The College Dilemma: Late-Stage Planning and Financial Solutions - Episode 35
Our guest, financial advisor Brad Baldridge discusses the complex landscape of college planning and its intersection with financial realities. Delving into the different perspectives surrounding the value of higher education, Brad emphasizes the importance of aligning college expenses with overall financial goals, including retirement planning. He highlights the challenges faced by families in navigating the ever-increasing costs of college and offers practical strategies for managing finances and making informed decisions. With a focus on striking the right balance between educational aspirations and financial stability, Brad provides valuable insights and resources for families seeking guidance in the college planning process.
About our guest:
Brad Baldridge is one of the nation’s leading college financial experts. He teaches families the best ways to plan, save and pay for college so they can make their children’s college dreams come true without wiping out their finances or their retirement. For over 20 years, he has shared his expertise and insights through his private practice, as a blogger and host of the Taming the High Cost of College Podcast, and as a presenter at numerous workshops and seminars.
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TRANSCRIPT:
[00:00:00] Naseema: Hello, my financially intentional people. It's an honor for us to be joined today by Brad Baldridge. And we are going to talk about preparing for college. And I know this is a hot Subject for a lot of people who listen to this podcast, because a lot of people are in a position where they don't know what they're going to do in regards to college and our kind of scrambling to figure it out.
We have an incredible resource here that can help us do that. So welcome to the financially intentional podcast breath. So happy to have you.
[00:00:35] Brad: Hi
[00:00:37] Naseema: Brad, can we talk about what's the number 1 concern people usually reach out to you about when it comes to college preparation?
[00:00:46] Brad: Yeah, so I do a lot of what I would call late stage college planning. So a lot of the people I'm working with are really just, feeling like a deer in the headlights Oh my God, what are we going to do and how are we going to do this? And a lot of times it's because they didn't plan ahead very well.
and again, and it comes very fast, right? A lot of people, if you talk about,
I've got a 10 year old in the last five years went by really fast. The next five years between 10 and 15, we'll go fast. Even faster and then 15 to college is just a blink of an eye, right? When the time kids get into high school to the time, all of a sudden, everybody gets really busy and college is, it goes very quickly and it's a challenge.
So I think a lot of people, again, they don't intend to not plan for college. It just never gets to the top of the list. And then you get really busy with kids in high school and all the sports and activities and everything else that's going on. thing you know, you're, you find yourself with a high school sophomore or junior just scrambling and saying, Oh my God, how are we going to do this?
And, and I think for a lot of families, maybe mom or dad went to college. So they feel like they know what they're getting into. But the reality is it's a lot different now for the typical student 15, 20 or 30 years ago.
[00:02:04] Naseema: Yeah, it's definitely 1 of those things that people totally put off and just in having a newborn. I I just remember, like, how I'm just remembering, like, how fast things change for kids. And it's incredible to see again, not like I haven't, I didn't have a 4 year old, but just like in that time difference, just like how much you like plan to do, but don't necessarily get to do.
It's crazy because they're just going to keep on growing. And then we talk about like planning, like every year, month matters. If you want to plan in advance. So when people come to you and I was just looking at actually the rising cost of college yesterday, like how much debt people usually graduate with or now versus 30 years ago.
And it's 100 and something percent greater. So the cost is exponentially greater. I, I can feel that the panic that a lot of these parents are coming to you with. And so let's dive into some of the solutions that you offer.
[00:03:08] Brad: to you with. And so if that is the kind of solution that you offer. Maybe we have a certain budget we're looking for. Maybe we have some money saved, but
no matter what, we're going to have to fill out financial aid forms.
We're going to have to apply to colleges. We're going to have to visit colleges. Students are going to have to figure out essays and what do they want to be when they grow up and all that stuff is all real. And that typically that's, should start in my opinion, sophomore year of high school. And. In the past, again, when I did college, I'm old and when we did it, it was, late junior year. You'd be like, oh, college is, I'm gonna have to apply in the fall. So I guess I'll figure it out soon. But now I think you need a full more year of that.
[00:04:04] Naseema: Wow,
[00:04:05] Brad: You know, do a few things in your sophomore year if you can, and then certainly be prepared to hit it hard all of the junior year.
[00:04:12] Naseema: and by and by that, you mean financially preparing or starting to look at what colleges you want to go to start applying for scholarships. What are you referring
[00:04:20] Brad: All of the above,
[00:04:22] Naseema: Yeah,
[00:04:23] Brad: So now, and then we have early stage planning and early stage planning is. And it's interesting too, but again, I think you said you have a nine year old, so where your student is going to go to college is a challenge right now. And there's no way to know what, Astronaut and firefighter are not necessarily true at this point in the game, right?
