WEBVTT NOTE This file was generated by Descript 00:00:07.045 --> 00:00:09.415 Candace Dellacona: Welcome to the Sandwich Generation Survival Guide. 00:00:09.415 --> 00:00:13.705 I am your host Candace Dellacona, and I'm happy to welcome today 00:00:13.765 --> 00:00:18.865 Jack Wang, who is a wealth advisor with Innovative Advisory Group. 00:00:19.285 --> 00:00:22.945 More importantly though, Jack is the host of a podcast 00:00:22.945 --> 00:00:25.605 called The Smart College Buyer. 00:00:25.885 --> 00:00:26.635 Welcome Jack. 00:00:27.730 --> 00:00:29.455 Jack Wang: Candace, thank you so much for having me on. 00:00:29.455 --> 00:00:30.235 I really appreciate it. 00:00:30.790 --> 00:00:34.390 Candace Dellacona: So let's tell our listeners, Jack, a little bit about your 00:00:34.390 --> 00:00:38.830 background and how you have gotten here. 00:00:38.830 --> 00:00:44.440 You are a commercial banker by trade, and from what I understand, you were in 00:00:44.440 --> 00:00:49.540 commercial banking for many years and you transitioned into wealth advisory 00:00:50.090 --> 00:00:55.580 which I think is the normal course of events and where you got your footing. 00:00:55.580 --> 00:00:59.570 So obviously we know you're a finance person and so you figured out 00:00:59.570 --> 00:01:05.240 something that you enjoyed obviously, and you sort of segued into the 00:01:05.240 --> 00:01:08.240 question of how to pay for college. 00:01:08.580 --> 00:01:09.450 Is that right? 00:01:09.450 --> 00:01:13.450 Can you give us a little bit of detail on that and how you got here? 00:01:13.555 --> 00:01:14.905 Jack Wang: Yeah, absolutely. 00:01:15.005 --> 00:01:16.625 So my background is finance. 00:01:16.625 --> 00:01:21.235 It's it's actually what I went to school for and doing the work that I do today. 00:01:21.605 --> 00:01:26.075 Apparently I'm one of the few people who actually works in a field that's actually 00:01:26.075 --> 00:01:28.055 connected to their undergraduate major. 00:01:28.215 --> 00:01:31.015 So many people, I talk to parents like, oh yeah, I majored in 00:01:31.015 --> 00:01:33.145 X, but I really do Y today. 00:01:34.165 --> 00:01:36.175 So I'm a kid who grew up in Massachusetts. 00:01:36.865 --> 00:01:41.785 But I actually went away to the University of Texas at Austin, so Texas Longhorns. 00:01:42.265 --> 00:01:44.215 That was a tremendous experience. 00:01:44.215 --> 00:01:48.585 It actually gives me a lot of material to talk about today with families about 00:01:48.585 --> 00:01:50.835 what it's like to go far away from home. 00:01:50.885 --> 00:01:54.665 And, yes, it's still the United States, Texas compared to Massachusetts, 00:01:54.665 --> 00:01:57.275 might as well be a whole nother country, a whole nother world. 00:01:58.425 --> 00:02:00.225 And I loved it and I absolutely loved it. 00:02:00.625 --> 00:02:04.645 So graduating, I did start out in the commercial banking field for many 00:02:04.645 --> 00:02:06.945 years and did quite well on that. 00:02:07.435 --> 00:02:12.625 What ultimately led me down this path was, I was going through a couple of 00:02:12.625 --> 00:02:18.495 consolidations, it got laid off a couple times and, so that ended up leading me 00:02:18.495 --> 00:02:23.815 to one of the major investment firms, a name that everybody would recognize. 00:02:23.865 --> 00:02:29.385 And at that time they were hiring bankers to do lending business and 00:02:29.385 --> 00:02:30.945 not just the investments business. 00:02:30.945 --> 00:02:32.115 So I went over there. 00:02:33.295 --> 00:02:37.625 What I did not know was that by the time I got over there, they 00:02:37.625 --> 00:02:43.565 had lent money to all of the different companies that traditional 00:02:43.565 --> 00:02:45.065 bankers would like never touch. 00:02:45.065 --> 00:02:47.195 So they were losing money hand over fist. 00:02:47.855 --> 00:02:51.845 But the takeaway from that was the introduction to financial services. 00:02:51.845 --> 00:02:55.295 So if you work for this company, I joke that you could be the janitor and 00:02:55.295 --> 00:02:56.765 you're still getting all your licenses. 00:02:56.815 --> 00:03:02.095 That was just a rule, but it really gave me this view of this world. 00:03:03.715 --> 00:03:08.965 Coincidentally, I was actually going through a divorce at that 00:03:08.965 --> 00:03:14.285 time, and my kids were like junior high, young, high school age. 00:03:15.495 --> 00:03:18.595 And so of course at that time I got some training at that firm and, I 00:03:18.595 --> 00:03:22.600 knew as much about college savings and college financial aid as the average 00:03:22.600 --> 00:03:26.560 financial advisor, which is hey, start saving the day your kid's born. 00:03:26.560 --> 00:03:29.410 Shove enough money in there and pray that you have enough by the 00:03:29.410 --> 00:03:30.610 time your kid goes to college. 00:03:30.800 --> 00:03:33.740 It's pretty much the extent of most advice. 00:03:34.370 --> 00:03:38.930 So just coincidentally, at that time I was playing on a men's baseball team in 00:03:38.930 --> 00:03:40.460 a men's baseball league, I should say. 00:03:40.460 --> 00:03:46.050 And one of my teammates, who is still a very good friend today, he, at that 00:03:46.050 --> 00:03:50.450 time was the financial aid officer at one of the major extremely well-known 00:03:50.450 --> 00:03:51.980 universities here in Massachusetts. 00:03:51.980 --> 00:03:56.870 So literally in between innings, I'm peppering him with questions, 00:03:57.320 --> 00:04:00.440 not because I was trying to build a business out of it or anything, but I 00:04:00.440 --> 00:04:03.995 wanted to know for myself that was the whole point I want to know for myself. 00:04:03.995 --> 00:04:06.665 And he was very generous with his time, his knowledge. 00:04:08.210 --> 00:04:12.260 And so what I found was that, hey, if I needed to know this, other 00:04:12.260 --> 00:04:13.550 people probably need to know. 00:04:13.550 --> 00:04:15.050 And it's kind of complicated. 00:04:16.205 --> 00:04:21.035 So even though my official title I think is Wealth Advisor, I have focused 00:04:21.035 --> 00:04:27.155 my entire practice today exclusively on college financial aid planning, how 00:04:27.155 --> 00:04:31.355 financial aid works and then on the backend, managing student loans for those 00:04:31.355 --> 00:04:34.915 who have, let's say, gone to graduate school, law school, medical school, 00:04:35.155 --> 00:04:38.215 and now they have a lot of student loan debt that they need some help with. 00:04:38.725 --> 00:04:40.475 So that's what I do. 00:04:40.525 --> 00:04:45.375 And in fact, just a short while ago I was actually at an event with many of the 00:04:45.375 --> 00:04:49.665 financial aid administrators, financial aid officers at Massachusetts colleges. 