some data skewed at these high-end schools, as an example, because they only accept the best and brightest kids.

Well, you know, so is Harvard a good school or they just have the privilege of accepting only the best kids? And I think the second answer is true. They accept the best kids, give them an average or maybe even an above average education. And in the end, what they turn out is some very productive, you know, high earning potential type graduates.

But they got to take the cream of the crop. And if you happen to be the cream of the crop, well, then you can maybe consider going that path or an alternate path. But the cream of the crop, I think, is going to do well whether they go to Harvard or the local state school or no college at all, potentially, because they have what it takes to get out there and do it, whether it's with formal education, informal education, on the job training, owning a business, all the different things that, you know, tend to create wealth, I think are potentially just because of the way the student acts and behaves.

Right. You face that and I appreciate your point about it's a big issue to me is that you have to deal with selection bias at every stage of this, whether it's at what type of student is here or I'm of the opinion that you face that even in terms of the earnings record.

What is the fact when you get to somebody earning a higher income amount on the average, is it because they learned something in college that allowed them to earn a higher income or is it because the college process was tailored to that type of person and they were the ones who were the kind of person who goes through and finishes things and does what they're supposed to do and that type of person has the skills to succeed and be more financially productive in the world of work than many other people.

It's challenging to get good data. Same thing, another one that really bugs me when looking at the numbers, it's my understanding of student loan debt and the amount of people – the earnings record and things like that. Many people when looking at it don't factor in the reality that – it's my understanding that about 40 percent of college students never graduate and so you don't just have to deal with what are the problems of student loan debt for those who graduate.

You got to deal with the fact that 40 percent of students don't graduate and so those – their stories are often filtered out of the data that you're looking at and you're only looking at the 60 percent who actually graduated and you're making advice and recommendations without factoring in the fact that almost half of the students never actually fulfilled the requirements.

And thus, they may have student loans or may have spent a few years of their life without getting the benefit of actually having the degree. Right. That's all true and that's where – again, when we're doing research as is college effective and what do you recommend. But again, when you start using that broad stroke, there's all kinds of things.

As an example, what majors are available at that particular college? If it has an engineering school, guess what? They have a lot of graduates that go off and do well and make good money, especially right out of school because the average engineer starts substantially higher than the average social worker as an example.

Now that's all averages, okay? And it's kind of like saying, "Well, I'm going to be a musician." Well, are you going to be a starving artist musician or are you going to be a rock star musician? And there's a very drastic difference to the lifestyle, the income potential, etc., etc.

And whether or not you can do it is based on the individual in my opinion most likely, not the college you attend. Let's walk through two scenarios because one of the biggest values that I think you can bring to my audience is talking about the framework of the decision process.

So first, the scenario. I come into your office. I'm a young father. My wife and I, we have two young children. We both have college degrees and we're concerned about planning for college. That's the extent of the data you have on this case. But I have a one-year-old and a two-and-a-half-year-old.

And I'm sitting and saying, "Brad, I want to plan for my kid's college." Walk me through the framework that you use to give clients good advice with regard to what to do. Brad O'Reilly Right. Well, you actually – and I happened to listen to a show that you created where you talked about it and I think you and I are on the same page in that if you're young and starting out, if you're maxing your Roth IRAs, maxing your retirement plans at work, and you have extra money that you want to save for college, knock yourself out.

For everybody else, get your own financial house in order. Do the best you can so that when you get to college 10 or 15 years from now, and theoretically your earning potential is high at that time, right? You've had a couple of promotions at work. Your small business is now not quite so small, whatever it might be, and theoretically you've got more to work with.

At that time, you can make some decisions as to how much you might want to commit to college. And if you're thinking, "I'm probably going to want to pay for college," well then bake that into your plan, but not necessarily a specific investment. So if I know, if my wife and I agree or your wife and you agree that, "Hey, I'm going to contribute quite a bit to college.

I want to be there to help," that's fine. Then when you're making your car buying decisions, don't spend so much money on cars. When you're making your housing decision, don't spend so much on a house so that you have more free cash flow over your lifetime. And then you can tap the college out of your net worth as it makes sense when you get there.

But it's really hard to plan for a one and a three-year-old because I think the system is going to change between now and then. I don't know how. So to base your decisions now on what we have now is probably not very useful. On the other hand, if you just say, "Well, we're going to grow our net worth.

We're going to have, by the time we roll around to college, we're going to have $400,000 in our 401ks and we're going to have $200,000 in our Roth IRAs. And we're going to have $100,000 in investments. And our house is going to be half paid off and all our cars are paid for.

And we'll have an extra $2,000 a month coming in that we don't know what to do with. And if we choose to spend it on college, we can." Well, you're in a great position. Then when you come to me with a high school sophomore or junior, we've got things to work with and we can make it work.

Where I see what you want to avoid is the opposite of that plan, which is you learn how to spend everything you earn, et cetera, et cetera. And I see these people all the time. They're earning $100,000, $150,000 a year, which disqualifies them from most aid. Yet they need that $150,000 to cover all their lifestyle.

The kids are doing dance. The kids are in sports. We take family vacations that are expensive. We've got nice cars. We've got a nice home. We've got credit card debt. And our budget is such that we need to earn what we earn just to cover our budget. And now you want to put college on top of it?

There's no way. Well, guess what? I've seen families earning $75,000 easily cover college. And I've seen families earning $150,000 just crumble under the pressure of college. And it has nothing to do with who qualifies for aid. It has everything to do with what their financial mindset was as they moved into the college years.

It has to do with how they prepared. And again, not necessarily having a specific college fund set aside, but having the cars paid off and having some free cash flow to be able to do what you need if you choose to do it. And then of course I have parents that are across the gamut as to whether they want to do it.

