Use high school years to implement a road map to college

Bill Cass, CFP®, CPWA®

Bill Cass, CFP®, CPWA®, 08/12/20


Despite the uncertainties of the pandemic, students can still plan for their future and that includes preparing for college.

A recent survey found that most families believe the current health crisis will not have an impact on their child’s college education in the long term. The majority (90%) of families view college as an investment in their child’s future.

For high school students, it is not too early to start planning and there are many actionable steps to take that can help them prepare and achieve their goals.

Putnam’s “Four-year action plan for college" can be a helpful year-by-year guide for students and parents.

High school students focused on college in their future may want to prioritize academics. There are many aspects of college acceptance, but high school grades and academic achievement are vital to the application. During high school, students will need to complete standardized tests and build a resume. They may need guidance on best practices to research colleges.

Due to the pandemic, the ‘back to school’ experience this fall will likely vary for high schools and colleges. As families prepare for college, many activities may need to take place virtually, at least through the fall semester. Students in their junior and senior years, for example, may need to determine whether standardized tests will be offered, or if they will be waived. A campus tour will likely be a virtual experience.

Parents pay for the largest segment of college costs. In fact, the number of parents with a financial plan for college reached an all-time high (52%) in the 2020 Sallie Mae study, “How America Pays for College.” Parents can use the high school years to prepare financially, by updating plans and researching ways to cover costs.

Here are some highlights of action items for each year.

Freshman year Parents:

  • Consider increasing saving in a 529 college savings plan
  • Encourage grandparents and other family members to get involved
  • Consider allocating some savings to other accounts such as custodial accouns (UTMA, UGMA) for non-qualified 529 plan college expenses, such as transportation.
Students:
  • Set goals to achieve the honor roll and maintain a solid GPA
  • Meet with a guidance counselor to discuss interests
  • Learn how to research colleges
Sophomore year

Parents:

  • Review asset allocation in plans to ensure that investments are on track
  • Consider tax-smart strategies and the impact of income on federal financial aid (FAFSA)
Students:
  • Begin standardized testing with the PSAT in October
  • Make sure coursework, such as number of AP classes, reflects the academic requirement of targeted schools
Junior year

Parents:

  • The financial aid calculator (FAFSA4caster) on the FAFSA website can estimate potential financial aid
  • Research whether targeted colleges require the College Scholarship Service Profile (CSS Profile)
  • At the end of junior year start compiling information for FAFSA submission such as tax returns and information on savings, investments, and assets
Students:
  • Take a prep course or find a tutor for standardized tests
  • Start building a resume and include summer employment, internships, and achievements
  • Near the end of junior year meet with teachers, coaches, or mentors in person to request letters of recommendation
Senior year Parents:
  • Make sure you have enough liquid assets for college-related expenses. This may require investment transfers within college savings accounts to more conservative options
  • Research tax credits and deductions to help with college costs
  • Complete the FAFSA form (between October 1 and June 30). Bear in mind that many states and colleges request FAFSA submission as soon as possible after October 1
Students:
  • Over the summer before senior year, start working on the Common Application and college essay
  • Research application options, including early decision and rolling admission
  • Apply to colleges as early as November for early decision
Seek guidance

Preparing for college can be an exciting time for parents and students. Consider meeting with a financial professional as part of this process. A financial expert could help both students and parents with their planning. For parents, there are many strategies to help save and optimize college savings. More than one third of families (37%) are using a 529 college savings plan, up from 21% a year earlier (Sallie Mae). At the same time, fewer families are applying for federal financial aid and may be missing out on funding. Sallie Mae found that 71% of families filed the FAFSA for 2019-2020 academic year, down from 83% in 2017-2018. Learning more about saving and tax strategies can be helpful.


Four-year action plan for college

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