So you know what they're gonna be. You don't really know, but you can say hopefully they're going to college, or, that's my intention anyway, so maybe I should get financially prepared as a parent and set up a savings plan or not, or whatever it might be. But the reality of it is I think I see parents earning any amount of income.
When they have a 17 year old, they could earn $50,000 a year, $100,000 a year, $200,000 a year. And all of them look at college and say, Oh my God, we just can't afford this. And of
[00:05:15] Naseema: It's crazy. Yeah.
[00:05:17] Brad: And anybody that's earning a hundred thousand and says that person over there earns twice as much as me.
How can they not afford college? But that's the reality is most people learn how to spend every penny they earn. It doesn't matter how much you earn your lifestyle grows and expands until. It's just like a bigger garage theory. I don't care how big your garage is. It's always full
[00:05:37] Naseema: Oh, I like that
[00:05:37] Brad: garage theory. Lifestyle inflation.
To the where you say,
Oh, that garage is too big. So if I'm going to add this toy, I've got to throw something else out. That's just the way it works. But if you got a bigger garage, right? And people would have a four car garage, have that problem. And people that have a one car garage have that problem.
It's just, The person with a one car garage says if I had four car garage, it'd be so much easier. It's no, eventually that'll fill up too. same with income, right? And as the kids get older, they get more expensive. So you start, maybe you're paying for private high school or private grade school, or maybe they're involved in sports that could be very expensive on club sports and all that kind of stuff.
And if we can afford to do those things often we will. And what we forget is to set aside. Money for college and those other things. And of course, a lot of times the schools and the sports clubs and all that stuff have this angle where they say if you get involved in this, it'll help you pay for college, especially that, you're going to get this athlete that's going to get a scholarship or
[00:06:39] Naseema: Mm hmm.
[00:06:40] Brad: And that may be true, but take it with a grain of salt because the reality of it is lots of people go down that path. Only a few make it just like professional athletes, et cetera. So
[00:06:51] Naseema: Yeah.
[00:06:52] Brad: I think that's part of the mix is really understanding. All right. Early stage, how are we going to do this? And, and some of the very basics would be what is our belief on college?
You can have that discussion when you have toddlers or whatever, right? Is, are we paying for it all? Do they get to pick any school and we're going to pay for it all? Is there a certain limit that we're going to set and how is that going to work? Now the caution there is a lot, I think a lot of people say things and then in reality it just doesn't work that way.
You can say we're only going to spend 3000 a year on college. That's our limit. And unfortunately what you'll discover is it probably won't work for a lot of families. So depending on, your situation, you need to have a realistic budget. I think that's where people kind of mess up. But if you look at numbers, right?
The average state school right now is about $27,000 a year. And the average private school is about $54,000. And again, that's average. You're not going to be average. You're going to be above average or below average
most likely. So California schools, as an example, they've got two tiers. They've got the UC system, which is very expensive at 35 ish thousand for in state residents and not state schools.
The California state schools is more like 25 or 28, 000. So alone there, there's a big swing in prices, but and Illinois is more expensive than New York is a little more expensive in some cases. And some, Iowa and other states are, are less than average. So it's just understanding that process.
And then when you get to the private schools, again, 57, 000, what that really means is that somewhere between 40 and 80
And averages about 57. So Harvard and all the big name brand schools are in the 80, 000 range. Now that scares a lot of people and in some ways it should, but on the flip side is you don't really care what the list price is.
And again, that price we just talked about, by the way, is total cost of attendance. So that's tuition room and board. Books, fees, beer, and pizza. The whole cost of a typical student for one year.
And that's, and they use averages, right? So the average dorm cost, the average book cost, that kind of stuff. So they come up with an average again.
So it's a good approximation. Your actual bill will vary some but it's a good place to start. But the other important thing to realize is that you don't pay list price necessarily. You're going to pay something less than that potentially, depending on the school and your situation. As an example, Stanford's 80, 000, but they just published that they will essentially give you a full scholarship and cover everything if your income is below 100, 000.
[00:09:45] Naseema: Okay, Stanford.
[00:09:46] Brad: below 150, 000, they'll cover all of tuition. So Stanford is often a very low cost option for a lot of families where... If you, especially if your income is low. Now, if your income is high, they won't help and they don't offer any sort of marity either. So for a lot of families that are earning 300 or 400 or 500, 000, you're going to pay full price no matter what at Stanford now, and to be fair, Stanford is an example, but the reality is most.
Students will never get accepted to Stanford. So it doesn't, it doesn't matter. But if you can get accepted to Stanford, great. It's a, it's a low cost option. Don't let that 80, 000 scare you away. So a lot of colleges offer some form of aid, whether it's need based aid or merit aid so that your net price might be 30 or 40 or, or 20 or 10, just depending on your student and their academics and your financial profile when it comes to need based aid.
