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  • Writer's pictureJeran Van Alfen, CFP®

3 Things to Know When Financial Planning for College

Financial planning for college is an important process. I have had many conversations with clients over the years about paying for college and I have found that the topic can be daunting to think about. This post addresses 3 things that can help start the process. There are many variables to consider, and it helps to have a plan that is specific about priorities but flexible enough to adapt and evolve. Here is what you need to know:


College Usually Pays Off


The first question to consider when planning for college savings is how much of a priority is college for your child and your family? It’s obvious that not everyone needs to go to college, and I often am asked the question, “Is college worth the money?”


The answer is yes. The average bachelor’s degree holder earns 88% more than high school graduates. These added earnings are usually worth the cost of the degree.

Another interesting indicator of value is the ability to keep a job. College graduates typically have lower unemployment rates indicating that the quality of their careers can be greater.

Time is Money


The time spent in college directly translates to higher costs. Because of this it is important to be strategic and think outside of the box. Many schools are offering students a head start through AP classes or dual enrollment. These are important programs to consider as they can be an inexpensive way to get credits toward graduation. It can also be important to think ahead and gain some real-world experience. High school internships and work programs could give your student insight into majors to focus on. College counselors will usually answer questions for prospective students as well to help them decide on a major. It helps to have a plan before you get there. It can be fun to take your time and figure out your life in college, but that is pretty expensive fun!

Plan ahead


The truth is the cost of college is typically more than one expects to pay. The slide below shows how reality is a bit different from most expectations.

With this in mind, it is important to evaluate your overall financial plan and prioritize where college savings fits. I often suggest a hierarchy of investing when prioritizing savings and investment goals. College funding is important, but it should normally be addressed after building an adequate emergency fund and some retirement savings. Then it should be evaluated with other goals in mind.

It helps to have a plan. You can schedule a session with us to discuss your college planning questions here.

Information and slides referenced from J.P. morgan Asset Management College Planning Essentials. 2023 Edition.


Centered Financial, LLC is a registered investment adviser offering advisory services in the State of California, Utah, Texas and in other jurisdictions where exempted. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the techniques, strategies, or investments discussed are suitable for all investors or will yield positive outcomes. To determine which strategies or investment(s) may be appropriate for you, consult your financial adviser prior to investing. Any discussion of strategies related to tax or legal planning is general and is not intended as tax or legal advice. Please consult appropriate tax and legal professionals for recommendations pertaining to your specific situation.

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