00:04:49.665 --> 00:04:53.425 There was an event, and actually coming up, I'm going to another 00:04:53.425 --> 00:04:57.715 event where 30 or 40 different colleges from around the country are 00:04:57.715 --> 00:05:00.415 presenting information on themselves. 00:05:00.865 --> 00:05:03.175 You know, when I say that, I'm deep into it. 00:05:03.715 --> 00:05:05.905 I am deep into it. 00:05:06.555 --> 00:05:10.305 Candace Dellacona: So you're getting the information Jack, from the actual sources 00:05:10.305 --> 00:05:15.255 from the universities and the people making the decision in those offices. 00:05:15.285 --> 00:05:15.626 Is that accurate? 00:05:16.230 --> 00:05:16.500 Jack Wang: Right. 00:05:16.785 --> 00:05:16.945 Absolutely. 00:05:18.045 --> 00:05:21.255 Candace Dellacona: Jack, let's talk a little bit about how your 00:05:21.255 --> 00:05:25.005 role as a dad, as a financial person has intersected here. 00:05:25.005 --> 00:05:29.145 You've spent your entire career making sure that you're on the cutting edge 00:05:29.145 --> 00:05:33.585 of all these wealth advisory topics when you meet with your clients and 00:05:33.615 --> 00:05:38.925 you found a different niche that many financial advisors have not, 00:05:38.925 --> 00:05:41.925 and that is how one pays for college. 00:05:41.925 --> 00:05:43.335 Which, let's face it. 00:05:43.335 --> 00:05:49.305 As Americans, we are in a position where at least we have to pay something 00:05:49.305 --> 00:05:51.555 for our children to go to college. 00:05:51.825 --> 00:05:56.625 Whereas in Europe and in other countries, it's very subsidized and 00:05:56.625 --> 00:06:01.485 the responsibility doesn't fall to the parents necessarily, and even state 00:06:01.485 --> 00:06:06.615 schools here in New York where you are in Massachusetts, those price tags 00:06:06.615 --> 00:06:08.805 have continued to grow over the years. 00:06:08.805 --> 00:06:12.400 So let's start with the basics for our listeners. 00:06:12.400 --> 00:06:17.470 Where should a parent start and when your child is thinking about applying 00:06:17.470 --> 00:06:22.960 for college, is that where you should begin or is it already too late? 00:06:22.990 --> 00:06:26.170 Can you fill us in on the jumping off point? 00:06:26.315 --> 00:06:26.885 Jack Wang: Yeah. 00:06:26.895 --> 00:06:30.475 And I'll tell you the answer to that is earlier than most people think. 00:06:31.105 --> 00:06:35.265 And so again, I don't mean, the day that your kid's born starts saving money, 00:06:35.265 --> 00:06:37.665 although that would ultimately be ideal. 00:06:37.665 --> 00:06:41.025 But I can tell you with, in all honesty, that when my kids were 00:06:41.025 --> 00:06:44.025 born, the last thing I was thinking about was saving for college, right? 00:06:44.075 --> 00:06:48.155 I'm up to my eyeballs and like diapers and onesies and wipes. 00:06:49.410 --> 00:06:52.870 And I still remember those days where like you're just going to grocery 00:06:52.870 --> 00:06:56.260 store, but you're packing like you're leaving the country for a month. 00:06:57.070 --> 00:06:58.360 So I remember that still. 00:06:58.360 --> 00:07:03.470 My kids are much, much older now, but anyway, I say that it starts earlier than 00:07:03.470 --> 00:07:07.490 you think because the typical timeline, and by the way I should mention that 00:07:07.730 --> 00:07:09.800 what I do is late stage college plans. 00:07:09.800 --> 00:07:12.110 So really when kids get to high school. 00:07:12.420 --> 00:07:15.270 What are the sort of the steps that they need to take at that point? 00:07:16.410 --> 00:07:20.070 But most students, most high school students, and most parents, quite 00:07:20.070 --> 00:07:25.920 frankly, don't think about the college planning process until about junior year, 00:07:25.920 --> 00:07:27.660 typically the second half of junior year. 00:07:27.660 --> 00:07:29.310 And there's a number of reasons for that. 00:07:29.740 --> 00:07:31.480 But now college is close, right? 00:07:31.480 --> 00:07:33.640 They can kind of see the finish line to high school. 00:07:33.640 --> 00:07:34.750 They're thinking about what's next. 00:07:35.575 --> 00:07:39.825 And also high school guidance counselors, the reason they talk 00:07:39.825 --> 00:07:43.495 to high school juniors is because in the fall of the school year, the 00:07:43.495 --> 00:07:47.065 guidance counselors are working with the seniors on their applications. 00:07:47.725 --> 00:07:52.085 And so by the time the spring semester rolls around, they're 00:07:52.085 --> 00:07:53.795 largely done with the seniors. 00:07:53.795 --> 00:07:56.975 So now those guidance counselors have time to talk to the juniors 00:07:56.975 --> 00:07:58.585 about getting ready for college. 00:07:59.920 --> 00:08:03.310 The summer in between junior and senior year is really the most popular 00:08:03.310 --> 00:08:06.340 time when all the families go on the different college tours and things, 00:08:07.600 --> 00:08:09.580 but it starts earlier than that. 00:08:09.580 --> 00:08:17.350 And so because of the way the timing works in financial aid the first year of tax 00:08:17.350 --> 00:08:24.730 return that is looked at to calculate aid actually spans the spring of sophomore 00:08:24.730 --> 00:08:29.335 year through the fall of junior year, that's actually known as the base year. 00:08:29.335 --> 00:08:32.335 So as an example, just to put some dates around it. 00:08:32.335 --> 00:08:35.605 As we're recording this, if your son or daughter is going to be a high 00:08:35.605 --> 00:08:39.745 school senior in fall of 2025, meaning that they're gonna go to college 00:08:39.745 --> 00:08:44.165 in fall of 2026 when you fill out the financial aid form in fall of 00:08:44.165 --> 00:08:49.475 2025, the form is gonna look at the most recently completed tax return. 00:08:49.835 --> 00:08:52.805 So in the fall of 2025, your most recently completed tax 00:08:52.805 --> 00:08:56.165 return is tax return for 2024. 00:08:56.915 --> 00:09:01.145 But then if you work backwards and think about what grade was your kid in in 2024? 