Et cetera, et cetera. So I have a, on my website, I have a cost of colleges by state and income. So you can look up the costs of the colleges of your state and get a feel based on your income, what you might pay, but as an example, let's say your income is between 75 and 110. The state school here in my state, it lists at about 20, 000,
[00:11:17] Naseema: Not bad.
[00:11:18] Brad: net cost.
And a number of the private schools are also in the 25, 000 range because they offer scholarships and they know who they're competing with. So the average private school can't, although their list price is say 65, 000, in reality they know the state schools are 000 or something like that. They, they can't win that battle.
They're not going to get a lot of families that are willing to pay double for their school. Now, if you're Stanford, that's the other, again, they can do it and Harvard can do it. And some of the big name brand schools can do it, but a lot of the other private schools realize that they're not going to get full price.
[00:11:55] Naseema: Yeah.
[00:11:56] Brad: So they're getting either offer merit for the kids that they want or need based aid or some combination where all of a sudden your net cost might be I can go to the state school for 26, 000, or I can go to this private school for 32, 000.
[00:12:11] Naseema: When people, when, when families typically come to you in this later stage of planning, do they already have a college in mind? Typically? Or are they looking at a price range?
[00:12:22] Brad: Most of the people that are coming to me don't have much of anything figured out and they're realizing it's a big challenge.
[00:12:28] Naseema: Okay.
[00:12:29] Brad: and ideally, that's better. I would rather work with parents of juniors that are just starting the process.
[00:12:34] Naseema: Okay.
[00:12:35] Brad: I do occasionally get parents of seniors who are saying we, we've been accepted to this school and all this. And then they say, and the net price is 45, 000 and we don't know how to pay for it. It's In your situation, you probably should have looked at different schools because they would have net, their net prices might've been 30, 000 had you known, and again, a lot of, again, because it's a very complicated process.
A lot of people don't realize that, there's different types of schools that cost different amounts of money depending on your particular situation. So I think that's the first step. And again, that's where using the cost of colleges charts to get an idea of, again, list price is one thing, net price is the other.
And then for most families, once you have that net price, how do you pay for that efficiently? So if college is going to cost your family 20, 000 that's still 80, 000 over the four years that you're going to have to come up with. And that's where, again, saving and investing, setting up college savings plans of some sort.
May make sense for some families that see it coming, right? If you have a two year old, you could save and invest. If you have a, if you have a 12th grader, you can save and invest. You just have a much shorter timeframe, but that's where a lot of times where we get get started. Sometimes we're saving for our junior who's right then and there, but we also have a eighth grader and a freshman in high school or something
[00:14:01] Naseema: When you're meeting with these families, are you just like, all right just starting exactly where you are and then coming up with the plan, whether it's be like, let's look at schools that you think you can afford and then start setting the wheels in motion for that
[00:14:16] Brad: Yeah,
[00:14:16] Naseema: are you're creating a plan, meeting people where they're at and
[00:14:20] Brad: For that
[00:14:21] Naseema: for that particular student, putting things in place so that they'll be ready when it's time to go to college.
That's exactly what you do. Every situation, every scenario is going to be different where people are coming to you from, but are you like,
Let's , exclude this certain set of colleges because it's not going to make financial sense. Or do you try to structure financial plans exactly where those families want to go?
I'm just like, cause, I feel the range of colleges you listed can be expensive. However, the type of colleges you can get into are depend on what the grades are, or what the majors are, are all of these kind of things and then then you have to factor in then the cost comes into play.
I was just wondering, typically, and I know it's not typical because every family comes from a different place. If somebody comes to you and they're in their kid is a college, a high school. Junior, like, how and they don't have anything in place. How do you walk them through that process?
[00:15:23] Brad: Junior, like how, and they don't have anything in place, how do you walk them through that process?
in their state that's appropriate for their student. So if you live in California and you have a brilliant student, then we can model UCLA or UC Berkeley or something like that. But if your student's not, of that caliber, then we might look at San Diego state or some other school that's more appropriate for their academic profile.
And if they've got a major in mind, then maybe we'll find one of the state schools that has that major, right? If they want to be a nurse, we can find a nursing school at one of the state schools and say, all right here's a school that you're likely to get accepted to. Let's run the numbers. And then that's a baseline.
And then from there, you can say okay in addition, there might be some private schools that will compete. Might we have to figure that out. And again, based on the academics of your student and that type of thing, there are colleges out there that target the B student. There's target, there's colleges out there that target the A plus student, there's the, and everything in between.
So there are often some, and depends on your state too, right? If you're in Iowa where the state schools are much lower. Less expensive, then it's a little bigger, bigger challenge to find schools that will compete at those prices. But if you're in Illinois, where even the state schools are approaching 30, 000, then it's a little easier potentially.
So that's the first step is, are you, is your student of the caliber that could get into the flagship at your state? And a lot of states have pretty strong, Wisconsin, Illinois, Texas, Florida, Washington, their flagship state school. Is a national, international caliber school.