Some parents say, "College isn't my problem." Other parents say, "We're paying for it all." There's no right or wrong there. But if you say you want to pay for it all, realize it could potentially be expensive and you need to plan accordingly as you're raising your kids. Another big one would be that private school, private high school, as an example.

I've had families say, "Well, we spent all our money on private high school instead of college, because we thought that was a, you know, and now he's going to go win a bunch of scholarships and ta-da, college is paid for." It's like, yeah, maybe, but there's a whole lot of kids that go to private schools that aren't in any better position than kids that went to public schools.

Could you think of the scenario in which, so obviously we're in agreement on that, and to me when looked at that way, that plan of paying for kids' schooling by attending to everything else brings so much more flexibility for a future that's very uncertain, especially for younger kids. I understand if you have a 12-year-old who's seemingly very interested in engineering and you come from a background of MIT and you say, "Well, MIT is interested in them.

They're working on that." I get the planning at that point. But for many young families, which seems to be the situation where you get the question as a financial advisor, you get the question, "Hey, what do I do for my one-year-old? I want to go ahead and open a college account for them." I just think the plan that you laid out there and that I've discussed elsewhere is so much more flexible.

But let's contrast that. Could you design a scenario in which you would, or what would be the scenario in which you would actually say, "No, a college savings plan is the way to go. What you should definitely do is go and open and fund a college account of some kind." What would be the scenarios, what would be the facts that would lead you in that direction of advice?

Being relatively financially sound in retirement, et cetera. So again, I have some young professionals where they just got married and they're both earning 80,000 each or high six figures or whatever it might be, where all of a sudden they take their two households and they merge them and they go, "Man, we've got 4,000 a month that we used to have two rents and car payments and all that stuff and that's all gone.

We've got 4,000 a month. What do we do with this? And we're already doing well in our retirement. Well, by all means, go ahead, put some of that into college." I deal a lot with parents of high school students. So I have a lot of parents come to me with 25,000 or 50,000 in a 529.

And I've got some that come to me and say, "Well, 100,000 in 529s." And they're also the ones that are saying, "By the way, I plan on sending both kids to high end school. So yes, 100,000 is a good start, but I need to come up with another 300,000 to make it all work." So let's jump to that scenario because that was going to be the next scenario I was going to present.

I'm now the parent of a couple of high school students. Both of them seem appropriately qualified for college. It seems like college would be an appropriate decision for them of some sort or another. What's your decision framework for giving advice in that circumstance? Pretend I've got $25,000 in a college savings plan and it's not enough.

Now you're trying to give me some advice. How do I approach that? Right. So what I recommend people do is they lay out their other goals and say, "Are we on track for those?" So a typical family that I see, they've got two goals. Figure out college, work a few more years, and retire.

That is a very typical. And then, you know, we'd like to have some family vacations, but they're not as critical. We'd like to do some other things, buy a boat, place up north, whatever it might be. Might be, you know, I wish I could, but that's, you know, that's, we'll drop that in a heartbeat to get these two goals done.

So that's the typical family. And again, if you've done your planning well and you've already, you know, you've got that half million tucked away in your 401k or million or whatever it needs to be, and you're sitting pretty good, I've done an analysis quite often where we say, "You know what?

In order for you to be able to retire, you need to continue to save about 10 or 15% into your 401k, which you've been doing all along. And that works great. And you're on track. Now if you want to pay for all of college, we need another 1500 a month." And the parents look at each other and say, "Yeah, I just started a new job.

I got a raise that covers that." Done, right? Now, it's just a matter of, we've got it. How do we do it efficiently? Should we use saving, you know, 529s or Coverdells or Roth IRAs? How are we going to, you know, let me get into the details. And doing that planning is important as well.

But for the typical family that I'm seeing, I'm telling them things like, "Well, you need 1000 a month to make this work, or you need 1500 a month to make this work." You're at the high end and sometimes maybe it's, well, what you want to do is 500 a month.

And if you can do your other goals and hit that nut, and again, it really boils down for most families is they say, "We're here. College is important." And I have to say things, "Well, is college as important as that $10,000 a year you spend on family vacations?" "Oh, college is much more important." "Okay, are you willing to stop the vacations?" "Well, yeah, probably.

The kids are grown and gone and they're off doing their own things. So you know, a big family vacation is a thing of the past anyway, or it becomes a family camping trip or whatever." But yeah, from that standpoint, I think a lot of families, you know, I have a lot of examples.

I think about the other day, I had a dad in my office, four kids. His oldest is a performing artist, wanted to get into New York, got accepted to NYU, did great, got lots of great scholarships. So the net cost for college was about $35,000. Now dad is looking at that and saying, "Well, $35,000 times four years, that's $140,000 times four kids.

That's a big number." And then we started talking about, "Well, if you do it for one, does that by definition mean you're doing it for all?" Maybe, maybe not. I mean, some parents say, "Well, we'll teach their own if they need more or less, that you know, we're not going to, doesn't have to be equal as far as dollar amounts." You know, we're going to, our idea of fair is different than that, and which is fine.

You do it however you want, but it's got to be part of the plan. How are you going to be fair or do you even care if you're fair? You know, I've had parents say, "Well, this kid earned it. They've worked hard. This kid has never tried, never worked hard.

You know, I don't care that they don't get as much as the one that has been going, you know, working hard at it." But that's again, kind of the scenario we're looking at is now in dad's situation, he was doing well at work and we were able to squeeze a couple thousand a month and with loans and everything and his current savings and investing, we could make the plan work.

It would probably delay his retirement by three years. And he was good with that because it was within what he was willing to do to make it all happen. How would you decide, if I come up short for college, how would you decide if student loans are a good idea?

And if we decide the student loans are a good idea, how would we decide whether it should be the parent borrowing money or the child borrowing money? Right. All right. So, and again, the families I'm working with are typically not qualifying for a lot of aid, although they do get some sometimes.

