There Is No “Right” Way To Fund College
Just about everybody these days is on a listserve of some sort (e.g., YahooGroups). I’m on too many listserves, but I get so much value from them, I won’t let them go. They help me navigate the nooks and crannies of parenthood, homeownership, city living, restaurant recommendations, health and wellness, you name it. I know I’m not alone in this.
I had to laugh the other day, though, when a post requested a referral to a financial planner who “could explain all the options for paying for college that people use.” This person wanted unbiased advice and essentially the a la carte menu of possibilities. That would be a little like me walking into the paint store and saying, “I just want to see all the colors people use to paint their walls.” Have you ever seen how many colors there are, how many different shades of the same color, and how many brands of paints? That’s before you get to oil or acrylic. Don’t get me started on brushes. And have you ever taken a sample of favorite paint home from the store, put it on the wall and hated it? This original poster would have been better off with a survey.
Your advisor should advise YOU.
Here are the many ways I’ve seen college get funded:
• Kid decides not to go to college or not to go right away.
• Kid decides to live at home and attend two-year college.
• 529 plans.
• Paying out of income as the child goes to college. In other words, not using savings at all. (Heck, in one instance, the family’s annual tuition expense went down when the kid left a private high school and went to a state university and the family bought a new car.)
• Brokerage and investment accounts.
• Grandparents or other family members paid for it.
• Work-study programs.
• Loans. (Remember, you can borrow for education but not retirement)
• Life insurance cash values.
• Investment properties (either selling them or using rental income).
• Inheritances and inheritance advances.
I could go on. My point is that there is no right way to do this, you need someone who can listen to you, understand your values and know who you are, and help you navigate among the many options with a presentation of the beauties and pitfalls of each. That’s what good advisors do: they listen well, they have opinions, they articulate them, and help their clients come to their own decisions about their financial lives. This is why good advice is worth it. It saves you time, money, anguish and agony. A strategy for college funding is not always easy to just paint over. Make sure you get as good of a look as you can at the start.