It's a good school. Now, it may not be a good school for your student. That's the other challenge, right? Is oftentimes there are big research universities and your student might thrive at a smaller liberal arts college, let's say, and if that's what you're looking for, then you say now, yes, our flagship school is a low cost option, but it's not a good fit.
So we have to find something else. So that's, so that's where you start, right? Yes. And then somehow you have to narrow it down from, there's 4, 000 ish schools out there. There's probably 1, 900 four year schools that a typical family would consider. If that's what you're looking for, then the other 2, 000 would be tech colleges and community colleges and that type of thing.
And then from there, how far away are you willing to go? Or what are some criteria that you can use to limit it? Cause you can't look at. So now you say show me all the nursing schools within a hundred miles of where we live. Now maybe that list is six schools, or maybe it's one, depending on if you're in a metro area or if you're, out in a rural area, whatever the rules might be.
And then again, my daughter, she's a sophomore. She's announced that she is not going to college in the Midwest.
[00:18:40] Naseema: Where'd that come
[00:18:41] Brad: Then you got a lot of work to do
You're, how are you going to visit school and we live in the Midwest, just to make that clear. So we're right in the middle of the Midwest.
We're in Wisconsin. So she's not going to go to the Midwest. That means East or West coast, which means every school visit could theoretically be either a multi day event or a plane ride or something. And all of a sudden now it's a much bigger deal and a lot more work. And so now I'm working with her to figure out what does that really mean?
I think she's only a sophomore. I, things may change or they may not. That's one of the things I've done, hundreds of plans now. And one of the things I realized is students don't know what they don't know. And as they learn more, things change sometimes. And other times students are saying, this is what I'm going to do.
And two years later, that's what they do. And it's hard to tell the difference of what, what's going to happen for sure. I, I don't know the students that well to know how serious, what they say is, is going to happen. But it's a very dynamic moving process.
[00:19:43] Naseema: Oh, yeah. I think it's interesting that your daughter is right there where you recommend most families start. And when most families come to you, do they already know that their kid like, they're like, okay, we're coming to you because we know our kid wants to go to college or do you.
Or do they come to you and say, I'm not exactly sure that my kid wants to go to college. I want to weigh the cost versus doing something else. Even for me for nursing. If I knew I wanted to be a nurse there's several options and different ways that I can go about being a nurse. I could have went to, for your university, or I could have went to, a junior college and kind of went that way.
Do you sit down and be like, okay, if you're not sure if a traditional for your university is for you, these are some other options for that person to get in and the career path, or maybe, a college for your institution or a traditional college isn't for your child. But here are some other trade paths or anything like that.
Do you walk through those kind of things with parents as well?
[00:20:42] Brad: Yeah, yeah, so we certainly talk about it. Now, again, the people that actually seek me out and actually hire me and work with me, I think they value education and they generally, they want their students to go to a four year bachelors or they're already talking about. Some sort of master's or even PhD or MD or lawyer or whatever, right?
but those are the ten, the people that are sending their kid to the local community college where the prices are reasonable and a Lot of times it works out reasonably. I Don't run into them as often I can help them and a lot of times what happens is there's a dichotomy in the family, right?
We've got three kids. We've got a high school junior and then we've got a sophomore and then we've got an eighth grader and our juniors An academic superstar, our eighth grader. We're not, maybe military already. They're talking like that, or maybe tech school or whatever it is. He's already done with school at eighth grade and doesn't, we're hopefully going to get him through high school and then who knows what's going to happen, and that's the reality, right?
That you'd have different kids that need different paths.
[00:21:48] Naseema: yes.
[00:21:49] Brad: And then I, and in other cases, it's, all three kids are on their way to advanced degrees and we're trying to figure out how to make that happen because they're all very academic. And, and I think that's where I think a lot of people need to pay attention because I think there's a lot of soundbites out there, things like college for all and, whatever everybody deserves an education or, but the reality I think is everybody should do what's right for them.
And college is not right for a lot of people.
[00:22:18] Naseema: That's facts.
[00:22:20] Brad: And
[00:22:21] Naseema: facts. Yeah,
[00:22:22] Brad: The sooner you figure that out, the more money you'll save. or another way to say it, maybe not, maybe not college isn't right, but maybe college isn't right now.
[00:22:32] Naseema: Right now. That's the thing. Yeah, I think that a lot of people just rush into it, thinking that it's something that they have to do and not really figuring out if it's going to be structurally needed. If it's going to be good for them career wise, or just development wise, there's probably some other things that people need to do before they jump into for your institutions.
Oftentimes, because they are they're spinning wheels, but spending a lot of money at the same time.