00:09:01.145 --> 00:09:03.785 It's the spring of sophomore year through the fall of junior year. 00:09:04.955 --> 00:09:08.015 And so then if you need to, let's say, move things around and there's 00:09:08.015 --> 00:09:12.545 all sorts of tax strategies and stuff that people can do, you need to not 00:09:12.545 --> 00:09:17.015 only start that, but also get it done before it hits that tax return, which 00:09:17.015 --> 00:09:22.895 really means in our example financial aid can be based on the 24 tax year. 00:09:23.165 --> 00:09:28.565 You really need to start doing this and finishing by, say, the 23 tax year 00:09:29.355 --> 00:09:31.575 so it doesn't hit the 24 tax return. 00:09:32.405 --> 00:09:33.935 Candace Dellacona: So that's really helpful, Jack. 00:09:33.935 --> 00:09:39.365 So basically what you're saying is that there really is a window of time that 00:09:39.365 --> 00:09:44.765 parents really need to think about because we're going to have to provide almost 00:09:44.765 --> 00:09:50.920 a snapshot of our financial information as it relates to what need will be. 00:09:51.555 --> 00:09:55.245 So having those documents in place for that snapshot is really 00:09:55.245 --> 00:09:56.330 what we need to think about. 00:09:57.345 --> 00:09:58.245 Jack Wang: Exactly. 00:09:58.275 --> 00:10:02.605 And so, what that really means is families should think about the financial 00:10:02.605 --> 00:10:05.305 aspect really as early as freshman year. 00:10:06.415 --> 00:10:09.895 And now the most common pushback is, wait, hold on, hold on. 00:10:10.465 --> 00:10:12.685 My kid just got to high school. 00:10:13.630 --> 00:10:18.010 My kids still like figuring out how to not get lost in the building, 00:10:18.010 --> 00:10:21.010 and you're telling me I gotta start thinking about college already. 00:10:21.010 --> 00:10:24.020 It's well, yeah, that's just the way the timeline works. 00:10:24.650 --> 00:10:27.950 But also at the same time, college is such a big investment. 00:10:28.020 --> 00:10:34.170 The most expensive colleges these days are 90 to $95,000 per year. 00:10:34.220 --> 00:10:38.735 So after four years, in most parts of the country, you're buying 00:10:38.735 --> 00:10:40.835 a house, the equivalent, right? 00:10:40.865 --> 00:10:42.305 Or close to one anyway. 00:10:43.925 --> 00:10:47.870 And so if you think about buying a house. 00:10:49.225 --> 00:10:53.305 You can go house shopping and you say I want a house like four bedrooms, two 00:10:53.305 --> 00:10:55.075 bathrooms, or whatever the case may be. 00:10:55.255 --> 00:10:59.365 But ultimately, when you buy that house, you're also looking at the neighborhood 00:10:59.365 --> 00:11:03.835 and what the yard is like, and maybe the commute to work and how far that is 00:11:03.835 --> 00:11:08.325 or how close the grocery store is, or what, there's other factors that are not 00:11:08.325 --> 00:11:10.185 necessarily specific to that one house. 00:11:10.845 --> 00:11:14.835 I often tell families that picking college is really the same thing. 00:11:14.835 --> 00:11:19.395 It's yeah, you might look at what majors they have or how big it is 00:11:19.395 --> 00:11:22.125 or whether or not their football team's any good or whatever. 00:11:22.455 --> 00:11:25.875 But really it's the stuff that's off campus, and whether it's far away from 00:11:25.875 --> 00:11:30.435 home or not like I went far away from home and all those other factors that makes a 00:11:30.445 --> 00:11:35.025 huge consideration because at the end day, what parents I think and students tend 00:11:35.025 --> 00:11:40.645 to forget about is that, like your kid has to live there for four years, right? 00:11:40.645 --> 00:11:43.375 Whether it's on campus or off campus, but they ultimately have to live there. 00:11:43.735 --> 00:11:47.995 And so if they have to live there, they better like it. 00:11:49.175 --> 00:11:52.235 A lot of kids when they don't start their search or really start thinking 00:11:52.235 --> 00:11:55.745 about it until junior year a lot of families are fixated on the name. 00:11:56.235 --> 00:11:59.595 I wanna go to this college because of this name, or all my friends 00:11:59.595 --> 00:12:00.525 are going there, or whatever. 00:12:00.685 --> 00:12:02.755 But just because your friends are going there doesn't mean 00:12:02.755 --> 00:12:04.615 that you actually like the place. 00:12:06.175 --> 00:12:09.845 And so what ends up happening is there's not an insignificant 00:12:10.205 --> 00:12:11.000 proportion of students. 00:12:11.000 --> 00:12:16.010 So roughly a quarter of all college students each year transfer schools. 00:12:16.040 --> 00:12:17.790 It's not because they flunk out or anything. 00:12:17.790 --> 00:12:19.860 Just they transfer all sorts of reasons. 00:12:19.890 --> 00:12:22.800 Too far from home, too close home, too big, too great, whatever. 00:12:22.850 --> 00:12:26.180 But the reason that's a financial issue is because then you introduced something 00:12:26.180 --> 00:12:29.840 called transfer leakage, which is, Hey, Candace, you know that math class? 00:12:29.840 --> 00:12:31.290 You took at the first college? 00:12:31.310 --> 00:12:33.890 That doesn't transfer to the math class at the second college. 00:12:33.890 --> 00:12:35.030 You have to retake it. 00:12:35.490 --> 00:12:38.770 And as a result, you end up lengthening out the time to graduation. 00:12:38.770 --> 00:12:40.510 And the longer you go, the more it costs you. 00:12:41.440 --> 00:12:45.600 So what I tell parents is, look, the earlier you can start this, and even 00:12:45.600 --> 00:12:51.990 if you start by figuring out what your kid does not like, okay, that's okay. 00:12:51.990 --> 00:12:56.070 And the earlier you start that, then you're just that much farther 00:12:56.070 --> 00:12:59.190 along the process and now you can find the school that's right for 00:12:59.190 --> 00:13:03.270 them and where they're gonna truly love it and thrive and make friends. 00:13:03.509 --> 00:13:07.139 Candace Dellacona: So Jack, one of the first things it sounds like you're saying 00:13:07.139 --> 00:13:13.679 is that your family and the student should really think seriously about where they 00:13:13.679 --> 00:13:19.439 wanna be and what it's going to look like, so that you're not part of that statistic 00:13:19.679 --> 00:13:23.879 of a 25% group of students who transfer. 