But families need to realize that the student can typically only borrow 5,500 under the direct loan as a freshman. Any borrowing after that, mom and dad are involved. So these kids that are quote unquote graduating with hundreds of thousands of debt or a hundred thousand of debt, that was facilitated by parents or it was grad school or some of those types of things could cause that as well.

You know, becoming a doctor or MBA, that type of thing is. But a typical undergrad can only borrow about $30,000 all in over four years. So anything beyond that, mom or dad has co-signed a loan or somebody has co-signed a loan, which in the private industry, private loans, or mom or dad have taken out a plus loan from the federal government.

Or mom and dad are the bank somehow. They choose to take their own assets and lend them to the student or they choose to pay for college or mom and dad borrow the money on a home equity or from their 401k, which I'm not recommending. But somehow mom and dad raise the money provided to the student.

And then mom and dad can say, here's the money you're going to pay us back. You can say, here's the money you're going to pay us back. Here's a contract to sign. Here's the money. We hope you pay it back, but we probably will never see it. You know, that's kind of the family dynamic that's often challenging.

So that the reality of it is, is choosing the right loan. Kind of two questions. Are you trying to save the family money or the parents money as an example? So parents might be able to borrow on a home equity for three or 4%, which is a really good rate.

However, that loan is now in the parent's name and they're responsible. Whereas if they co-sign a loan, maybe it's at 4% variable and likely to go up. But that interest is paid by the student. The loan is in the student's name and it's only going to cost the parents something if the student defaults and the parents have to step in and clean up the mess.

So again, you look at it and say, well, I don't care if my student pays 12% for this loan because they're paying it. It doesn't cost me a penny. Now most parents are going to look at that and say that, you know, we want to protect our family and if that's what it's going to take, maybe we will consider using the home equity or some other way to get the cost down where they can.

So that, I guess, is part of the process is who's going to pay the interest and are we worried about the family as a whole or are we worried about mom and dad's costs versus the student's costs? You wrote an article on your blog that I thought was excellent.

It was the top 10 college planning mistakes. And about five of these I want to talk about for a moment with you because they're specifically financial and I think there are some interesting little radical strategies contained therein that my audience will benefit from. So your number one mistake that you listed was to assume that you won't qualify for need-based aid.

Your point was that it's hard to know in advance whether you'll qualify for need-based aid. You've seen families with a high income qualify, as high as $250,000 qualify. But you've seen families earning $75,000 not qualify. And so you need to test it out with actual calculations. That one's relatively simple.

But in your number two, you said the biggest second biggest mistake, starting your planning too late or not at all. And you point out that the base year for financial aid calculations starts in the middle of the junior year of high school. And so there might be things that you need to do in sophomore or early junior year before that base year starts.

Talk about the base year and why that date is important. So the base year is the year that they use, and it's the tax year that they use to calculate how much aid you're going to qualify for. So that base year, you want to behave. So you don't want to do anything that would artificially inflate your income.

And that would be things like selling assets at capital gains or selling a rental property or taking bonuses at work or exercising stock options, adjusting what you put into your 401(k) could have an impact depending on the type of investment. So there's things that cause your income to go up or down, and you want to do that consciously.

Now another important thing to realize is since that article has been written, they actually change when the base year is. They have what's called the new prior prior rules. So that means a typical family, the tax year that they're going to use for your first year of college starts in the middle of your sophomore year of high school and goes through the middle of your junior year of high school.

So that's so as an example, if you have a student starting college in 2017, so they're a rising senior, you're going to be filling out financial aid using 2015 taxes. So it looks back a long ways. So now it's even more challenging that you do what you need to do in order to make it work out.

So the idea here, because I see some potential for a segment of my audience with this knowledge, and it does get complicated with the fact that you're saying two years. The idea is in this year, if we can lower our income to the maximum amount that's tenable, we will look on paper as though we are more needy and this will help the need-based financial aid calculations to come out in our favor.

This could be a substantially high benefit if you just calculate – let's say you're going to get a need payment of $20,000 per year over four years. This could be a very high offsetting amount. So a couple of questions to clarify. This prior, prior year, are these calculations done one time or are they done each year while the student is going through college?

Yeah, they're done each year, so they continue to look back. So the first year would be that tax year. So again, if you have the senior, they're going to be using 2015 taxes. But in the next year, you're going to do it all over again using 2016 taxes and then 2017 and then 2018.

But a big advantage to that now is you'll use your 2018 taxes to calculate aid for your senior. So 2019 taxes will never be seen, assuming you don't have other students and they're going to graduate in four years. But 2019, now the colleges are never going to see. And in 2019, your student is still only a sophomore or junior.

So in that year, that would be the year where you could blow things up, where you don't see anything. So that's the year that grandma gives you money. That's the year that you exercise some stock options. That's the year that, you know, that you can increase your income, have it available for college, but it's not going to show up on any forms because you're not ever going to have to fill out financial aid again.

And these, the data here, we're talking about the data that's going to go on the FAFSA. Is that correct? That's correct. And/or the CSS profile. So there's two financial aid forms out there. Okay. The FAFSA, the Free Application for Federal Student Aid, and then CSS. Does that have an acronym that I should know?

It does. It's like IBM. I don't remember what it is. It's a company, college something, data service or something like that. Now, what is counted as income? Is it using the adjusted gross income number from the tax return? What is it counting? All right. Well, now we're getting into some technicalities.

So the FAFSA looks at your adjusted gross income, which is the bottom of the first page of a typical 1040, and then they add back in certain types of untaxed income. So they would add back in, as an example, contributions to 401(k)s. So if you've got a family earning $50,000 a year and they choose to put 10,000 in their 401(k), it's not going to help them when it comes to aid because what they do is that the government says, "Well, what's your AGI?" And it's going to be 40 because of the contributions.