[00:22:57] Brad: Exactly. And that, and right. And when I went to college and maybe when you went to college too, it was, there was a lot of undecided kids that were saying, this is my sixth year. I've changed my major four times. I'm trying to figure out what I want to be when I grow up. And they're doing it while at college.
That worked when college wasn't so crazy expensive.
[00:23:14] Naseema: Oh, I, I, I ran across that when I was in college and I went to USC, so that was not an inexpensive school.
[00:23:23] Brad: Exactly, right? That, that happens all the time.
[00:23:26] Naseema: Hmm.
[00:23:27] Brad: and again, with parents and the price tags today, parents don't want to hear undecided, or I'm just going to figure it out when I get there kind of stuff. That's hard to deal with. And so that's one thing. Another important thing that has changed is there's a lot of experts out there now to help with this, where in the past, you stumbled through it.
Now, I tend to work with parents to figure out the financial side and, the pieces of the parent, but there are other experts that can help students figure out what they want to be when they grow up, to help them write essays, to help them apply to colleges.
[00:23:58] Naseema: Yes.
[00:23:58] Brad: Whatever that might be.
Again, it boils down to in the past, you know how there was nobody out there, so the parents and the students just had to stumble through it and figure it out. now there are experts, and now you can use the analogy of, learning the piano. Probably the piano. If your nine year old came to you and said, oh, I, I was at the mall, or whatever, I saw this guy playing the piano, it would look really cool.
I wanna learn how to do that. So your first thought would be, all right, I'm going to go learn how to play the piano so that I can teach my child to play the piano. It's no, that, that's not how we, it's we immediately think of the, the old lady with the ruler that stands over the piano while the kids playing scales.
So we can just hire her. I don't need to know how to do it. We'll hire her and she'll teach. And then as you start thinking about it, it's wait a minute, that's even old school. There's online ways to learn how to play the piano. And, my son taught himself how to play guitar. He learned violin in grade school.
And then when he went to high school, they didn't have an orchestra or any place for a violinist. So he switched to guitar and taught himself. But that's the reality of college, right? Is I, I offer a course, I offer free resources, and I offer one on one. If you want to, just work with me directly and get it done quickly and efficiently, any of those things can work.
And I think, and there's similar things for the student, where as it's getting more complex and more expensive, it's, there's more opportunity to, for consultants to add value and help families figure it out.
[00:25:40] Naseema: So yeah, the college landscape has changed drastically since I went to school and I still have nine years from our oldest to go to school So I would not consider myself an expert on that like I would be like a fish out of water when it comes to Trying to figure out what college looks like. I have done planning.
In advance to pay for their college, but as far as what college they would go to and what that would look like I just,
[00:26:10] Brad: I just,
[00:26:11] Naseema: it's, it's it's a way out of my field of expertise and I, and I'm, and I don't think that that's going to change because I'm not trying to dive into it like that.
I would definitely elicit help from an expert like you so where can people like, access your services? And I know you broke down your services a little bit throughout, but just can you again, go through the services that you offer for families
[00:26:39] Brad: families. Yes. Yeah. So I've got a lot of free resources through my website at tamingthehighcostofcollege. com. So we've got college money report where you can estimate where you literally can put in your students information and the family information and three colleges and it'll estimate the prices for those colleges based on.
Both merit aid and need based aid and all the different pieces of the puzzle there. And then we've got just reports with all the colleges in a particular state, again, the cost of colleges type information, we've got a free email newsletter that you can sign up for, where we'll, drip various good resources on you.
And then if you're interested in signing up for the course or hiring me directly or whatever it might be, you can. Reach out through the web, that website as well.
[00:27:28] Naseema: so you
[00:27:28] Brad: is at that low, central hub. And I've been, Oh, and I also have a podcast there.
[00:27:32] Naseema: Nice,
[00:27:33] Brad: if you're listening to this, you understand how podcasts work.
So we've got a hundred and some episodes of college planning podcasts on all the different avenues.
[00:27:42] Naseema: so all different levels of ways that people can work for you work with you. They can access your free resources. They can have a kind of done with you course, or just direct a 1 on 1 consultation.
[00:27:56] Brad: Correct.
[00:27:57] Naseema: If somebody like me I'll have my plan is the way that I, like, when I.
1st, started getting enough finances. It was advised to me to have 100, 000, 100, 000 each for my kids save for college. So I'm on track to have 100, 000 save for my kids.
[00:28:17] Brad: Me to have a hundred dollars each, a hundred
[00:28:20] Naseema: When they're 18, at least for my 1st, 2 kids, the 6, the 6, the 6 week old. You have to be determined because I'm trying to see if I'm even going to spend down that 200, 000.
But if I came to you with that in place, like my 529 structured all like that in place how would you typically work with me? If I came to you when my daughter's a, a high school sophomore.
[00:28:44] Brad: right? Yeah. So great.