00:13:24.411 --> 00:13:30.471 And so maybe you find the handful of schools that your child says I want 00:13:30.531 --> 00:13:35.331 this particular major and I wanna have a great sports team, or I wanna be 00:13:35.331 --> 00:13:37.851 close to the city or on the East coast. 00:13:38.661 --> 00:13:42.921 You come up with a group of schools that you're ready to apply for. 00:13:43.311 --> 00:13:48.591 So what are the next set of rules in terms of paying for those colleges 00:13:48.801 --> 00:13:50.391 that you would share with your clients? 00:13:50.391 --> 00:13:54.201 Where do they go after they have that list of schools? 00:13:55.716 --> 00:14:01.186 Jack Wang: So as most families go through this process it's very much 00:14:01.186 --> 00:14:05.756 a find the list of colleges to apply. 00:14:07.616 --> 00:14:10.716 Then think about the money, then hope for a lot of aid. 00:14:11.316 --> 00:14:13.866 And so really as they're going through the process, they're trying 00:14:13.866 --> 00:14:17.256 to answer the question of what schools will accept your student? 00:14:17.256 --> 00:14:21.246 Or what do you need to do to be accepted by x, y, z University? 00:14:22.476 --> 00:14:26.256 That's what the vast majority, 99% of the world does. 00:14:27.126 --> 00:14:31.686 But if money actually matters right now, again, when I say money matters, 00:14:31.686 --> 00:14:34.686 you can have a very poor family or you can have a very wealthy family. 00:14:34.686 --> 00:14:37.446 And just because you have wealth doesn't mean you wanna give it 00:14:37.446 --> 00:14:39.606 all the way to the college, right? 00:14:39.606 --> 00:14:40.986 Because you probably worked hard for it. 00:14:42.126 --> 00:14:45.156 Families really should focus on a different question. 00:14:45.156 --> 00:14:47.886 This is a different question with a completely different answer, 00:14:47.886 --> 00:14:52.461 and that is finding colleges that will give your kid the most aid. 00:14:53.701 --> 00:14:58.411 So here's a very important distinction is most families focus on getting 00:14:58.411 --> 00:15:03.751 accepted, but that does not mean that the college wants them. 00:15:04.546 --> 00:15:04.936 Candace Dellacona: Okay. 00:15:04.936 --> 00:15:05.866 Makes sense. 00:15:07.126 --> 00:15:10.876 So when you talk about aid though, Jack, you're not talking about 00:15:10.876 --> 00:15:13.696 need-based aid necessarily. 00:15:13.696 --> 00:15:16.216 Not financial aid in the traditional sense. 00:15:16.786 --> 00:15:21.836 You're talking about any number of sources of aid, whether it's merit-based 00:15:21.836 --> 00:15:24.666 or need-based particular scholarship. 00:15:26.406 --> 00:15:27.006 Jack Wang: Exactly. 00:15:27.006 --> 00:15:31.596 And in all honesty a lot of families think that need and merit are two completely 00:15:31.596 --> 00:15:34.746 separate buckets and there's a wall in between and they shall never cross. 00:15:35.226 --> 00:15:38.406 That actually is not true at the vast majority of schools. 00:15:38.826 --> 00:15:41.646 A lot of merit programs have a need component. 00:15:41.646 --> 00:15:43.986 A lot of need programs have merit component, but here's 00:15:43.986 --> 00:15:45.366 really what it comes down to. 00:15:46.266 --> 00:15:49.536 At the end of the day, colleges are businesses like any other. 00:15:50.451 --> 00:15:54.981 It's actually a fallacy to think that colleges need students. 00:15:55.071 --> 00:15:59.241 Yes, they need students, but what they really want is 00:15:59.361 --> 00:16:01.041 particular types of students. 00:16:01.071 --> 00:16:04.941 And so like any business, colleges have certain goals. 00:16:05.001 --> 00:16:09.471 If they could be looking to start a new major and expand a major, 00:16:09.771 --> 00:16:14.361 they might need more boys or more girls, or they might need more 00:16:14.361 --> 00:16:18.351 kids from a particular geographic region or a particular ethnicity 00:16:18.671 --> 00:16:20.201 or a combination of all the above. 00:16:21.761 --> 00:16:26.041 So what happens is for families going through the process they think about, 00:16:26.281 --> 00:16:29.251 Hey, college, you should accept my kid because my kid gets straight 00:16:29.251 --> 00:16:30.871 A's and got a high score on the SAT. 00:16:30.871 --> 00:16:34.501 And they also do all these extracurricular activities and that's how families 00:16:34.501 --> 00:16:35.491 and students think about it. 00:16:36.181 --> 00:16:39.931 But if you really wanna maximize aid, you gotta think about it from the college's 00:16:39.931 --> 00:16:42.481 perspective, is who do they actually want? 00:16:43.141 --> 00:16:48.361 And the bottom line to that and how it translates the aid is the more a student 00:16:49.051 --> 00:16:56.701 helps the college achieve its goals, the more aid you're going to get, whether 00:16:56.701 --> 00:16:58.501 it's merit, need based or otherwise. 00:16:59.046 --> 00:17:00.966 And it's literally as simple as that. 00:17:01.186 --> 00:17:07.336 And the best analogy I can think of for this and almost fits it to a t is the NFL 00:17:07.336 --> 00:17:11.531 draft, the professional football draft, so teams take turns picking players. 00:17:11.951 --> 00:17:15.551 And so the first round draft pick, if you're picked first, you get a 00:17:15.551 --> 00:17:19.511 lot bigger contract than you get if you're seventh round draft pick, right? 00:17:19.601 --> 00:17:24.401 So the seventh round draft pick still got drafted by the NFL, which is still a great 00:17:24.401 --> 00:17:29.681 achievement because not everybody can say that, but comparatively they get no money. 00:17:30.641 --> 00:17:34.031 But you can't just be the best player because teams, when they draft, 00:17:34.031 --> 00:17:35.581 they draft for positions, right? 00:17:35.581 --> 00:17:38.101 Well, if I need a quarterback, I take a quarterback. 00:17:38.261 --> 00:17:40.091 If I don't need a quarterback, I don't take one. 00:17:40.511 --> 00:17:44.831 So again, colleges see it as like majors and all the other factors I named before. 00:17:44.831 --> 00:17:51.341 So it really comes down to, for a particular student, are you viewed as the 00:17:51.341 --> 00:17:56.501 first round draft pick there, or are you viewed as the seventh round draft pick? 00:17:57.491 --> 00:18:02.051 The kids who are, let's say first and second round, are the kids who are wanted, 00:18:02.471 --> 00:18:05.801 they're the ones who get big aid packages, even if the family's really wealthy. 