College is expensive—especially if you’re an agency owner, and likely won’t qualify for financial aid. That requires saving a lot of money (Part 1) and looking for ways to pay less (Part 2). But there’s a final part, too—getting more from your money, or what we might call your “College ROI” (Part 3).
There’s the investment (in money, time, and other resources) required, and the return (result) you receive. But there’s also timeline (how long it takes to get the return). If you spend $1 and get $5 back, that’s a good ROI… but not if it takes 100 years to see the return.
Good news—no matter where your child goes to college, there are things you can do to improve your ROI at that specific school. And that’s our focus here in Part 3. Don’t have kids, or they’re already past college? Please pass this along to someone who needs the advice.
Paying for college: 4-part series for agency owners
This article is Part 3 in a four-part-part series on paying for college:
- [Part 1] How Much to Save for College, and Where to Start (e.g., your kids are in elementary school or younger) — click here
- [Part 2] How to Pay Less: Choosing the Right Path (e.g., your kids are in middle school) — click here
- [Part 3] Get More for Your Money: Raise Their College ROI (e.g., your kids are in high school or college already) — this article
- [Part 4] Q&A with an Expert on Paying for College: Stephen Boatman, CFP®, CSLP® – click here
You can make the most of this “Part 3” article if your kids are in college or about to start. Why? Because the choices they make now will help them get the most out of wherever they go. But if they’re younger, it still can come in handy. I may write more on this topic in the future, so don’t miss any updates—subscribe to my newsletter to get notified.
As an agency coach, why am I sharing college advice? Because other than real estate and retirement, sending your kids to college will likely be your biggest expense. Unlike a house, there aren’t [quite] 30-year mortgages for education. And unlike retirement—where you can delay your retirement or choose to work part-time—your child’s high school graduation will arrive, whether or not you’re ready.
Is college even the right approach for your child? Read (or re-read) Part 2 in the series, on alternative paths. They don’t need to start at a four-year school. But for this article, I’ll assume that you and they are focusing on the four-year path… and that you want to get the best ROI for your family.
9 tips on “college ROI”: Get more from the experience (during and after)
1. Explore how the school supports students’ mental health. If your child currently struggles with issues around addiction or mental health, will they get the support they need? For instance, a freshman dormmate almost died of alcohol poisoning at least once; I’m not sure his parents ever knew. Schools are taking this more seriously; for example, William & Mary built a new counseling center in the center of campus. But it’s still a tough issue.
2. Strongly encourage your kids to do internships. The WSJ recently shared research about how internships are critical for long-term career success: “Securing even one internship during college significantly improves the odds of landing a college-level job upon graduation, according to the study. For humanities and psychology majors, the rate of underemployment five years after college dropped by a quarter with an internship. Among social-sciences majors, it fell by 40%.”
3. Talk with your child about “under-employment” risks. That is, they might find themselves working in a post-college job that didn’t require their degree training. Yes, “bachelor’s degree holders in college-level jobs earn nearly 90% more than people with just a high-school diploma in their 20s”—but “underemployed college graduates earn 25% more than high-school graduates.” Don’t pressure them to take the first post-college job they can find—if they hold out for a major-related job, they’ll likely do better long-term.
4. Consider inter-collegiate networking opportunities. Yes, the Ivies have amazing networks. But there are other options. As a student, I joined a coed professional business fraternity—Alpha Kappa Psi—with chapters at 200+ schools in the U.S. and abroad. I later built extensive leadership experience as an alumni volunteer. Ultimately, my involvement gives me access to an international network of alumni from a wide range of schools. I had a similar experience with StartingBloc, a social innovation fellowship—where I met other participants from Ivies and top liberal arts colleges.
5. Budget for extra expenses, like study abroad. Tuition isn’t the only expense—there’s room and board, textbooks, and supplies. And ideally, you can afford to cover some degree of study abroad experience. Going to a relatively less expensive school meant I could do a summer program in Italy, studying Italian and art history. Some classmates did a semester—or an entire year—abroad.
6. Double-check that you have enough insurance. Now’s a good time to check in with your insurance agent. Do you need to increase your life insurance coverage so that it would pay off tuition in addition to your mortgage? You might also consider “umbrella” insurance. And your agent may recommend other options, too.
7. Perhaps consider hiring your kids to work in your agency. Your teenager probably won’t work as an Account Manager, but they could help with filing, shredding paper, or cleaning the office. This can reduce your taxable income while giving them money to help with expenses. It also gives them earned income, so they start earning Social Security credits. They can keep working at the agency, but you likely won’t be the strongest reference for future jobs once they’re in college. Talk to your CPA on specifics, including eligibility and tax implications. (But be careful about doing this if you’re planning to seek financial aid, since their income and assets will “count” against them.)