A lot of the people I work with have some money saved. Whether it's enough is a different question. But either way, it's how do we use it efficiently? Just because I have 100, 000 doesn't mean I need to spend it. If I can do something, if there's choice A and choice B, and they're essentially equal, and one of them's 50, 000 and one of them's 100, 000, then obviously you take the 50, 000.
But here's the reality for most families. Is when you get all the way to the end of the process, you're going to say, here's the five schools that we're accepted at. These two over here, we don't really like at all.
These three, we like a lot. I like this one. My daughter really likes that one, but we all think all three of them are, have their pluses and minuses.
And we're not sure which one, but one of them's 50 and one of them's 30 and one of them's 42. The one we really, my daughter really likes, of course, is the 50, because that always works out that way,
[00:29:41] Naseema: Always, always the most expensive one.
[00:29:43] Brad: The one I like is a little more expensive, but then we got the low cost option and we're trying to decide should we spend more money to get, and again, a lot of times parents see the value and say, it's worth it to me to spend more money and I'm going to do it.
I'm, a great analogy of that would be. That 120, 000 car that you see on the road. And people look at that and they say that car is not worth it. 120, who would spend that kind of money on a car? The guy driving it would, and he did, so he thinks it's worth it, right? And lots of people have opinions about other people's spending of that's what you should spend money on.
And that's what you shouldn't. And I learned a long time ago that the reason we earn money is so we can spend it on stuff we want.
[00:30:26] Naseema: And it's
[00:30:27] Brad: And what I want isn't necessarily what you
[00:30:28] Naseema: Yes.
[00:30:29] Brad: right?
A lot of people will spend crazy amounts of money on education and then tell me to doing that other thing. It's okay other people say college isn't worth it.
I'd never spend all that kind of money on college and they're not necessarily wrong. It's again, it is a matter, a little bit of a matter of opinion.
And I think what happens is for a lot of families is mom or dad or both had a great time in college. It was one of the best times of their lives and they want that for their children.
That's the bottom line, right? Is I just. I want you to go off and do college, have fun, do what I did, grow up, get started on a career, and again, there's lots of different goals, right? Is it educate, we're, we want them to go out and have fun and grow up for sure. We also would like them to get some sort of useful degree that then launches them into a, into a successful career of some sort and, et cetera, et cetera.
But I think that's where a lot of the people I'm working with will say yes, we could do the community college thing. But if we can figure out how to do the four year college where they can get to go live on a dorm and do that, we'd rather do that if we can make it, so a lot of times we will explore the.
stepping stone idea of you just go here and live at home. And it's and then parents immediately recognize it, but that's not the college experience living at home is not our goal.
[00:31:54] Naseema: hmm.
[00:31:55] Brad: Yes, it might be a little bit cheaper, but if you, and again, sometimes it's not significantly cheaper than the local state school, as an example.
By the time you factor everything in it's not automatically, automatically going to work out great, but again, for a lot of families, that's their goal and they're willing to stretch a little of that to make it happen. So that's, that's the, there's a couple of different steps there.
So the one is some families you need to stretch to do any sort of four year degree, other families are like we can easily cover the local state school. Our students are talking about going out of state. And when, as soon as you go out of state then we don't have the end state price anymore. So now it's either a private school or an out of state state school.
That's going to cost more. Should we do that? And then on up the tier, right? So again, families that earn a little more start considering a little more expense. And so forth and so on until, and again, if you're a brain surgeon making 3 million a year, you're probably not listening to this. You're busy.
You're in the operating room, but it's a different story. But again, many of the families I'm working with are just trying to do wise things, whether they earn a hundred thousand a year or 300, 000 a year. It's always a challenge because of the way, the way the need based system works, especially it's like 50, 000 a year for someone earning 300, 000 is painful.
25, 000 for someone earning. 150, 000 is painful, and 10, 000 a year for someone earning 50, 000 a year is painful. And that's the reality, right? They've raised the prices until it got to painful, and then they slowed down.
[00:33:31] Naseema: Yeah.
[00:33:32] Brad: And, that's the challenge I think a lot of families are up against.
My
[00:33:36] Naseema: Yeah. It's definitely and it's something that like, usually people are reaching out to me like in that later stage oh, my God. So my kid is already about to graduate. What do we do? I don't have anything in place. This is a school that they want to go to. And, yeah, that that scramble is real, but then just most 1st of all, most people don't have their finances in a place where they even know how they're spending.
And so when you talk about these college planning things do you incorporate. The rest of the family's finances in there to say we probably need to cut in these areas. We can't just look at college. We have to look at your overall finances and see what adjustments we need to make.
If we need to really be leaning into scholarships, or if we really need to be leaning into schools with endowments, like my school, even though it was really expensive, it was cheaper. For me to go there than a state school, because they had endowments, but just like understanding that process in planning you, you drill down just like the overall, like this family's like overall spending to help them navigate that.