But then you say, "But what did you contribute to 401(k)?" That you're going to say 10,000, and they're going to add it back in. So you're right back to 50 where you were. So contributing to retirement doesn't help or hurt you when it comes to aid for the typical family.

But they do add that back in. The other things they would add back in are things like child support that often families receive tax-free because the other parent pays the taxes, and things like investment income that's tax-free, like municipal bonds, disability payments, a few things like that. So they try and capture all your income, whether it's taxed or not.

And then they also look at the assets of the family. So let's come to assets in a moment. But as far as income, so if I wanted to skirt this, and it's hard when you get into multiple kids because we're talking about a planning scenario where you're trying to reduce your income on paper for multiple years while your student is in college.

And if you have multiple kids, this could be just not practical. But it's kind of a fun thought experiment. So the first thing that occurs to me is, number one, if I'm a radical personal finance hardcore person who's saving a lot, and if I've got plans for, say, a mini retirement, then it would be really good to line up my mini retirement with these years that these financial aid calculations are going to be done if college is important to me, just to naturally reduce the income.

And that would be the time to plan that round-the-world sailing adventure, or whatever the appropriate version is for your life. As far as income that's not countable, the big one that stands out to me is debt. If I can structure debt income and pay my bills from debt, whether that's, say, a real estate transaction, refinancing a mortgage, something like that, then that will not be reflected under my AGI number.

But yet, taking out debt is still money that I could use to pay my bills and fund my lifestyle. Can you think of any other creative strategies that we could use to still be able to fund our life without having it reflected there on that FAFSA AGI number? Right.

Well, I mean, you can just use your assets, too. If you have built up $20,000 in the bank, and then you're just going to bleed that down instead of having income. So yeah, a lot of small business owners and people that have control over their tax forms and their income can do some things that are relatively creative.

So I've seen small business owners buy a lot of equipment and drive their income down. You know, so another recommendation in your situation is to pick the years where you have two kids in college and say, "Well, those years, I'll get double the benefit for having low income. So those are the years I'm going to focus on." And maybe use the other times to spend whatever else is going to count or whatever it might be.

So that would be another tactic that we use a lot is a lot of times with one kid in school, it's not going to make much difference if you do your financial aid planning. But if when you have two or three in school, that's the year you really want to focus on because you're going to put that number on three different financial aid forms and you could potentially get benefit three times.

Now you said the FAFSA is different than the CSS. Right. So the CSS profile is operated by the more prestigious schools. As the government makes the FAFSA easier to complete and they make, you know, there's less data on it and it's just getting easier and easier. The colleges that hand out substantial scholarships want more information to verify that if they're going to give you, you know, 30,000 a year times four years in scholarships, that you in fact deserve it from a financial standpoint.

So you know, things like your real estate are not on your FAFSA. Small businesses under 100 employees don't show up on the FAFSA. A number of things like that. Whereas the CSS profile asks about all those things and it asks about your retirement plans and they want to know if you've got a 50 million dollar IRA, which you would never show up on a on the FAFSA.

Whether or not they would count it against you is a different question, but they at least want complete data. So they can choose on a subjective basis how they're going to count the assets? Well the FAFSA... On the CSS, I mean. Yeah, the FAFSA has federal rules, federal guidelines.

They have to do it the way they want, the way the government says it has to be done. When it comes to Harvard offering aid, they can do whatever they want. It's their money. They can say, "I like you." And as long as they're not discrimination with the official discrimination rules, you know, they can say, "We like redheads." And since redheads is not a protected class and they say, "I give a thousand dollars to every redhead," that's fine.

I mean, they can't, again, minority status and disability and those types of things, they can't break those laws, but they can do it however they want. I mean, it's their money. And now from a practical standpoint, although they can do it however they want, they want to make it look like at least that they're, as they're handing out the money, they're doing using some sort of system.

They don't just want it willy-nilly because then that gets to be the political problem of, "Well, you know, this guy got more than I got and it's not fair and you're discriminating." And, you know, from a long-term viability, they don't want to get into the, like they're selling used cars and some of those types of things as well.

So, the other planning idea, and I want to see if it would be invalidated on the CSS, the other planning idea of the way that you decrease your income in order to get aid is to focus on building a capital asset during the years that you need a low income.

And so that could be as simple as somebody who's handy moving into a fixer-upper, they buy it cheap and they spend their time increasing the value of that asset by working on it during the years that they, or year that they need to show a lower income. That increase in the value of the capital asset is not going to be reflected on an income number or this would be a good time where you're going to start your business.

And so your business has a very low value in the beginning, but you're pouring yourself in to building it as a capital asset, thus you're having a low income. So what you're saying though is that capital assets are more capturable by the CSS data than by the FAFSA. Is that accurate?

Yes. Okay. That is in general accurate. Even on the, both the FAFSA and the CSS profile would count anything beyond your primary residence. So if you had a rental property or apartment buildings and that kind of stuff, that would be the net value of that would be applicable. How is the primary residence counted on these forms?

So the primary residence for FAFSA is not included at all. They don't care about the value. They don't care about the debt. They don't care about the big mortgage payment. They don't care about the equity. So none of that shows up. Whereas on the CSS profile, you report it all.

They want to know what you paid for it when you bought it, what it's worth now, how much do you owe on it. Now what the colleges do with that data is a case by case basis. Some colleges say we're just going to count it as an asset, the net value of your real estate.

Others, you know, especially that California colleges where there's people that are sitting on tiny little homes worth a million and a half and they can't borrow that money because they can't afford the repayments on it. I mean, they have this huge asset, but they can't tap it in any way.

So some of the California schools will say, well, we'll limit your, you know, that asset to two times your income. So if you're only earning 75,000, but you happen to have that paid off house that you bought 50 years ago or 30 years ago, and it was in a great neighborhood and you got lucky, we're not going to count it against you up, you know, except for up to two times your income.