00:18:06.701 --> 00:18:12.011 The seventh round draft picks are the kids who are accepted but 00:18:12.011 --> 00:18:16.331 not necessarily wanted, and it reflects in their admissions offers. 00:18:16.631 --> 00:18:18.221 I see it all the time. 00:18:18.771 --> 00:18:22.931 And so that student might say yay, I got into X, Y, Z University, but. 00:18:23.756 --> 00:18:29.476 But they didn't gimme any aid, and it's yes, congratulations on getting in, 00:18:29.476 --> 00:18:32.326 but what does that really tell you? 00:18:32.651 --> 00:18:35.581 Candace Dellacona: Yeah, it's an interesting way to frame the question 00:18:35.581 --> 00:18:37.266 about where you should be applying. 00:18:37.316 --> 00:18:42.386 Because there's this focus on the name of the school and getting into the 00:18:42.416 --> 00:18:49.196 quote that school that you can get into, and I think there's a lot of pressure 00:18:49.196 --> 00:18:52.916 among parents as well, trying to make sure that their kids are in the best 00:18:52.916 --> 00:18:57.386 possible school or the named school that other people will recognize. 00:18:57.881 --> 00:19:01.211 So what you're talking about really is redefining what 00:19:01.211 --> 00:19:03.711 that means and being wanted. 00:19:03.711 --> 00:19:07.041 It's actually a really nice way of looking at the problem. 00:19:07.491 --> 00:19:14.181 And so once you determine these schools, there are gray areas or leeway within 00:19:14.181 --> 00:19:17.631 the various financial aid offices, I think is what you're pointing out. 00:19:18.021 --> 00:19:23.301 And there are certain universities that may offer aid for particular 00:19:23.301 --> 00:19:27.471 types of students and so it sounds to me is that you can provide these 00:19:27.471 --> 00:19:32.391 kinds of tips or insights to our listeners so that they know what 00:19:32.391 --> 00:19:34.371 those universities are looking for. 00:19:34.611 --> 00:19:34.971 Jack Wang: Yeah. 00:19:35.026 --> 00:19:35.896 Absolutely. 00:19:35.946 --> 00:19:40.766 So what everybody focuses on and frankly incorrectly because of how 00:19:40.766 --> 00:19:45.796 most people approach this process is essentially, hey, is there a secret 00:19:45.796 --> 00:19:49.776 code like when filling out the FASFA, I can get more ? Do I have to blink twice 00:19:49.776 --> 00:19:51.246 and do a jumping jack or something? 00:19:51.246 --> 00:19:53.306 I automatically get a lot more aid or something, right? 00:19:53.396 --> 00:19:54.936 And no, that's not the trick. 00:19:54.936 --> 00:19:55.417 That's not the game. 00:19:56.791 --> 00:20:00.151 And also in understanding where aid comes from. 00:20:00.151 --> 00:20:05.081 So if you look at the universe of where aid comes from, the largest 00:20:05.081 --> 00:20:09.401 source is the federal government, but the vast majority of those 00:20:09.401 --> 00:20:11.471 dollars come in the form of loans. 00:20:12.111 --> 00:20:16.071 And nothing wrong with loans per se, but I'd rather have scholarships 00:20:16.071 --> 00:20:17.481 and grants I don't have to pay back. 00:20:18.346 --> 00:20:21.736 When you look at the pool of dollars, that is scholarships and grants 00:20:21.736 --> 00:20:26.896 or what we call gift aid, the vast majority of that money comes from the 00:20:26.896 --> 00:20:29.266 colleges themselves, their own pockets. 00:20:29.266 --> 00:20:32.626 And so what that means is because it's their own money, 00:20:33.046 --> 00:20:34.666 they get to set the rules. 00:20:35.116 --> 00:20:38.326 And so this is when I talk to different schools, I visit different schools, 00:20:38.326 --> 00:20:40.666 I talked to their financial aid staffs and their admission staff. 00:20:40.966 --> 00:20:44.326 This is where all these little details come out and you would not 00:20:44.326 --> 00:20:47.506 believe the range of variability. 00:20:47.556 --> 00:20:49.446 All the different ways schools look at this. 00:20:49.446 --> 00:20:52.026 So a couple of examples. 00:20:52.366 --> 00:20:56.206 One example right now that really on the admission side a lot of schools 00:20:56.206 --> 00:20:59.026 do not require test scores to get in. 00:20:59.216 --> 00:21:01.766 So it's a huge stress relief for students and parents and great. 00:21:02.966 --> 00:21:06.746 The vast majority of those schools still use test scores 00:21:06.746 --> 00:21:08.666 to set scholarship amounts. 00:21:08.666 --> 00:21:12.146 So yeah, you can get in without them, but you might not get any money. 00:21:12.146 --> 00:21:15.436 And so many colleges, no test score, no impact on dollars. 00:21:15.436 --> 00:21:15.766 Great. 00:21:16.486 --> 00:21:17.866 Another college, I know. 00:21:19.006 --> 00:21:23.626 No test scores, no money unless you set up an admissions interview. 00:21:23.656 --> 00:21:26.656 But the admissions interview isn't required and they 00:21:26.656 --> 00:21:27.676 don't really tell you that. 00:21:28.051 --> 00:21:30.361 So if you never bothered to accept the interview, you can get 00:21:30.361 --> 00:21:33.301 accepted, but you're left wondering why you didn't get any money. 00:21:33.901 --> 00:21:37.701 Another school, no test scores, you can still be considered for 00:21:37.701 --> 00:21:40.401 all the scholarships, but the biggest one available at the 00:21:40.401 --> 00:21:42.371 school, you're out of consideration. 00:21:43.161 --> 00:21:46.161 And then another school, just as an example, you're eligible for 00:21:46.161 --> 00:21:50.541 all the scholarships, but every scholarship is $5,000 less per year 00:21:51.021 --> 00:21:52.611 than if you did submit a test score. 00:21:53.131 --> 00:21:54.991 So there's all these different variations. 00:21:55.366 --> 00:21:57.616 And it's not just private schools too. 00:21:57.976 --> 00:22:02.686 If you really know to ask the question, and I'll be honest, even 00:22:02.686 --> 00:22:06.641 though I tell schools I'm coming, I tell them who I am and my background, 00:22:06.641 --> 00:22:07.781 all that stuff, so they're prepared. 00:22:07.781 --> 00:22:09.281 I'm not trying to sandbag anybody. 00:22:10.061 --> 00:22:13.631 I'll ask questions and it's a little bit like asking for the 00:22:13.631 --> 00:22:15.251 secret recipe to Coca-Cola. 00:22:15.311 --> 00:22:16.376 They don't always tell you. 00:22:17.351 --> 00:22:19.361 Candace Dellacona: So that's what I ask you, right? 