[00:34:45] Brad: Yeah so I'm a financial advisor. So I understand,
I always tell people that college planning is retirement planning because if you blow up college, it'll blow up retirement and then it's all hooked together. and and again, so sometimes it is well, if we do it this way instead of that way, if we refinance your debt and get life back in order.
Then maybe we can squeeze college in there too, or pay for insurance a little more efficiently, or taxes a little more efficiently, or all of the above, right? If you do this, you can save a few hundred a month. If you do that, you save a few hundred a month. If you deliver pizza on Friday night, you can get a few hundred a month.
And between all of those things, we can make this happen. Okay. That works.
And I think that's where the clarity I think is the, for many families, it's the clarity of, okay what is it going to take to put this together and what am I giving up? I had a dad come to me a couple of years ago and his daughter was accepted at NYU.
She was a performing artist. She was dancing and singing and NYU has the Tisch performance center right there near Broadway. It was her goal to go there now and NYU is a 75, 000 school. She got, did great. She was also strong students. So she had a lot of scholarships. So net for her, it was like 35, 000.
And dad was like 35, 000 times four years is 140, 000. She's my oldest of four. So if I do it for one and I'd have to do it for them all now, 140, 000 times four kids. That's a big number.
[00:36:22] Naseema: Yeah, pretty
[00:36:22] Brad: Should I, should I do it? And can I do it? And all right. And he was doing, he was an engineering manager. So he's, his salary was pretty good.
And it turned out that, he could afford to pay for college and retire within his goal. Now, had he not paid for college, he could have retired a couple of years earlier.
But again, that boils down to what, it was important that his kids get at some sort of college. And to go from the state school at 25, 000 to 000, he thought it was appropriate in his situation.
And I think that's where, but if it would have meant retiring at 87, maybe he might have a different opinion, but it turned out he could still retire at a reasonable time and it all worked out, so it was a combination of financial planning and college planning and, We did have some lower cost options that we could have switched to if we, if he decided no, but in that situation, he decided to spend the money.
[00:37:22] Naseema: yeah, I think that's super important for people to kind of balance like, that retirement planning versus that college planning. Like you said, like he could have retired a lot earlier if he had made, had to make a different decision. And I think. 1st of all, people aren't typically in a position where they're setting theirselves up to be good to retire.
But they'd rather focus on their kids because they're like maybe it's too late for me, but my kids
[00:37:53] Brad: kids will
[00:37:54] Naseema: will have better choices if I am able to do this for them. 1 of the things that you manage retirement planning versus college planning and, the way my thought process is on this and let me know how you feel about it is that I feel like the kids have a lot more time to recover than you do to retire.
And if you don't set yourself up in a financial position to be able to retire stably, you're putting your kids in a financial position that I have to support you later. It's really like 1 of those those questions of pay now pay later kind of things, but if. But planning can mitigate all of that, right?
[00:38:36] Brad: mean, there's a
[00:38:37] Naseema: so
[00:38:38] Brad: families out there that have a strong middle income situation, right? But their income is pretty good. But again, they probably learned how to spend it all before they learned how to save it. So if we can reverse that, a lot of times that that alone solves a problem.
[00:38:55] Naseema: and then do you find, like, when people are coming to you when their kids are in that age that you're able to successfully help them manage that process, even though they feel like they're kind of like, too late.
[00:39:08] Brad: Oh, absolutely. And again, it, it's all relative, right. But, another analogy that I like to say all the time is if you're giving up the Lake home to pay crazy amounts of money for college, okay. It's your decision, right? I will skip the Lake house. We'll spend crazy amounts of money on college.
Great. If you're blowing up your retirement to play crazy amounts of money on college, that's a different decision. A lot of times people don't know where they stand. I, am I blowing up my retirement or not? I don't really, I don't know where I'm at and that, so that's the first step.
But then the other side of that coin is, my, what's the minimum college education that, take your example, right? You're a nurse and I, obviously it's done well for you. It doesn't really matter how much you spent on your college. If you look, if you did the math, based on some of the stuff I've seen on your website that you were successful, right?
And it worked out. If you would have spent a little too much, so to speak, yes, you had that had student loans or something to pay off a little harder, but a little more work, but you still gotten there.
[00:40:15] Naseema: Yeah, that's
[00:40:16] Brad: That's a little different, like I said, than people that are signing. And that's I think the challenge is there's a lot of student loans out there where people that don't plan you get all the way to the end and they say here's a solution You just sign up for this big loan And apparently a lot of times this feels stuck, right?
It's like well, I can't say no at this stage I guess i'm going to sign up for the loan
[00:40:39] Naseema: the situation. I find a lot of my people are in like in under these massive loans, either for themselves or for their their kids and they don't have a career to show for it. They don't have the income to show for it and struggling with that. So yeah,
[00:40:58] Brad: Exactly. So people start, you start talking about is college worth it from a return on investment
[00:41:04] Naseema: hmm. Mm hmm.