Other colleges, they count the whole thing. And so, and that's a case by case. Again, with the CSS profile, you fill out the data and the colleges use the data however they want. And they typically would use some sort of formula, but some colleges, you know, around the edges, they all do it similar.

But you know, some will include your home equity, some won't. Some will do this with your business, some will do that with your business. And what they actually do is not even published or, you know, not knowledge necessarily. They don't have to disclose how they came up with their calculations.

But the CSS is only used by higher end schools, you said. Right. There's about 300 colleges, the name brand schools, you know, the Harvard and Yale's and Stanford and Notre Dame and Harvey Mudd and et cetera, et cetera. So if someone were trying to plan for, say, state school, you know, local, well regarded state school that's strong in their area, probably the CSS wouldn't be reflective.

So they could use some of these planning ideas in order to generate a higher amount of federal aid credits. Correct. That's great. Yes. I like it. Next one on your list, number three, biggest mistake is putting assets or savings in the student's name. So explain here how people get this one wrong.

Right. So as I mentioned, financial aid in general, there's five major factors. It's income and assets of mom and dad, income and assets of the student, and the number of students that the parents are supporting. And this is all predicated on the typical 18 year old going off to college after high school.

If you're a returning student or, you know, 40 year old returning or whatever, the rules are different. But for the typical parent dealing with a 18 year old student, those are the five factors that have the biggest impact. Now a lot of times the student assets are zero and the student income is zero or nearly enough that it doesn't really have much of an impact.

So now you're really dealing with mom and dad's income and assets and the number of students. And then occasionally parents over the years have put assets in the student's name. In the past it was done for tax benefits, but those benefits have gone away, but we still see the accounts out there.

So it's called an UGMA or an UTMA account would be typical or maybe a bank account with the student's name or the student gets an inheritance from grandma or grandpa or something where they now have substantial assets in their name. In any of those cases, they assess student assets much more heavily than parent assets.

So parent assets are assessed on a sliding scale up to about five and a half percent. So if you have a hundred thousand dollars in the parent's name, the biggest impact it'll have is 5,500 reduction in aid. If you had that same hundred thousand dollars in the student's name, it's assessed at 20%.

So that's going to have a $20,000 swing in aid. So that's a $15,000 difference. So if you can, you get that student asset to zero. So depending on what it is and how it's structured, you know, if it's parents putting money into the student's name on purpose, we'll stop it and reverse it.

Start using that money for student expenses and other things. I had a grandmother pass away and leave the student about $250,000. That student was accepted at Northwestern and mom's single and earning a decent living, but it's 65,000, something like that, but not great by any means. And because he was accepted at Northwestern, which will help that school meets a hundred percent of your needs.

So if you demonstrate need, they've got a scholarship for you. Well, because of that $250,000 in a trust, he's the beneficiary labeled for college, essentially. We had to report it and he essentially got zero aid. He spent $250,000 of his inheritance on college. Could he have disclaimed it? Perhaps, I don't know if there was a contingent or where it would have gone.

I wonder where it would have gone. But that was heartbreaking. Yes, that's water under the bridge. Had that money been in mom's name, it still would have counted against us. But because of the difference in the formulas, he might have been eligible for $10,000 or $20,000 in scholarships each year.

So I mean, you spend half of it instead of all of it. Are there some assets that are generally not reflected on, that some people have that are generally not reflected either for the student or for the parent? Yes. So not all assets are counted against you. And the major categories that do not count would be, and we've already talked about home and home equity.

So that's out on the FAFSA, maybe on the CSS, just depending. But also in general, most colleges will not count retirement against you. So your 401(k)s, IRAs, Roth IRAs, pensions, profit sharing. How about retirement accounts for the child? Same thing. They're out. Now, most students don't have it because you need to have earned income in order to have money in a retirement plan.

But yes, I have had. That's a strategy that we use quite often, where if a student is working part time, their Roth IRA gets funded to the maximum that they can when we have extra cash flow. So yes, so most retirement is out. Another big category is small business.

We've already talked about that. Small businesses generally don't count. As long as there's less than 100 employees and more than 50% owned by the family. So you can exclude, you know, the typical doctor's and dentist's office and the realtors and the small manufacturers and the restaurants and all those types of things.

So the entire business, the business investment accounts, all that stuff is out. So anything that's part of the business, the working capital, etc. Annuities and life insurance generally are out. They're not considered an asset. Now I'm sure you've had life insurance shows in the past, but there is, you know, on a side, there are life insurance agents out there that will sell you life insurance and tell you that's a great way to plan for college.

That strategy does work, but it works in very limited cases. I've, you know, I've helped about 180 families now directly plan and I've used life insurance three times, I think. I could never get the policies to, I could never get the return high enough on child policies to make it work and make sense from the perspective of using the life insurance policy as the funding vehicle.

I always wound up, and I think they, I mean, I guess in theory it's possible and I never researched this to the extent where I could find it, but I heard that some life insurance companies were offering policies that were specifically designed for it. But for whatever reason with the mortality tables, I could never get a life insurance policy to show enough return, you know, over even 18 years to make it worth it.

But that didn't mean that the life, but where I went to in a few situations was to say, "Okay, consider the life insurance policy as a component, but plan it so the premiums disappear. And if you're funding it heavily, just plan it so you don't have life insurance premiums during those years and then pay for the college out of earned income, pay the expenses out of earned income.

Then you've got some of the assets sheltered aside and you need more than 18 years for that asset to make it worth it, but you've hidden it to some degree on the financial aid forms and then you can make up the difference in cash flow." That was the best way that I could see to use them around that.