00:22:19.361 --> 00:22:23.531 So your child gets into school and let's say the test issue is really out the door. 00:22:23.531 --> 00:22:28.091 We know now that Ohio State and a number of other universities, for example, 00:22:28.631 --> 00:22:31.301 have decided that tests are back in. 00:22:31.781 --> 00:22:37.301 And the reason that they have provided is because the numbers were just too high. 00:22:37.361 --> 00:22:41.321 And Ohio State, for example, didn't actually have the people 00:22:41.321 --> 00:22:44.141 in the admissions office to actually review the applications. 00:22:45.021 --> 00:22:48.591 So let's say you get your admittance and you're now looking at the 00:22:48.591 --> 00:22:50.811 price tag and what it's gonna cost. 00:22:51.261 --> 00:22:55.251 Can a student really call a financial aid office at that school and say, 00:22:55.251 --> 00:23:00.081 Hey, can you share with me what sort of aid is available, whether merit 00:23:00.081 --> 00:23:02.901 based or financial aid based on need? 00:23:03.211 --> 00:23:05.011 What do I have to do as a parent? 00:23:05.011 --> 00:23:07.201 Or what should the student do? 00:23:07.831 --> 00:23:11.941 And are those financial aid officers in the schools willing 00:23:11.941 --> 00:23:13.306 to share that information? 00:23:13.436 --> 00:23:18.986 Do they just tell you and how do we go about finding out that information 00:23:19.046 --> 00:23:21.206 if it's all treated like a secret? 00:23:21.986 --> 00:23:24.116 Jack Wang: Yeah it's simply asking the question. 00:23:25.016 --> 00:23:28.646 Most schools will share that kind of information that I just shared, but I 00:23:28.646 --> 00:23:35.231 can tell you in sitting in hundreds of information sessions, I think i've only 00:23:35.231 --> 00:23:39.791 heard now when I, by the way, when I go to these as a professional I sit back 00:23:39.791 --> 00:23:41.356 and I'm just listening, observing, right? 00:23:41.356 --> 00:23:45.756 I don't, because I could really sandbag the presenter if I spoke up but I'll 00:23:45.756 --> 00:23:50.016 tell you that I've only, I can count the number of times on one hand where 00:23:50.016 --> 00:23:54.426 someone actually asked Yes, but if you don't submit test scores, you still 00:23:54.476 --> 00:23:55.946 can serve all the scholarships, right? 00:23:55.946 --> 00:23:59.206 I can count that on one hand and I won't even need all my fingers. 00:23:59.776 --> 00:24:02.566 Most schools will tell you if you know to ask, but most people don't 00:24:02.566 --> 00:24:05.866 ask because they're focused on the getting in and not the money. 00:24:06.406 --> 00:24:10.236 Now, other examples of where where it comes into play. 00:24:10.236 --> 00:24:15.601 So there's some schools that can consider the value of your home equity, right? 00:24:15.601 --> 00:24:17.041 The value of the equity in your house. 00:24:17.411 --> 00:24:22.061 There's one school in particular depending on how much they like you, 00:24:22.061 --> 00:24:25.901 whether your first round draft pick or seventh round draft pick, this school 00:24:25.901 --> 00:24:30.401 will either count all of your home equity in the financial aid formula, or 00:24:30.401 --> 00:24:32.471 they'll cap it at two times your income. 00:24:33.011 --> 00:24:37.036 Or they won't count it at all, but they have discretion to decide what to 00:24:37.036 --> 00:24:39.061 use and I have so many examples there. 00:24:39.062 --> 00:24:41.846 Candace Dellacona: So how do you know what their formula is? 00:24:41.946 --> 00:24:46.446 If every school has a different formula and you have two houses 00:24:46.446 --> 00:24:50.376 that are worth $500,000 each, and home A has a home equity. 00:24:51.246 --> 00:24:56.916 And let's say there's no mortgage on one of the houses, is there 00:24:56.916 --> 00:25:01.816 a possibility that, this sort of configuration would render your child 00:25:01.816 --> 00:25:06.076 to receive more financial aid or even having a larger mortgage would entitle 00:25:06.076 --> 00:25:07.906 your child to more financial aid? 00:25:08.586 --> 00:25:11.036 Jack Wang: Yeah, so even though that's particular school told 00:25:11.036 --> 00:25:13.676 me that they obviously don't tell me where the cutoffs are. 00:25:13.676 --> 00:25:15.806 What students go into one category versus the other. 00:25:16.316 --> 00:25:20.166 But there are ways to guesstimate. 00:25:20.836 --> 00:25:23.716 And again, a lot of parents, a lot of students think, oh, it's just all based 00:25:23.716 --> 00:25:26.896 on test scores and SAT scores or whatever. 00:25:26.896 --> 00:25:28.091 And it's really not. 00:25:28.141 --> 00:25:34.191 Obviously those are important, but those other factors, if a school's trying to 00:25:34.191 --> 00:25:39.241 expand a major and you happen to be a student who wants to go into that major, 00:25:39.841 --> 00:25:43.591 all of things being equal, you're probably gonna get more aid than if you were a 00:25:43.591 --> 00:25:45.841 student going into some other major. 00:25:46.151 --> 00:25:51.031 There's a college in the Northeast where it's about 70% male, and most 00:25:51.031 --> 00:25:55.381 of that's engineering, but the school also has a phenomenal business program. 00:25:55.381 --> 00:26:00.751 And so I tell my clients if you're a girl who wants a major in anything other 00:26:00.751 --> 00:26:05.611 than engineering, you should consider this place because again, they're trying 00:26:05.611 --> 00:26:08.611 to balance out the student body, so you're probably gonna get more money 00:26:08.971 --> 00:26:11.821 than if you were a male student, let's say, going to business or whatever. 00:26:11.821 --> 00:26:14.911 The problem is that schools are not always forthcoming with this 00:26:14.911 --> 00:26:18.571 information, and they're not, and they're not always forthcoming with me. 00:26:19.151 --> 00:26:24.131 Even though I ask, but, and there's some ways to try and figure it out. 00:26:24.651 --> 00:26:28.684 But even public schools do this, for example, the public schools 00:26:28.684 --> 00:26:32.764 in Florida, Virginia, North Carolina, Texas, and California. 00:26:33.664 --> 00:26:36.544 Those particular states limit out-of-state enrollment. 