Case Studies

Case 1

This family had few resources available for college because of unexpected medical expenses.  The objective of the family was to find a quality school that will challenge their daughter.  The student worked hard during school and had good grades, good standardized test scores, and was involved in extra curricular activities.

It was important to find the right school that challenged the student and also be able to enjoy college without studying 60+ hours per week.  The student preferred a small school and liked the Southeast, Northeast, and the West Coast.  We narrowed the options down to 8-10 schools ranging in cost from $15,000 per year to over $50,000.  By positioning the student properly we were able to get a good combination of Merit and Need Based Aid.  For a $50,000+ school the net cost was under $20,000.  The first thing the parents wanted to know was what loan would be best for them.  Not Surprising!  Assume they borrowed $20,000 each year the cumulative amount borrowed would be $90,000+ after four years.  Interest only payments would be $500+ per month.  After restructuring their liabilities, analyzing their cash flow, and implementing a plan we figured out they would only have to take out the Stafford Loans each year totaling less than $20,000.  There was also a surplus in their cash flow that totaled $15,000 over four years.  In this case, their total college loans will amount to $5,000 for four years.

Case 2

This family looked at the options of sending their child out of state or attending an in-state school.  Their savings were slim and had a financial need (based on the FAFSA) with the cost of an in-state public college.  The student did well in school and had average scores on the standardized tests. 

It was important to find a school that has good selection of majors along with an adequate supply of on-campus housing.  The student decided on an in state public university.  The annual cost of attendance is over $15,000.  The student’s grades were good enough so they will receive the state merit award that pays for tuition and fees.  This leaves less than $10,000 per year to pay.  After making cash flow recommendations and using federal education tax incentives the cost is down to $3,000 per year.  By taking advantage of the $3,500 subsidized Stafford Loan the college bill is now fully paid with a little breathing room. 

Case 3

In this situation we had a good student with standardized test scores slightly above the average.  This student needed a small classroom setting with some one on one attention from the teachers.   It made sense that the child goes to a small private school although the family’s budget would not allow that to happen.  With the cost of private schools running $30,000 to $50,000 this was not likely to happen.

There are a lot of good quality schools that are overlooked.  Through the student positioning process we found some schools where the student will be challenged and likely to excel.  After deducting institutional aid, state merit aid, and self aid provided by the school we lowered the cost of attendance to just less than $12,000.  After taking advantage of the Stafford Loan the net cost of attendance is slightly higher than $8,000.  By controlling the capital gains distributions ignored by their stock broker we will likely increase available aid in the upcoming year.  By using cash flow strategies we can see the cost of attendance dropping to less than $3,000.