Planning considerations for college-bound high school students and their parents

Bill Cass, CFP®, CPWA®

Bill Cass, CFP®, CPWA®, 08/14/18


It’s never too early to plan for college. While it may seem a distant goal for a high school freshman, there are many things both students and parents need to do over the next four years to prepare.

For college-bound students, the focus may be largely on academics, how to build a resume, when to complete standardized tests, and how to research and visit colleges. Parents need to use the high school years to prepare financially, by updating plans and researching ways to cover costs.

Meeting with a financial advisor is one way families can learn about the steps and deadlines. Putnam’s “Four-year action plan to prepare for college” can be a helpful year-by-year guide for students and parents.

Here are some highlights of action items for each year.

Freshman year
  • Increase saving in a 529 plan. Encourage grandparents and other family members to get involved.
  • Students can set goals to achieve the honor roll and maintain a solid GPA throughout high school.
  • Set a plan for participating in extracurricular activities or employment outside of school.

Sophomore year
  • Continue saving in 529 plan and review asset allocation to ensure that the investments are appropriate for the remaining time horizon.
  • Consider tax-smart strategies and the impact of income on federal financial aid (FAFSA). Beginning with next year’s tax return, all income will be factored into the aid calculation.
  • Students can plan to take the PSAT in October, and may want to select a schedule for junior year to include AP courses if they are looking at a competitive college.

Junior year
  • Determine the Expected Family Contribution (EFC) for financial aid. The EFC process factors income from the “prior prior” year. Note that increases in income — for example, from the sale of a stock or a Roth IRA conversion — may affect aid.
  • Students may keep a calendar of tests (PSAT in October; SAT, SAT subject tests, and ACT later in the year).
  • Take a prep course or find a tutor for standardized tests.

Senior year
  • Ask employer if scholarships are available for children attending college.
  • Make sure you have enough liquid assets for near-term college-related expenses. This may require investment transfers within college savings accounts to more conservative options.
  • Students can take the SAT/ACT in the fall.
  • If opting for early decision, students may apply to colleges as early as November.

See Putnam’s four-year guide for additional ideas and resources for each year of high school.

Expert advice can help families stay on track

Despite the deadlines that have to be met during high school, planning for college is an exciting time for students. For parents, the window for saving may have narrowed, but there is still time to optimize financial decisions during the high school years. Seeking professional guidance and staying organized can help families reach their goals. It is also important to note that having a plan to spend savings for college expenses is as important as planning to save. Read Putnam’s investor education piece “Strategies to make the most of college savings” to consider guidance on saving as well as selecting accounts to draw on when the first tuition bill arrives.

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