00:26:37.594 --> 00:26:42.814 And so as an out of stater, A, it's harder to get in because they limit 00:26:42.814 --> 00:26:48.799 out of state enrollment, but B, you get relatively little financial aid or 00:26:48.799 --> 00:26:50.599 any kind of aid if you did make it in. 00:26:50.629 --> 00:26:55.369 And so my alma mater, University of Texas says, right on their website, 00:26:55.939 --> 00:26:59.089 if you're an out-of-state student and you qualify for need based aid, 00:26:59.089 --> 00:27:00.739 you're not getting a dime from us. 00:27:01.169 --> 00:27:03.809 You might qualify for some aid from the federal government based off your 00:27:03.809 --> 00:27:07.559 fafsa, but any what we call institutional aid, we're not giving you a thing. 00:27:07.609 --> 00:27:08.269 Just zip. 00:27:08.319 --> 00:27:13.059 Now, the flip side is there are certain states that love out of state students. 00:27:13.059 --> 00:27:14.589 University of Maine is one of 'em. 00:27:14.649 --> 00:27:18.579 And so they're very generous with aid to out state students. 00:27:18.579 --> 00:27:23.409 And so you might get, you might get so much aid that it may even cost 00:27:23.409 --> 00:27:27.339 less than your in-state alternative, depending again, how they view you. 00:27:27.729 --> 00:27:31.239 So there are these little nuances, but again, families 00:27:31.239 --> 00:27:32.889 don't think about it initially. 00:27:32.919 --> 00:27:35.489 They're just like what do I need to do to get into the University 00:27:35.489 --> 00:27:36.839 of North Carolina Chapel Hill? 00:27:37.514 --> 00:27:40.544 Then they find out, oh my goodness, we didn't get any aid. 00:27:40.604 --> 00:27:43.994 And then that's when I get a panicked email like, Hey, 00:27:43.994 --> 00:27:45.524 my deposit's due next week. 00:27:45.524 --> 00:27:46.724 The bill's coming after that. 00:27:46.724 --> 00:27:47.444 I don't have the money. 00:27:47.444 --> 00:27:48.254 What do I do? 00:27:48.344 --> 00:27:49.994 And it's like. 00:27:50.279 --> 00:27:52.799 Candace Dellacona: Alright, so for our listeners, that's exactly 00:27:52.799 --> 00:27:56.459 why we talk about starting this process earlier, right Jack? 00:27:56.489 --> 00:27:58.559 You don't want it to be a fire drill. 00:27:58.889 --> 00:28:03.449 You don't want it to be a matter of urgency and crisis planning. 00:28:03.449 --> 00:28:09.959 So look, you can listen to Jack's podcast, The Smart College Buyer, and he's going 00:28:10.079 --> 00:28:14.519 to provide you with all of these tips and tricks and insider information. 00:28:15.329 --> 00:28:21.419 So when we're talking about aid and making sure you're advocating for yourself to 00:28:21.419 --> 00:28:25.609 make sure that you're getting all of the aid that you're possibly entitled 00:28:25.609 --> 00:28:31.729 to and being the right student for that university, that's gonna give you money. 00:28:32.169 --> 00:28:36.339 You know when you get to the point where you do all of the 00:28:36.339 --> 00:28:39.009 math and it's still not enough. 00:28:39.009 --> 00:28:40.989 Jack, what about loans? 00:28:41.019 --> 00:28:42.069 What's the advice? 00:28:42.879 --> 00:28:47.649 You can give to families about student loans and whether or not 00:28:47.649 --> 00:28:52.089 they should consider taking the loans or whether they should not, 00:28:52.149 --> 00:28:53.844 and perhaps pick another university. 00:28:54.384 --> 00:28:54.954 Jack Wang: Yeah. 00:28:54.979 --> 00:28:55.819 Several tips here. 00:28:55.869 --> 00:29:01.089 The loan system does work very differently than back when you and I were in college. 00:29:01.459 --> 00:29:05.689 One of the things I commonly hear from parents today, especially those in the 00:29:05.689 --> 00:29:11.279 sandwich generation, is that, hey, I'm willing to chip in X dollars, but if 00:29:11.279 --> 00:29:14.369 my kid wants to go to a more expensive school, they're gonna have to figure 00:29:14.369 --> 00:29:15.539 out, they're gonna have to borrow. 00:29:16.509 --> 00:29:21.309 In the old days and the old days, that was, there were mechanisms for that. 00:29:21.309 --> 00:29:22.659 That does not exist today. 00:29:23.019 --> 00:29:31.734 And so your 18-year-old high school graduate, no lender other than federal 00:29:31.734 --> 00:29:36.354 government, but no private lender is gonna touch an 18-year-old with no full-time 00:29:36.354 --> 00:29:38.244 work history, no credit history, right? 00:29:38.244 --> 00:29:42.204 They're not gonna lend them 90 grand to go to New York University or something. 00:29:42.394 --> 00:29:43.474 It's just never gonna happen. 00:29:44.764 --> 00:29:46.359 So if the family needs to borrow. 00:29:47.194 --> 00:29:51.154 It is on the parents either as a, what we call a parent plus loan, which 00:29:51.154 --> 00:29:55.684 is only on the parents or a co-sign private loan, but it is on the parents. 00:29:56.014 --> 00:30:00.304 And so because of that, parents really need to think about their own finances 00:30:00.304 --> 00:30:04.114 because whatever loans they take is gonna show up on their credit report, 00:30:04.174 --> 00:30:06.124 they're gonna be legally responsible. 00:30:06.674 --> 00:30:10.754 So that can have an impact on their ability to refinance a 00:30:10.754 --> 00:30:14.124 mortgage if they wanted to, or to get a car loan or whatever. 00:30:14.174 --> 00:30:17.774 And the one piece of advice that I often hear from many financial 00:30:17.774 --> 00:30:23.594 advisors who don't specialize this and just drives me bananas, is the 00:30:24.014 --> 00:30:27.614 well you can borrow for college, but you can't borrow for retirement. 00:30:27.614 --> 00:30:31.544 So you should, which is technically true, right? 00:30:31.544 --> 00:30:35.649 It is technically true, but if you have to borrow money, a bunch of money 00:30:35.649 --> 00:30:38.109 for your kids' college, and again, it has to be on the parents, right? 00:30:38.109 --> 00:30:38.924 This is not on the student. 00:30:40.549 --> 00:30:44.789 If you're borrowing 90 grand a year for your kids undergraduate you are not gonna 00:30:44.789 --> 00:30:47.309 have the retirement that you think, okay. 00:30:47.499 --> 00:30:51.569 In fact, there's a family that they started working with me, but after their 00:30:51.569 --> 00:30:54.929 oldest daughter went to school where their original financial planner said, 00:30:54.929 --> 00:30:59.039 Hey, max out your 4 0 1 Ks because the family told them they wanna retire early. 