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Why college financial planning is a very good business opportunity


College Financial Planning is a high value service for your existing clients, a valuable service for new client prospecting, and a point of differentiation from traditional wealth and retirement advisory.

1 - It is an opportunity to expand your business by creating significant value for your clients. You can save your clients $thousands annually in college tuitions, and then add hundreds of $thousands to their child’s lifetime earnings. It is also an offset to margin erosion in investment advisory, and the challenges in differentiation from other wealth advisors. College planning involves hands-on client engagement, which is an excellent hedge against the robo-advising trend.

The market opportunity is significant as families make $500 billion in college commitments annually. Each year, 2.5 million students enroll in college. Every parent wants their kid to succeed in college, and the 50 years thereafter. College selection is tricky when each college has a formula that results in some students paying zero tuition, some pay full price, while the remaining 80% are spread across a distribution between those 2 extremes. Your value creation for the client will come from showing the family how they can save on tuition costs, and developing a plan that leads to a real career.

College planning engagements range from completing the FAFSA ($400 starting point to $1200 for families with assets) through to college and academic major selection at $5000 on up. Another aspect of college planning is ‘financial positioning’ which involves moving assets for the purpose of reducing exposure.

And finally, college planning is a very different discussion than the standard topics of portfolio management and retirement planning. College planning is personal, it is time sensitive, and it goes to the essence of the family, their future, their legacy. Showing a family that you care about their children, and can bring material assistance to a highly uncertain element of the families’ future is much closer to home than talking about a few basis points or tax deferments. These are engagements that are priceless to your client families.


2 - It is a national imperative – young people entering the workforce have historically been crucial contributors to the economic stability and future of America. For generations, persons aged 22 to 30, landed a career tracking job, got married, bought a house, started a family, and planned for retirement. These productive people paid into the tax systems, fed their pensions, funded social security, and accumulated wealth, while preparing their children to repeat the process.

From 2005 onward, the entire calculus of ‘the American dream’ changed dramatically for the worse. A majority of this newest cohort became ‘economically constrained’ in two main financial areas: 1- 60% were ill equipped for the labor market and landed in lower paying occupations (retail, hospitality, service sector), 2- were allocating a significant portion of earnings to student loans that would previously have been used for mortgage payments and investments.

Why does this matter to you and your clients? Which side of the ledger should young people be on? Earning, contributing, investing, and successful? Or burdened with student loans and dead end jobs? Let’s work together to help families make the right decisions.


3 - Working with families on college plans leverages your core skills in financial planning, while introducing a strategic component that is fascinating. It’s a high value service that can’t be replaced by ‘robo advising’ or a ‘software solution’. It’s not simply a function of filling out applications and picking a college. This is thoughtful and strategic planning - and that is why the value creation is so high. Over the course of 4 chapters, you’ll learn the technicalities of college planning, such as the paperwork and applications side of the process. You’ll also gain extremely valuable insights into admissions pricing models and how to select a college using that knowledge – to save your clients $thousands on tuitions annually.

This is college to career planning – it’s not about getting the child in. As everyone is now aware, with a big enough check, anyone can get into even the elite colleges. This is about building a practical college plan that gets the kid out, on time, with a degree that leads to a real job. And when that happens, you’ve got a legacy client that will become generational when the graduate opens an investment account with you.




This Section focuses on applications, paperwork, checklist management, and other administrative functions. We’ll tell you upfront that preparing for, and applying to college requires a lot of forms being filed, the process is not particularly intuitive, and it does require reasonably good organizational skills. Missed dates and incomplete forms can be costly or even cause a student to not be considered for a specific college. Many clients choose to offload the paperwork burden to their Advisor – therefore, the paperwork administration can be a service that brings in new business.

To support your efforts in working with families in college to career planning, we created the Financial Advisors College Planning System. The System is referenced throughout this guide. It contains information that is used in college planning, links to programs and resources for college planning, and most importantly – all of the information within the System is organized in a sequential, process oriented manner. You don’t need to follow the steps of the System verbatim – many advisors use it 'a la carte’, leaning on what they need, depending upon the clients’ needs. Do think of it as a resource you’ll want to bookmark and use as an all in one reference.

One last comment regarding the System – we have an accompaniment to the System for families, and it’s the College To Career Planning System. This was designed to inform parents and enable them to have cost conscious discussions with their kids that underscore the importance of real career planning.