Do you have additional ideas surrounding using life insurance? Yeah. So in general, where I've seen it work too is it has nothing to do with the child policies. The child policies almost never work that I've ever seen. In my opinion, they're a complete waste of money because yes, it would be terrible if a child died, but economically there's no real good reason to have life insurance.

Where I've seen it work is where we're putting quite literally hundreds of thousands of dollars into a large contract on mom or dad who already have a need for two million of insurance and we're sheltering huge sums. And then when you look at the fixed costs of a policy, a typical policy might have a hundred dollar policy fee and a $5 a month this and a $2 a month that, premium taxes.

So if you're spending a couple hundred or a couple thousand dollars in fees and you only have 10 or 15,000 in the policy, it eats the policy alive. When you've got a half million and you're spending a couple thousand dollars, now you're spending a half a percent of the policy value and that's where I see it works.

But now you've got a major asset that you really need to understand and manage because it can blow up on you. It's not as simple as a basic mutual fund portfolio or something like that. You've got to make sure that you have the right types of insurance and you don't break the tax rules and all that kind of stuff.

But again, for the high end estate planning or those types of things, that's where I've seen insurance work well is the bigger dollar amounts. I'm going to put in $5,000 a year for the next 10 years. Use a Roth IRA. Right, right. It's simpler. Right. It's simpler, it's cleaner, it doesn't have all the overhead expenses and then just buy some term insurance.

Yeah. I do think, by the way, on life insurance, I think parents, especially if they're funding their children's college, I think parents should all buy a term insurance policy on their 18-year-olds of at least a couple hundred thousand, $100,000, $250,000, something like that in case their child dies during college or at an older age.

Setting aside the fact that most people have a difficult problem with that emotionally, do you agree with me on that piece of advice? Well, yeah, especially if you're cosigning loans, you need to understand what the loan provisions are. I know federal loans typically are forgiven if the student dies and it's in the student's name.

So you don't have to worry about those loans. And under disability, they're also forgiven potentially. But it's the private loans, you have to read the contract and really understand, well, what happens at death and disability. And you know, to that exact example, right, you have a student that graduates from college and one year into their life that after college, they get hit by a bus and now who pays back the loans that they're no longer earning money to pay back, etc., etc.

And yeah, you might want to get some and it would be very low cost on a young, healthy person. Yeah, I mean a young male or female, 18 years old, a couple hundred thousand dollars, especially if you get something like annual renewable term and we're talking $150, $200 a year for a couple hundred thousand dollar contract.

I mean, it's pretty negligible. By the way, Brad, do you ever feel bad for the bus drivers that are always hitting all these people? I don't know. I guess I never thought of it that way. I feel bad for bus drivers that we're always insulting their driving abilities, referring to all the people they're hitting with their buses.

Excuse me, I couldn't resist. Next thing on your list, number four, we covered number four, which is increasing parent income in the base year. We talked about that enough. One point you made here that I think is important that when you're trying to adjust your income, you only want to adjust the income that you can adjust without the fear of losing it.

So when do you actually have constructive receipt of the asset? Sometimes there are ways if you control your own – and you can't do this when you have a salary, but if you have a business or you're timing a real estate transaction or something like that, those are the things you want to control.

You point out that if you're going to receive a $20,000 cash bonus, you just take the cash. Much more value to have $20,000 in the bank than to give up five and a half percent of that as far as a student aid credit. But I think that was a good point.

But let's go on number eight. Well, let me just read number five, failing to plan for the cost of college, relatively self-explanatory that you need to actually plan with it. Number six, overuse of college savings plans, getting too much money in there. Number seven, missing financial aid deadlines. It can be very expensive to miss that.

Number eight is one of the other two that I want to focus on, which is neglecting your debts. Your point here is consumer debts such as credit cards and car loans are not reported for financial aid, but bank accounts, savings accounts are counted against you. So sometimes you might want to go ahead and reduce your assets by paying down your debts.

Expand on this, please. Yeah, and that's right. I mean, they will count any asset, but they don't generally count any of your consumer debt. So if a debt against a specific asset like a home, then you can net that out for like rental property. But if you just have credit card debt or a boat loan or something, they don't count the boat as an asset and they don't count the debt as a negative towards your net worth either.

So what you may want to do, again, if you've got $100,000 sitting idly in the bank earning zero percent and if you pay off those loans, will you get more aid? If the answer is yes, then you go ahead and do it. But all of this planning that we're talking about as a quick caveat here is generally you don't want to do something that doesn't make sense.

I mean, I can say this correctly. So if you're going to make a financial transaction and it makes sense for tax purposes or retirement or all those things, and it'll benefit you for college, great, go ahead and do it. If on the other hand, you're going to do some transactions with the sole goal of getting more aid, as an example, you need to make sure that after it's all done, that you in fact will deliver on that aid.

Because I've seen a lot of families where you can increase your eligibility for aid and not get any benefit or only get a loan that you didn't want anyway. So as an example, I've had families going to a state school, their EFC comes in at $15,000, so their actual financial aid...

- EFC is their expected family contribution. - Correct. So their actual need or financial aid that they need is $10,000. And a typical state school is going to say, "Yes, you need $10,000. Unfortunately, all we can offer you is that $5,500 loan that we've been talking about." Now you go through a bunch of hoops and you rearrange your assets and you increase your need from $10,000 to $15,000, you get the same answer from the school.

It's like, "Yes, you need $15,000, but all we can give you is that $5,500 loan that, you know, the direct loan." So nothing changed, although you went through the effort of, you know, planning and increasing your need. So if you're going to go through the planning and increase your need, you need to be reasonably sure that it's going to provide some benefit if that planning is going to cost you something, right?

If you shuffle assets around and pay off your debts and now you have less flexibility or there's a negative to that, now you're trying to compare the negatives of what you did to the positives. And if you say more financial aid is in the positive column and you're wrong, well, then maybe you shouldn't have done whatever it is you did.

