Five Most Common Mistakes Parents Make When Paying for College … And How to Avoid Them!

Mistake #1: Parents don't plan far enough in advance for what events are to come.

The first obvious thing to point out here is the fact that if you're like most parents, you didn't start early enough and haven't saved enough to pay for your child's college education. But that's water under the bridge. An even bigger mistake parents make is not utilizing “late-stage college funding planning” strategies to dramatically lower their college expenses. Regardless of your family's income level, you need to determine the most efficient way to pay for college. Once your child is in high school, you need to familiarize yourself with the whole college funding process and develop a comprehensive, multiyear plan that will take into account college admission strategies, cash flow strategies, financial aid strategies, and tax and other financial strategies.

Using the services of a college funding consultant who is a specialist in late-stage college funding planning is highly recommended. Most families are not even aware this type of planning exists. For a reasonable fee, a good qualified college planning consultant may be able to save your family literally tens of thousands of dollars in college expenses. The key here is not to wait until your child is just about to leave for college. This planning should be done before your child starts applying to colleges, preferably before your child is a junior in high school. Planning in advance may very well be one of the best financial decisions you ever make and will enable you to pay for college and still be able to save for retirement and other financial priorities.

Mistake #2: Parents don't learn the “rules” to the college funding “game.”

Many parents assume they can just “wing it” when the first college bill comes their way. You figure you can just rely on your child's high school, books, the Internet, your CPA, or friends who already have children in college to provide you with all you need to know about paying for college. All these resources are good places to start to gather information, but they will not provide the depth of knowledge and customization necessary for your family to reach the most beneficial outcome. Don't be like the majority of families who make the mistake of thinking they can easily navigate through the college funding process themselves and that the colleges will help them. These families routinely end up with a lot of added stress and a less-than-ideal outcome of paying more than they have to for college.

You need to be proactive when it comes to paying for college. You need to be informed and develop a strategic plan specifically for your family that takes into account admission strategies, financial aid strategies, and tax and financial strategies. Again, a combination of pertinent strategies for your family's unique situation may save you tens of thousands of dollars. The financial aid rules alone cover more than 2,100 pages! Can you imagine filing an income tax return without taking advantages of tax deductions or credits available to you? Wouldn't you end up paying more than your fair share of income taxes? The same holds true when paying for college. If you don't take advantage of “college funding discounts and deductions” you will end up paying a lot more for college than you need to.

Make sure you learn “the rules” for strategies you can use to lower your college bill and what you should and should not do before applying to colleges and for financial aid. A professional college funding specialist can be your best ally to guide you through this maze.

Mistake #3: Parents believe that high school counselors can provide all the information they need.

High school counselors can be a tremendous resource for basic college funding planning information. But it is not unusual for one high school counselor to work with several hundred students at a time. Counselors routinely spend 90 percent of their time working with only 10 percent of their students. Counselors try their best to be helpful, but you cannot rely on them to help you lower your family's college expenses to the degree it may be possible.

Many high schools offer meetings for parents at the school that will describe the financial aid process and some of the forms that need to be filed, such as the FAFSA (Free Application for Federal Student Aid). However, high school counselors are not trained in financial aid planning for individual families. They are not qualified to give advice on how your family can maximize your opportunities for financial aid. Counselors are not familiar with the more than 5 pounds of financial aid rules! In addition, financial aid is only part of the college funding process. How much you pay for college will be also be contingent upon how you handle the admissions process and what tax and financial planning strategies pertinent to your family you end up putting into action.

Mistake #4: Parents with higher incomes or assets assume they won't qualify for any type of financial aid.

First, you must understand there are two different types of financial aid offered by colleges and universities. The first type, “need-based” aid, takes the parents' and student's income and assets into account. The second type is “merit” aid, which is based on academic achievements and has nothing to do with financial need. (And don't think your child needs to have a 4.0 grade point average to be awarded merit aid! There are plenty of great colleges that will award merit aid to students with 3.0 or higher GPAs.) If a college wants to attract your student, no matter what your income or assets, you may very well be offered a tuition discount to entice your child to attend if he or she is marketed effectively.

But to have a chance at any of these offers you must apply for financial aid. If you are a high-middle income, high-income, or high-net worth family that won't qualify for need-based financial aid, you still need to apply. Up to now you probably thought there is not much you can do to lower your college expenses. You most likely believed the myth that all you can do is apply for education loans or write a check when the bill comes. Your college funding plan is simply, “Whatever the cost is, it is. Somehow we'll find a way to pay for it.” This line of thinking can cost you thousands of dollars of potential savings! If you are a high-middle income, high-income, or high-net worth family, with proper planning, not only can you get money from colleges but you can also let the IRS pay a big piece of your college expenses! This is “financial aid” for the affluent! (Click here to view our free report on How to Pay for College with Pre-tax Dollars.)

Mistake #5: Parents assume they are doing their child a favor by not making them responsible for any of their college expenses.

The years your child spends in college are a time of transition and a bridge between being a teenager and becoming a young adult. Parents can be very valuable in helping to guide their child into becoming a responsible adult. So many adults today have never been taught how to be financially responsible. Many adults do not know how to effectively manage debt, develop and follow a spending plan, or set and work toward achieving financial goals. The years spent attending college can be used to help your child develop healthy financial habits that will follow him or her into the adult years.

It is a well-known fact that most people will better appreciate and take care of something they have paid for. Having a student take on responsibility to pay for some of his or her college expenses can provide a valuable lesson in fiscal responsibility. At a minimum, we recommend a student be responsible for earning their spending money. To accomplish this, your child can work during the summer or work part-time during the school year. It is interesting to note, studies have shown that students who work 15 hours per week or less during the school year tend to receive higher grades in college. These students are forced to focus more on time management than students who do not work.

In addition, students who earn rather than those who are just given money for their college expenses will usually think a lot harder about how they are spending their money. These students tend to spend wiser and have a higher likelihood of developing good budgeting skills. The earlier your child can develop healthy financial habits, the less likely he or she will have financial challenges later in life. Having your children be responsible for a portion of your family's college expenses can help them learn, in a small way, what it is going to be like after college when they are completely on their own financially.

If you can avoid making the above five mistakes parents make when paying for college, you will be well on your way to minimizing your family's out-of-pocket costs for college and beyond. To find out more about how you can avoid these mistakes and others and take control of your family's college funding process, click here to find out how a professional college funding consultant can help your family avoid paying the full price for college. source of this article