Financial Planning for the Full Cost of College

Joe Pitzl, CFP®, is the Managing Partner at Pitzl Financial. He spoke with Investopedia about working with families on the ever-increasing cost of attending college, and how to prepare children for the cost of their education.

We are at the financial planning associations conference in nashville i’m drawing by joe pizza from pizza financial in st. paul minnesota thanks for joining us thank you thanks for having me here to talk about college planning and families planning for that big life stage event obviously it has to happen way before college but talk to me about the whole holistic

Nature of making that making that plan as a family yes i mean education obviously is a huge commitment that’s a values decision everybody goes about it in a little different way and has a little different kind of thought process or mentality in terms of how they want to tackle it so there’s no one-size-fits-all solution which is both good and bad kind of brings out

The creative element to the planning process and at the same time a lot of people sometimes just want a simple answer and that’s just not how it works it doesn’t work that way and the nature of education especially college education has changed dramatically in the past decade so there’s everything from junior colleges to online colleges to a couple year-to-year

Programs community colleges the range has expanded and therefore the choices that families can make has expanded to how do you try to open those doors up for your clients to get them to understand that a little bit better sometimes people can come in with some preconceived notions of what college is gonna look like throughout the planning process it really

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Just requires trying to understand both the parents objectives and also what the children are trying to accomplish what’s realistic for them the challenges can really just become trying to help parents navigate this with an understanding that there has to be a big element of flexibility in there not only to ensure that the kid is getting the education that they

Really want and desire but also in some cases to actually protect some of the assets from inadvertent penalties and taxes what are the two or three of the most common misconceptions you see families have when it comes to planning for college some people come with the sort of feeling or obligation that they owe this to their children entirely you know some really

Interesting new research that’s being published now and evidence that you show is that children that have skin in the game throughout the process actually perform better at school they take it more seriously they study harder and better and get better grades you have one piece of advice that covers it generally for families thinking about starting that 529 plan or

Alternatives to to funding they’re there the child’s education what would it be consider that there ought to be a little bit more of a multi-pronged approach to the process so not every dollar that gets allocated towards college savings for example should necessarily go and go 529 plan certain families every dollar can they’re not really going to have the ability

To save save enough to cover the full cost of college but you want to build some flexibility in there in case your child decides to take a different educational path 529s if you don’t using for education purposes you can penalize pretty heavily so you know simple brokerage accounts and we have some clients that instead of actually saving dollars into accounts

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For their children’s education they try to get a mortgage paid off by the time the kids go to school and it frees up a whole bunch of cash flow to just pay it out of pocket so there’s a lot of different ways to do it you know and just have to figure out which plan and strategy works best for you so it’s that optionality but also looking at planning from a holistic

Perspective which sounds like something you do with the families you are

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Financial Planning for the Full Cost of College By Investopedia