Here we go:

  1. FAFSA (Free Application for Federal Student Aid) – everything flows off of the FAFSA, including the applications to specific colleges. The FAFSA is much like a tax filing and includes much of the same information that is submitted to the IRS in a schedule 1040 Federal Tax Return.
  2. CSS Profile (College Student Scholarship Profile) – is like a ‘FAFSA lite’ and it determines if the student will qualify for any scholarship monies. It’s worth doing when you complete the FAFSA.
  3. Our Checklist is an indispensable project management tool. This will help you and your client to understand the important functions of college planning, as well as keep track of key dates and deadlines.
  4. Services and pricing schedule – this pricing document, Advisors Services and Fees shows the common functions that an advisor will provide for clients, along with a pricing schedule for those functions.
  5. It is strongly recommended that you spend some time in Module 1 of our Financial Advisors College Planning System. Within Module 1, you’ll learn about the intersection of the FAFSA and college pricing models. Income, financial assets and the students’ SAT/ACT scores are the major determinants of the tuition that the family will be charged. All of this information is provided in Module 1. You’ll also find guides to help you fill out the FAFSA and other applications.
  6. If you’ve got a competent administrative manager in your office, it’s worthwhile to have that individual be the point person for FAFSA’s, applications, and Checklist management. Families are easily overwhelmed with the various functions and many will happily hand all of this off to capable hands.

Families frequently place a strong emphasis on which college they’ll send their child to, yet they’ll allocate too little time to the selection of an academic major, which is the most important aspect of college planning. Academic majors provide specific pathways to jobs – they are the foundations of a career track.

There are a lot of factors that ultimately determine where a given student will end up studying; the primary ones’ being family finances and test scores. What happens though with many families is that they have a perception that a degree from elite tier college is going to guarantee their child’s success in the job market – it won’t.

There are about 25 elite colleges in the U. S. which will catch a recruiter’s eye. The other 1300 colleges are where the real world gets their degree. Recruiters run filters on resumes and the first order of culling is by academic major. They are hiring for a skill set, not a label.

This clearest way to express the disparity in value of one major over another is that STEM majors (science, technology, engineering and math) have starting salaries that are approximately 2.5 times higher than ‘soft’ majors. In the past 20 years, wages in STEM occupations have risen by about 3% annually, whereas wage gains for soft degrees have been in the 1.5% range annually.

It is crucial that you inform your clients that long term value creation lies in the selection of the academic major. We have important and intuitive programs that will help you and your client families select academic majors. An engineering, healthcare or finance degree from a middle tier state college pays over $50k in starting salary. Conversely, the jobs available to persons with soft degrees pay wages on par for persons with a high school diploma.

CollegeBuddy – 48 different majors and all of the jobs, with salaries where recent grads are employed.

CareerBuddy – a solid reality check regarding the jobs that actually exist for recent grads, and the competition for those jobs. This ones’ an eye opener and families love to see the actual results of where recent grads are employed.

Our College Planning System for Financial Advisors provides the insights you’ll need for informing parents of the importance of choosing the most appropriate major for their child, along with programs that support the process. Module 2 the System has been written for this specific purpose. The following programs will allow you to explore the pathways from academic major, to the job market. All supported by facts and data.

Moving on to selecting a college - the first concept regarding college selection is that tuitions are variable and negotiable. Yes, tuition is negotiable. In fact, we have a program that will provide you with the range of tuitions charged last year by each college in our database. If you pad around the College Tuition Negotiator, you’ll see the actual range of tuitions charged last year. You’ll also be informed of the average tuition, the percentage of students that were given grants, and the amounts of those grants. Your clients will find this information to be extremely valuable when they can sit in front of an admissions officer and be fully informed with admissions data.

Colleges employ sophisticated pricing models that enable them to optimize yield (revenue) from each class of students. These dynamic pricing systems establish a range of probabilities of a student enrolling across a range of prices, which based upon each families ability to pay, and the students’ test scores. We have mathematically deconstructed the fundamentals of these pricing models and share our insights with you through our College Admissions Probability program. We actually advise clients to review the User Guide of this program before running any actual analyses. With the information provided by the FAQ and User Guide, you’ll understand not only the tuition structure of the colleges, but the strategies they will employ to try and get you to pay top dollar.

Negotiate with each college. It may seem a bit odd that an academic institution has a variable pricing structure, but when you’ve moved beyond the initial surprise, then you’ll realize that the negotiation process is really pretty straightforward. Here are a few key points to help you with the process, and know that when you’re equipped with the right information and data, you can likely save $ thousands annually at a public school and in excess of $10,000 at most private colleges.