Right, right. I think it's a valuable point and I appreciate you making it. And then to add to it, you also still have to make sure that the use of the time and the money in the first place is best spent on college and is best spent on this particular school.

What's the opportunity cost for the student going to this school? Are you rearranging things when in reality it might be better off to just give the student $10,000 and say, "Here, you should invest this in yourself some way and if you want to use it for college, do it or don't." But you don't want to engage in creative planning without benefit.

It's just for those circumstances, for those people who are in a situation like this, then some of these creative ideas could potentially be employed in advance if they are certain on what their goals are, which is where we started with what are your goals. Right. And to clarify again, planning kind of falls into three categories.

There's planning you can do that it's just a net benefit no matter what, right? Even if the college falls through or whatever it might be, getting your debt in order, you know, saving for retirement, those types of things are going to help no matter what. So it doesn't, you know, it's not just for college that you're doing it.

And then you have planning that's around college. But you've got it nailed down. You know the school you're going to attend, you know what it's going to cost, you know how the aid works, and you know that if you do this, you'll get that. And that's where I spend a lot of time again working with parents of high school students where colleges, it's not a should we go to college or it's which college are we going to and how are we going to pay for it.

The college decision is already done. It's going to happen. Right. Now, how do we do it in the most cost-effective way? Right. So I think that's important that, you know, and once you land on a particular path, just like, you know, people might say that, I don't know, a vacation home is a good deal or a bad deal, doesn't matter.

If you're going to do it, now figure out how to do it in the best way. In the best way. Right. Right. So one just very simple example that came to mind with using this debt principle, consumer debt can certainly be considered, you know, for a simple way to utilize that is if you have $20,000 sitting in the bank and you have $20,000 in a car, assuming you can't leave yourself in a cashless position, but you also have a car payment, if you can use that to pay off the car as a capital asset, you clear the $20,000 from your bank account and you eliminate a car payment, which allows you to lower your income and be able to get by with a lower income because you've cleared out the need for that income.

That would be one simple way that in some circumstances could be approached. Or another one, Brad, what about I have a mortgage, I have lots of cash in the bank, let me go ahead and just move the cash, pay off the mortgage, and then I'll go ahead and just set up a line of credit on the house so that I still have access to some of that liquidity if I need to by being able to pull from the equity.

But because it's going into my primary residence and because I'm getting rid of cash, that could for some people make a big difference or at least make some difference in their form. Are those good examples? Yes, absolutely. And then allocating debt between your primary residence and your rental property as an example.

So explain that one. Well again, on the FAFSA, they don't care about your home, your home equity, or your debt. So you can have a paid-off home and it's not counted against you. You have a paid-off rental property and it's very much counted against you. So if you're going to owe $200,000 on a mortgage and you get to pick which property it's going to be on, well, put it on the rental property from a college perspective.

Yeah, that's a great point because generally I would go the other way. I'd rather have the debt on my mortgage and have my rental property clear. I mean, obviously, to look at the specific financing terms, but that's a good point that if you have the choice, you're looking at college coming up, now might be a good time to adjust your portfolio a little bit, clear off the mortgage on your primary residence and move the debt over to the rental property.

Great example. Number nine biggest mistake, poor communication with the schools. I find this is one I think that affects many people. Poor communication with anybody. It costs people a lot of money. In general, if you just pick up the phone and call people or communicate, you can usually get better deals on many things.

So good point. Number 10, reporting your retirement plans as an asset. And so again, just to emphasize this, you write that you're not required to include any sort of retirement plan as an asset when you fill out financial aid forms. It's not made very clear on the actual form and many people make this mistake, often inflating their assets by hundreds of thousands of dollars unnecessarily.

Expand on that, please. Right. So, every year, I find myself cleaning up after someone that tried to do it themselves and then things blew up and they're trying to figure out what went wrong. And a lot of times what I see is someone's, there's three blanks on the FAFSA.

What do you have in the bank? What are your investments worth? And what is your business or farm worth? So people, again, if you don't spend the time to understand what you're getting into, people will say, well, geez, I've got a million dollars in all my retirement plans, so I'll put a million dollars in that blank.

And guess what? And all of a sudden you don't get any aid, pretty much no matter what. And it's because you took an asset that didn't belong there and reported it and it was counted against you. So I see that a lot where people will put assets in the wrong spot.

And again, it's not hard per se. It's kind of like taxes, the devil's in the details. You got to pay attention and make sure you understand what you're doing and do it properly. And that type of mistake can greatly inflate things. And I've seen it probably a couple of times a year for the last 10 years.

Brad, how is real property counted on these forms? You're talking about... Consumption property. I got an $80,000 boat and I got an RV, those kinds of things. How are those factored in? Right. So generally speaking, all stuff that you're going to depreciate it and throw it away at some point is not considered.

So things like your furniture and your cars and your appliances and your toys, your ATVs and sports cars and boats and jet skis and all that kind of stuff, all that stuff is not an asset. And the debt against it, if you happen to have it, is not really considered either.

So then you may want to take a real asset like a bank account and pay off that debt, as we mentioned earlier. So the reason I ask that is because often I think this is something useful. Before I give my example, just to clarify, is that the same for the student and for the parent?

Yes. Okay. So I clear out, I take and give my child a $20,000 car for their high school graduation present. Now we've taken a bank account and turned it into real property. And then if somebody is looking to say, "Hey, I want to take my trip, but I've got all this money saved up." Well, if it makes sense, again, I always go to travel because it's just an interest of mine and I find a lot of people have that interest.

If it makes sense, this is the time that you might want to go ahead and buy the motorhome or buy the sailboat, buy the real property, pay off the personal house, pay off your personal residence. You might rent it out. But the point is, take the assets that are counted and consider putting them into something that's not counted, like the personal property.

