Every year, I say the same thing in September - but it never gets old and it never changes. This is my favorite time of year, period. Full stop. From the beginning of September to the end of the year, there is nothing I don’t absolutely love. The seasons changing, fall colors, football, and of course the gauntlet of the four greatest holidays known to man. Those holidays, of course, are Halloween, Thanksgiving, and Christmas…but it all starts with my birthday in late October.

I have an unhealthy love of my birthday, especially for a grown man. I haven’t decided if I actually enjoy my birthday so much because I love the time of year when it happens or if I love this time of year because of my birthday, but you get the picture.

Fall also marks Back to School Mania for us parents. As I embark on my 14th consecutive year of sending at least one of my children to school in the fall (my oldest is a senior in high school), it never ceases to amaze me how August and September calendars are absolutely LOADED with extracurricular meetings and events. Homecoming is right around the corner for my two high schoolers, and it’s yet another reminder of this wonderful time of year, busy as it may be.

As you might expect, having a senior in high school means we’re getting more and more anxious by the day about college. I know a lot of you are, too. If you haven’t heard, college is incredibly expensive. It’s way more expensive than you remember it. I promise. Here’s a little look at inflation vs. college expenses, health care, and the cost of a new car since 1978.

Why is college so expensive? Well, similar to an inappropriate joke about divorce…the answer is simply because “it’s worth it.”

If your kids go to college, they’re likely to make more money in their careers and less likely to be unemployed. Some quick facts courtesy of the folks over at Admissionsly.com:

• In today’s market, 35% of all job offers require at least a bachelor’s degree.

• In 2019, the unemployment rate between those with a college degree was 2% compared to those with high school degrees at 5.5%.

• On average bachelor’s degree holders earn 31% more than those with associate’s degrees and an incredible 84% more than those with just a high school diploma.

• The bachelor degree holders are 47% more likely to have health insurance with 74% of their health coverage being contributed by their employers compared to those holding high school degrees.

I spend my days advising clients on their finances and investments. One area that I've really tried hard to make myself an “expert” on is late-stage college planning for parents. Almost universally, parents want what is best for their kids and college is no exception. But, there are so many moving parts, and it’s beyond intimidating. I generally find that one of three happens to clients when the topic of college expenses come up:

1. The parents have saved some money (maybe even quite a bit of money) for college, but realize that there is no way they can pay for everything or how the process will even work

2. The parents believe that going to college will work out the same way it did for them and are just doing things on a whim

3. The parents knew they had no chance of saving enough money early on and the numbers seemed so astronomical so they didn’t do anything

This isn’t uncommon in the world of personal finance and its psychology underlying it. It’s not that different than retirement or the purchase of your first home, really.

So, Jeff, what to do?

Get Organized

First, and probably most important, is to understand your personal financial picture and what your resources are. How much money do you have that you can use? Do you have an old 401k floating around somewhere that you could roll over to an IRA? Have your parents (your children’s grandparents) been saving money for this very day without telling you? What level of monthly cash flow can your budget handle to help pay for living expenses for your child?

In conjunction with that exercise, get your most recent tax returns ready to start the really unappealing process of filling out the FAFSA so that your child is eligible for financial aid. This is non-negotiable for our clients, regardless of income. Even if you are absolutely positive in your own mind that you won’t qualify for assistance, you need to fill out the FAFSA so your child will be eligible for a Stafford Loan, which everyone qualifies for. Be ready to start the FAFSA when it opens - October 1st of their senior year.

The final piece of “getting organized” is to help your child decide where they’d actually like to spend your money for the next 4 or 5 years. If they’re anything like my oldest son, they’ll listen for 4 minutes, get angry that you're stressing them out, and then storm out of the room. Don’t let this deter your efforts, however, and continue the same exercise until they’re willing to answer three very important - but very simple - questions: A) where do you want to live while you’re in college? B) What do you want to study? (and do the schools where you want to live offer that discipline?) and, C) how big of a school do you think you want to attend?

Keeping things simple, constantly refining that series of questions, and having a working list of “ideas” will ultimately get you where you want to go. And maybe most importantly, no matter how hard it is, please, please, please….don’t try to influence your children with suggestions. They’ll most likely say “yes” just to get you to quit asking them about it.

PREPARE TO APPLY

This can be happening concurrently with the GET ORGANIZED part. You and your child should have a good understanding of the application process for their final list of schools they’re most interested in. Talk to your counselors at your local high school on how to get transcripts sent out, understand the landscape of scholarships available at the schools of choice, and consider retaking the SAT or ACT if it might afford your child an opportunity for a scholarship should they improve their score.

Your child is going to need to write an essay, so find someone you trust to help you edit and proofread. And, as a college counselor told my son, “don’t write about baseball”.