[00:41:06] Brad: there's some legitimacy of that of, right? If I'm going to spend all this money to get a degree in underwater basket weaving or what, pick the degree that people like to pick on, whatever it is.
It doesn't work out real well compared to if you get an engineering degree or a nursing degree or whatever, right? Because the math, the higher salaries make the math better. But that's not to say that underwater basket weaving is the wrong decision for your student. It, it can lead to great things.
And I think that's when we go back to the original discussion of college isn't right for everyone. And if you look at the spectrum of students there's students at the bottom that, academics just isn't their thing. They're just going to have to get out in the real world. And the school of hard knocks is probably their path, right?
They're just going to have to get out there and take the crappy jobs and then decide if that's what they're going to do, or they're going to go on and get an education somehow. On the other end of the spectrum, there's the kids that are going to do be successful no matter what college they pick, what major they pick, because they're just going to land on their feet every time.
And they've got that drive, that ambition and skills to go with it. And they're going to be, it's the ones in the middle that I think where it gets really challenging of I'm not a, they're not a rockstar, but they probably could get a nursing degree. They certainly could go get a two year nursing degree.
Do they have the chops to get a four year degree right out of the gate? I'm not sure. Now you got a really tough call, right? It was do we just, do we step it up? We start with the two year degree, go get some experience. A lot of times when you have that experience going back to college, it means something now because you don't know why you were studying this stuff.
But once you've been in the real world a while, you realize, Oh, I do need to understand this and learn this. And I see how this is going to help. Or sometimes you get jaded and say, I've been in the hospital. Nobody knows that does any of this stuff. I don't know why I'm learning it. There's two sides to that coin as well, but
[00:42:58] Naseema: Mm hmm.
[00:42:58] Brad: And then I think that's where the politicians and the soundbites do a big disservice of college for everyone.
No,
college, it's the wrong answer for a lot of people.
[00:43:09] Naseema: Thank you.
[00:43:10] Brad: And we're not saying education is wrong, right? You're going to have to get an education, but there's. And if you look at adult education, there's a lot more choices, there's online, there's different types of certificates and all this stuff and night classes and weekends or the traditional four year degree and all that stuff.
We don't have those choices as much for the typical 18, 19 year old going off to college. And there's not that incentive to change because there's a lot of parents out there that say, I want that for my kid.
[00:43:43] Naseema: Mm hmm.
[00:43:44] Brad: And there's enough parents out there to say, I'll pay whatever it takes to make that happen for my kids. And as long as there has that market, that's just the reality that there's colleges out there that cater to that. And if they can raise their prices, and again, the USCs of the world can and do raise their prices because why? Because they
[00:44:02] Naseema: they can. It's like
[00:44:04] Brad: We raise the prices, people still come. Why wouldn't we raise our
[00:44:07] Naseema: Exactly. That's why
[00:44:09] Brad: And that's, anything else, right? Why does steak cost so much? Because. That's where it needs to be for people to buy it.
And that, supply and demand and all that economic stuff.
[00:44:19] Naseema: Yes. Brad, you're here to make sure that parents make smart decisions that are specific for them and their family situation. Again, can you just summarize how people can work with you reach out to you and get access to your resources?
[00:44:34] Brad: Yep. So I have a podcast at taming the high cost of college. So wherever you get your podcasts, you can find it under that title. And I also, I have the website, tamingthehighcostofcollege. com. So all my other resources are there. And if you're interested in, you can contact me directly through there. There's even a phone number there if you want to give me a call.
[00:44:54] Naseema: Awesome. Awesome. So I, I love this conversation because it's, it's so many things that we have to think about when it comes to planning for college for our kids. And so many things that we have to weigh is great to have resources. Like you said, there are experts out there that can help us with that.
And instead of us trying to figure it out on our own, I'm glad that there's people like you that can help. Families navigate this process and take a load off because it is really a major financial decision that most families have to make and to not have to do that alone is really a godsend. I really appreciate what you're doing.
I love that. You've helped so many families and. Also that you're doing this with your own kids at the same time
[00:45:40] Brad: and I think he has a bunch of resources for all price ranges and wherever you're at in the college MBA.
[00:45:42] Naseema: great. If you guys want to reach out to Brad, all his contact information will be in the show notes. And I think he has an abundance of resources and for all price ranges and wherever you're at.
In the college planning game, so make sure that you reach out to him, but Brad, I want to thank you so much for joining me. I think this is a great you covered so many different topics and I think my audience will learn a lot from this. I appreciate you.
[00:46:10] Brad: Yes, thanks for having me.
[00:46:12] Naseema: Of course, of course.
Hey there I’m Naseema
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