So if you need to buy the RV to take the year-long trip to all the national parks, then go ahead and do it and use the cash from the bank so that you have less cash to report on the financial aid form. Right. And then to leverage that even further, spend the student's asset in the bank instead of the parent's asset in the bank, if the student happens to have one.

So you have a student with $10,000 in the bank and mom and dad have $10,000 in the bank and you're saying, "We need a car to send Johnny off to college." Well, little Johnny buys the car. And now his asset disappears. And as from a family, you could say, "Well, that really would have been our money, but we just did that for planning purposes." Well, then you take your $10,000 and spend it on whatever to replace whatever Johnny would have spent it on.

Right. Absolutely. And you can do that easily enough with just the verbal discussion in the family without actually conveying the property, which would make it Johnny's asset. So awesome. Anything else, Brad, that you think is great must-remembers from my audience? I think this has been really fun to get to some of these useful ideas.

Yeah. And I guess getting back to point number one is planning and starting early. The biggest challenge with college planning is college is paid for with time, money, and emotions. And if you don't start early, if you put it off as long as you can, and most families inadvertently do, that means you're going to have to do that much more in the time you have left.

And that gives you less opportunities to buckle down and find the strategies and find the right schools and do all the work that's necessary. And you end up just by default. I have many families talk about scholarships, but they never actually do them because they run out of time, as an example.

And I'm not saying that you should do scholarships or shouldn't, but it was their intention to do it, but they didn't know what they were getting into soon enough and they didn't have a plan to budget their time, not just their money. So it's a busy process with school visits and testing and test planning and students doing AP this and prom and all the stuff that they have going on.

I mean, the typical parent of a high school student has got a busy life and you're going to have to carve out some time and do it sooner than later because as you start learning something, you'll realize, "Oh, there's something else I need to pursue along the various planning opportunities, etc." So I recommend, again, as an example, read a book or two on the subject, plug into a podcast or two, do whatever it is that, however you like to learn about it, go do it on purpose.

I'll second that and on your time, money and emotions discussion, I'll just expand on that for a moment. I've tried to keep our discussion today fairly mainstream. I oftentimes turn people off with my kind of hardcore opinions about it. So I've tried to keep our discussion fairly mainstream that's of help to many mainstream people in the idea that we want to go through the traditional four years of college at a traditional school.

These strategies matter. But I'll just point out that if you're planning for financial strategies, usually you're dealing with the hardest thing to plan for in any area of planning, retirement planning, college planning, etc. Dealing with figuring out what asset goes on your FAFSA is a lot more difficult than encouraging your child to take six CLEP exams this summer and walking away from the need to do an entire semester of school.

It's a lot easier to get the same education at an inexpensive school than at an expensive school than it is to figure out how to adjust your tax returns to try to look poor on paper so you can get more financial aid at the big expensive school. I see so many students and parents – I like your thing about time, money and emotions.

Talking about time, you're better off – I see so many parents just miss all of the many scholarships that they and their students could apply for. They miss the opportunity to do CLEP exams. They miss the opportunity to take the AP CLEP classes. They miss the opportunity to dual enroll in school.

I know somebody here locally who is dual enrolled for their high school. It's a high school, government high school and government state college program and all of their credits are college credits but they're being paid as though it's government school. So there are two years basically of free tuition simply because it's a dual enrollment opportunity.

It was a merit-based program for academically skilled and highly qualified applicants but it's essentially enabling the student to at the age of 18 have their high school diploma and the first few years of college done at an official local state university. So there are all kinds of these programs and it's far cheaper.

Those are more expensive in time and emotion but they're far cheaper in money to pursue many of those other strategies. So plan wisely with all of them. Brad, I'll give you the last word. Any final thoughts you have and then tell us about your website. You have a podcast on this subject, your blog, your planning services.

Please share all of the action points that you'd like my audience to take to connect with you further after this interview. All right. Yeah, again, I guess the bottom line is just do it. Find out what's going to work for you. Obviously you and I were partial to the podcast because we do that.

We create them but there's good books. There's visiting schools. There's all kinds of ways to learn and you're probably going to have to do many of them but I do have a podcast at tamingthehighcostofcollege.com and it's also available obviously wherever you consume your podcasts and that's a great way where you can plug in and while you're driving around to the soccer moms going back and forth or the whatever it is that you do, dads that are traveling or whatever, you can just start dripping a little bit of college knowledge into your head, you know, starting your freshman year of high school instead of your late junior year and so that you know what you're getting into and that's one strategy.

I also have a blog. There's a couple of calculators at my website. So tamingthehighcostofcollege.com/efc as an example. I've got a great resource there where you can calculate how much aid you may be eligible for and then do some what ifs. Well, what if I change this to that? How do the numbers change?

As well as some videos that explain what goes in what blank and introduction to the aid. So it's not just a calculator but it's a okay now that you have this number, what does it mean and what do you do with it? Scholarships, tamingthehighcostofcollege.com/scholarships. There's the free parent guide to scholarships there.

It's designed for busy parents who need to learn enough about scholarships to know if you're going to pursue it or not. The right answer for scholarships for some families is ignore it and move on. For other families, get in there and work hard at it but figuring out what it should be for you so that you can make an informed decision, that's a resource.

So again, we've got lots of resources, just plug in and take advantage of them. If you do want to contact me directly, if you have specific questions, I do work with families one-on-one as well. If that seems like something appropriate for you, get in contact through the website, give me a call.

Brad, thanks for coming on. It's been a pleasure. Thank you for listening to this episode of Radical Personal Finance. If you're interested in building financial freedom for yourself and your family, please subscribe to the podcast with our free mobile app so you don't miss a single episode. Just search the App Store on your mobile device for Radical Personal Finance and download our free app, which also contains an archive of every past episode of the show.

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