Once applications are in, your child’s new part-time job on the side should be applying for EVERY. SINGLE. SCHOLARSHIP. they might qualify for - both private and public. To summarize:

• Determine which of your target schools accept the Common Application

• Gather letters of recommendation

• Secure transcripts to be submitted with your applications

• Know and meet all application deadlines for target schools

• Prepare and submit all institutional and private scholarship applications

ANALYZE AND DISCUSS

Signed, sealed, and delivered. Come winter and spring, the acceptance letters and financial aid offers will start pouring in. You already applied for financial aid through FAFSA, spring break is on the horizon, and you deserve to pour yourself a drink and start thinking about “decision day”.

• Review Award letters from each college

• Determine the strength of the merit-based and need-based aid that is awarded

• Decide which Award letters, if any, warrant an appeal

• Leverage competitive offers from other schools

• If there are additional circumstances that have come up or were missed by the colleges, make sure they are notified that the financial aid package may need a review

ACCEPT AND PREPARE TO SAY GOODBYE

I won’t lie to you, dear readers. This is what I’m the most terrified of. We want our son to succeed. We want him to go to the “perfect” school for him, regardless of our opinions. But I absolutely and emphatically do not want to have to say goodbye to him in the fall. By this coming spring, he will have made his decision, just as your senior in high school will do. Our job isn’t over, though. We need to understand, completely and fully, the net cost that we’re on the hook for and how we’re going to pay for it.

Understand every loan you qualify for, every tax credit you qualify for, every scholarship your student is eligible for. Put the financial aid office at the school of choice on “speed dial”. Put the work in and it will benefit both of you.

Is it more complicated than this? Of course it is. Life is always just a little more complicated than what you expect. This is designed to give you a structure on how to attack the problem. If you need more help, you know where to find us.

Noble Wealth Pro Tip of the Month

A little re-emphasis on what I just wrote, but September is a great month to start getting prepared for higher education expenses.

The FAFSA opens for high school seniors on October 1st, and it requires an extraordinary amount of precision and detail to make your child available for both merit and need-based aid.

If you don’t have a high school senior, but all of this is starting to sound really scary because your kids seem to get older every year…take a minute and assess what you have and SAVE MORE MONEY. While it’s said tongue in cheek, my favorite saying about personal finance is as true as the sky is blue. “95% of things in your personal financial life can be fixed by saving more money or spending less of it”.

Of most importance…max out your Roth IRA every year if you can (meaning you’re not phased out). Roth IRAs are simply the best vehicle to save for college expenses because you get the optionality of using it for retirement, as well.

Second in the hierarchy of importance for college savings is to look to 529 plans, if your state offers a tax deduction, and if the investment options are any good. While 529 plan contributions can’t be phased out based on your income, the money can only be used for higher education expenses (and private K-12 schooling in some states), and not everyone likes having only one use for their money.

If you don’t get the tax deduction or don’t like being anchored to using your savings just for college expenses, then you should set up a good, old-fashioned investment account earmarked for their college expenses. While you don’t get tax-free investment growth, you can always optimize for long-term capital gains when you need the money.

Do not, however, feel like you need to funding whole life insurance policies to save for college. If you are, please come talk to us.

Things We’re Reading and Enjoying

The Price You Pay for College: An Entirely New Road Map for the Biggest Financial Decision Your Family Will Ever Make | by Ron Lieber (Book)

Timely. I listened to this on Audible and it was terrific.

“If you have a teen headed for college in a few years, you literally can’t afford to skip this candid guide by The New York Times' 'Your Money' columnist Ron Lieber. He grills college presidents and financial aid gatekeepers to answer all your biggest questions about the right ways to save, borrow and bargain for a better deal." -- Audrey Goodson Kingo, Working Mother Magazine

"Contains an implicit analysis and critique of higher education as a system, by acknowledging the inequities that exist at every level from recruitment to admissions to financial aid. It’s a how-to book that will also make you think, 'But why?'" -- New York Times Book Review, Editor’s Choice

"Aims to provide parents and students financing their own way with the information they need to make more informed, financially sound goals and decisions." -- Fortune

Inflation Master Class with Cullen Roche | by The Investors Podcast: We Study Billionaires (Podcast)

I make it no secret that Cullen Roche is my favorite economist (and the one whose opinions I value the most). I listen and ready everything he’s involved with.

IN THIS EPISODE, YOU’LL LEARN:

• What is inflation, and what is it not

• How much of inflation is due to base effects

• How can expected inflation drive inflation

• If the current inflation is temporary

• How is inflation reflected in the real estate prices

• Why do we have regional differences in inflation

• If investors can profit from the interest rate parity

• If investors should take on debt in an inflationary environment

• Whether value stocks are a good investment in times of inflation

• Whether paper assets can be inflation-proofed?

• How Cullen Roche has positioned himself

-Your team at Noble Wealth Partners

“There is nothing noble about being superior to your fellow man. True nobility is being superior to your former self.” Ernest Hemingway