8. If you’re going to pay full price anyway, what’s the student experience? Is the school a research powerhouse with national basketball or football teams? Is it a small liberal arts college where professors work closely with students? Is it in a city where your child wants to live after graduation, and they can easily do internships with future employers? During a visit to High Point University (tagline: “The Premier Life Skills University”), students mentioned that staff members are distributing bottled water and ice cream bars on the quad on hot days. The on-campus steakhouse offers etiquette lessons. My recruiting contact said when they learned someone was considering High Point, they “gave up” on the prospect—because HPU could promise an impossibly-attractive student experience for the price.
9. Your child will likely be OK no matter where they go. I’m sorry you’re dealing with this; I imagine it’s not what you expected when you started your agency or when your kids were born. But you’re ahead of the vast majority of society. As an agency owner, your family is upper-middle-class (or entry-level wealthy, when you include pass-through profits). Barring accidents and addictions, your child will likely be fine no matter where they go to college.
Other considerations before they apply to school
10. Where do they want to live later? Top national schools have national—or international—networks. State schools tend to have graduates concentrated in that state. If they want to work in government or politics, consider a school in or near the state capital—or with connections to D.C., if they aspire to work at a national level.
11. You don’t have to come up with 100% of the cash while they’re in school. In the New York Times, Tara Siegel Bernard suggests thinking about it in thirds: “It may be less stressful to think about covering the cost in a few distinct pieces: For the first chunk, hopefully your parents have saved roughly a third of this amount over the first 18 years of your life. (If they haven’t, you may have to adjust your expectations and more deeply explore the least expensive pathways to a four-year degree.) The next piece can be paid while you’re attending college (ideally by you and your parents), and the final chunk can be covered by borrowing — dependent students can generally borrow up to $31,000 from the federal government.”
12. Consider the career implications of the major(s) they choose. It can be hard to predict which majors will pay off in the future. STEM majors have done well since the 1950s Space Race, but they’re not a match for everyone. Some majors lend themselves to a broader range of future jobs. Liberal arts majors rarely connect directly to a vocation, but also prepare students to be well-rounded. And, of course, industries change, creating new opportunities for those who can adapt. A friend graduated in 1960 with a bachelor’s degree in Data Processing. He later ran two businesses—and is a highly tech-savvy 80-something—but “data processing” itself is no longer a field.
13. Don’t skip Early Decision, if your child is sure about their top choice. Citing an HEA Group analysis in the New York Times, Ann Carrns notes: “There is a myth that early decision applicants get less aid because the college knows it’s the student’s top choice, Mark Kantrowitz, a financial-aid expert, said. In reality, he noted, ‘financial aid offers for students who apply early decision and regular decision will be the same.’ Statistics do show that early-decision financial aid awards are lower on average, he said, but that’s probably because early-decision applicants tend to be wealthier.” Going all-in likely increases their odds of getting accepted if they focus on a selective school.
14. Don’t underpay yourself. If you cut your salary, that “savings” will show up as higher business profits, which schools still typically consider in their aid calculations. As a business owner, you have flexibility in your compensation, but unless you’ve had several terrible years in a row, it still likely won’t make a difference in college aid. That is, underpaying yourself likely won’t help you qualify for aid—so you pay yourself enough now.
15. Be careful about co-signing private loans. In the New York Times, Tara Siegel Bernard notes: “turning to private loans may be a sign that you’re borrowing too much — particularly if you’ve already taken out the maximum amount of federal loans you qualify for.” Private loans offer fewer borrower protections than Federal loans. And if your child has a string of bad luck—or is a dilettante—you’re left paying the bill. In contrast, your child could potentially take out Federal loans—and then you pay them off early, via tax-free gifting. Of course, talk to your accountant for specifics.
16. “Transfer later” comes with challenges. If your child starts at a community college—or a lower-priced four-year school—they can always transfer. But this is potentially a tough transition. I saw this at William & Mary, volunteering with the New Student Orientation program. Transfer students were less plugged-in to student activities, and had to work harder to get involved on campus.
What next? Getting advice from a financial expert
When your agency is successful, you’ll have more money to help your kids make the most of their college experience. Consider doing a 4-6 week consulting engagement, to get Quick-Win advice you can start implementing within a month—and longer-term tips to help you keep up the momentum. Contact me here, and my team will recommend options.
Want even more advice? See Part 4, for answers to 27 questions about paying for college—including how to approach your 529 plan, options to accelerate your savings, and advice on creating incentives for your kids to graduate faster. And be sure to read Part 1 and Part 2, too. Don’t miss out—subscribe to my newsletter for future updates.
Question: How can you and your child boost your family’s “college ROI”?