The general strategy for negotiating tuition with colleges is as follows:

  1. Know what you can afford. Run some analyses with our College Business Plan to set a preliminary budget. You’ll tighten up the numbers once you get feedback from the colleges.
  2. Generate a list of at least 8 colleges that offer the academic major and where your test scores are within the range of the candidate schools. Some college consultants advocate adding a few ‘reach’ schools (Your test scores will be below range. Those schools will only accept students who pay close to full tuition.)
  3. Apply to each of the schools. (Use our Checklist to keep everything on track)
  4. You should receive at least a few acceptance letters. With those acceptance letters, the process of negotiation can begin as each letter will contain a reference to the Expected Family Contribution (EFC), which is the tuition they are hoping you will pay.
  5. Compare the EFC’s that you’ve received to what you had hoped to pay. Are you close? Are some not worth considering?
  6. Set up a discussion with each school and explain to each the following:
    1. Live at home. We say this because if there is a continued lockdown, or a secondary outbreak – you will live at home.
    2. Attend a college near your home that offers the following:
      1. Thank you and I am interested.
      2. I am looking at numerous other colleges, and this is the number that I need to hit $____ in order to meet my budget.
      3. Let them know that you will commit to their college if they hit your number. Ask the college to provide you with a response by a specified date.
    3. You will receive counter offers (revised EFC numbers) from the colleges. The decision is then in your hands when you receive those counter offers.

Here is an opportunity to create an incredible amount of value for your client families. All of which revolves around applying your financial skills to developing their children’s college plans.

We like to introduce to a family the idea that they should have a business plan for college. The rationale is irrefutable – whether buying a home, starting to invest, or obviously when starting a business, you need a plan. Explain to a client that the Small Business Administration requires a detailed business plan before they will consider loaning any money, as does every bank. It’s just common sense – and the exercise itself is very valuable. A business plan, with financials causes the borrower (or in this case, the family and student) to think through their intentions, and to justify the costs and the ROI. The process of running multiple scenarios, making revisions, questioning assumptions – all of that is of great value to the family. It’s also the first time that they will have thought about college in a financial sense. Furthermore, it generally helps to bring some rationality to the student who likely has no experience with financial matters. The parents will be exceedingly thankful to you for exposing their kid to financial realities, which can be difficult discussions between parents and their kids. But they are necessary discussions.

We have a superb program, the College Business Plan, which builds a business plan with financials for families. It takes 5 minutes to run through the program, and it is incredibly eye opening and thought provoking. It’s free, though premium data which allows you to pull down a personalized spreadsheet in Excel is $10. The value to the family will be in the tens of $ thousands. Most importantly, it establishes a well thought through set of guideposts for the family, with a real budget. And for you, this budget and these guideposts will provide you with great reasons to ‘check in’ with the family on their child’s progress through college.

The 529 plan. Many financial advisors had long thought that a 529 plan was a college plan. A clarification is needed – a 529 plan is an important investment component of a college plan.

A quick primer on ‘529 plans’ - there are two choices for tax advantaged college savings plans: 529 Plans and Education Savings Accounts (ESAs or Coverdell accounts). Both versions offer tax deferred growth, provided the proceeds are used to finance qualified education expenses (tuition, books, computers, and room and board). Though the principal and any gains can be withdrawn tax free from both 529 plans and ESA’s, it should be noted that there are important distinctions regarding contribution amounts provided by these plans. ESA’s are capped at $2,000 per year while 529’s allow for up to $75,000 per year. That higher funding limit is beneficial as many families start funding a plan late and commonly need to ‘jump start’ their account.

And then there is a big question regarding every 529 plan, “How much will I need to accumulate in a 529 plan?” Because of the wide array of input costs, families don’t know how much, or even what to budget for. And those costs can vary by factors of 5 or more. Tuition alone can range from $5,000 to $75,000 annually for undergrad programs. Families assume their child will graduate in 4 years, yet the nationwide average is 5.3 years. Tuition accounts for only about half of the total cost of college for families who send their child to a state school. Fortunately, the College Business Plan has a 529 function built in which will tell you the funding required for each specific 529 plan. That ‘529 number’ is a key figure in the overall college plan for a family.

Lastly, encourage the family to get their hands on the College Business Plan as well. Suggest that the student be required to run scenarios until they can produce a plan that shows no ‘red ink’. Again, they will be infinitely wiser regarding the costs and outcomes of college. When they need a final budget done along with their 529 number, you as the advisor can be the arbiter and record keeper for the family, as you are with their other financial matters.

College Business Plan

Module 4 Text

Coming June 3 - this module will focus on 'closing the loop'.... working with the student through a career plan, leading to investment mgmt for the student as they become self sufficient.


Business Development – your existing clientele are obvious candidates for college planning services. Prospecting with college planning can be an excellent way for bringing in new clients. Below are some of the ways we can help you to grow your business.

Use of the Financial Advisors College Planning System, and programs within the System is free. Subscribe for full access to premium data for $99 annually per financial advisor, regardless of the number of families who benefit from the data.