00:31:00.269 --> 00:31:05.459 But, they were borrowing, I think like 60,000 plus a year to send 00:31:05.459 --> 00:31:07.979 their kid to school, and they still have a second kid to go. 00:31:09.119 --> 00:31:12.449 And so I kept telling 'em like, I know your regular financial planner's 00:31:12.449 --> 00:31:15.059 telling you like, oh yeah, the numbers, your projectile and this and that, and 00:31:15.059 --> 00:31:17.819 you're gonna be able to retire at 60, or whatever it is that they're trying to do. 00:31:18.149 --> 00:31:20.489 There is no chance that that's gonna happen. 00:31:20.559 --> 00:31:23.739 Or you'll retire, but the bulk of your retirement savings is gonna be 00:31:23.739 --> 00:31:26.559 going to pay off the loan and you're gonna have to go to back to work or. 00:31:27.519 --> 00:31:29.439 Or live under bridge or something. 00:31:29.439 --> 00:31:31.029 I don't know what, but something. 00:31:31.134 --> 00:31:31.424 Candace Dellacona: Okay. 00:31:31.429 --> 00:31:31.899 Fair. 00:31:31.899 --> 00:31:34.239 But back to your original point then, right? 00:31:34.239 --> 00:31:34.359 You have. 00:31:34.809 --> 00:31:40.899 To look at the entire process from a holistic perspective because your 00:31:40.899 --> 00:31:46.599 finances are applied and you have to think about what is the sort of 00:31:46.599 --> 00:31:49.089 investment I'm making in college? 00:31:49.089 --> 00:31:50.619 What am I buying here? 00:31:51.309 --> 00:31:55.779 And all of that factors into the overall financial health of the 00:31:55.779 --> 00:32:00.579 entire family unit, especially if the parents are the ones who are 00:32:00.579 --> 00:32:02.769 on the hook for the college loan. 00:32:03.054 --> 00:32:03.414 Jack Wang: Right. 00:32:03.564 --> 00:32:09.294 And yeah, I mean it really is the holistic view and we as people tend 00:32:09.294 --> 00:32:11.644 to, segment our finances, right? 00:32:11.644 --> 00:32:13.114 I think the term is mental accounting. 00:32:13.114 --> 00:32:16.054 So we think about this is our emergency fund and this is our vacation 00:32:16.054 --> 00:32:17.314 fund, and this is for retirement. 00:32:17.314 --> 00:32:20.494 We think about in those terms, but reality, it all has to work together. 00:32:20.954 --> 00:32:22.904 So there's only so much money to go around. 00:32:22.904 --> 00:32:26.744 So the more you spend in one place, the less automatically 00:32:26.744 --> 00:32:27.824 they have for something else. 00:32:28.334 --> 00:32:31.174 And there's also a lot of ego involved, getting caught up on the 00:32:31.174 --> 00:32:36.724 name or if mom and dad, went to Stanford, then they really want 00:32:36.724 --> 00:32:40.264 little junior, little Sally, little Johnny to go to Stanford, let's say. 00:32:40.264 --> 00:32:42.014 Or the grandparents, went somewhere. 00:32:42.354 --> 00:32:42.444 And. 00:32:43.849 --> 00:32:47.819 There's no, there's a relatively big part of just the ego. 00:32:47.869 --> 00:32:50.569 Like you want people to sit down at Thanksgiving dinner with the 00:32:50.569 --> 00:32:54.259 big family and be able to say haha, my kid goes to blah, blah, blah. 00:32:54.259 --> 00:32:57.259 People don't necessarily admit that, but that does happen. 00:32:57.309 --> 00:33:00.024 Candace Dellacona: So you also see your kids working really hard, right? 00:33:00.114 --> 00:33:01.974 And maybe even harder than you did. 00:33:02.004 --> 00:33:02.844 Certainly in my case. 00:33:03.114 --> 00:33:08.454 So there is a part of you that probably feels like, Hey, they deserve this. 00:33:08.454 --> 00:33:12.199 They deserve to go to the educational institution that they've chosen. 00:33:13.009 --> 00:33:17.269 So I understand where that piece is coming from. 00:33:17.269 --> 00:33:19.879 But let me ask you a question before we wrap up here. 00:33:19.879 --> 00:33:25.409 Since we are The Sandwich Generation Survival Guide and we do have older 00:33:25.409 --> 00:33:30.074 generations grandparents and other loved ones listening to this podcast. 00:33:30.074 --> 00:33:35.789 So when you think about maybe even outside the parental unit, the nuclear family. 00:33:35.819 --> 00:33:41.689 And you have grandparents or aunts or uncles and other loved ones that may wanna 00:33:41.689 --> 00:33:47.509 contribute to the cost of college, what is your best tip for the way in which 00:33:47.509 --> 00:33:54.854 someone outside of that parental unit should contribute to the cost of college. 00:33:55.124 --> 00:33:56.834 Is it a 5 29? 00:33:57.224 --> 00:34:00.224 Is it a gift straight to the child? 00:34:00.254 --> 00:34:01.994 Is it a gift to the parent? 00:34:02.354 --> 00:34:06.584 Should they pay the institution directly for tuition? 00:34:06.974 --> 00:34:09.694 Jack Wang: So I'm glad that we have another three and a half 00:34:09.694 --> 00:34:11.134 hours to go on this recording. 00:34:11.184 --> 00:34:12.354 I can answer that for you. 00:34:12.714 --> 00:34:14.904 And actually I do run into this a lot. 00:34:14.904 --> 00:34:16.584 Hear from the parents as their work families. 00:34:16.584 --> 00:34:19.814 Oh, grandma and grandpa would chip in X dollars for little Johnny, or little 00:34:19.814 --> 00:34:21.864 Sally's college, which is great, right? 00:34:21.864 --> 00:34:23.514 If they're able to do that, that's phenomenal. 00:34:24.564 --> 00:34:29.994 My first question back always is, what do they actually mean by that? 00:34:30.094 --> 00:34:34.634 And what I mean is do they want to save that money in advance and maybe 00:34:34.634 --> 00:34:38.794 they can use a 5 29 or something, or do they wanna pay as they go? 00:34:39.714 --> 00:34:44.109 Or do they want to pay sort of afterwards? 00:34:44.159 --> 00:34:47.869 So like, perhaps leave a bequest that'll pay off student loans 00:34:47.869 --> 00:34:49.219 for the student or whatever. 00:34:49.349 --> 00:34:52.569 All those are grandma and grandpa are helping pay for college, 00:34:52.569 --> 00:34:53.769 just depends on when they do it. 00:34:54.429 --> 00:35:00.709 But that actually has implications on the chances for aid as well as where the 00:35:00.709 --> 00:35:02.779 student may or may not want to apply. 00:35:03.569 --> 00:35:08.069 And at the same time you run into some IRS rules with regard to the annual gift 00:35:08.069 --> 00:35:09.959 tax exemption limit and things like that. 00:35:11.069 --> 00:35:14.589 So just give you a quick example, let's say grandma and grandpa want 00:35:14.589 --> 00:35:16.629 to chip in $50,000 a year, right? 00:35:16.629 --> 00:35:17.259 That's great. 00:35:17.679 --> 00:35:22.189 If the student, applies to what we call a FAFSA only school, which is the 00:35:22.189 --> 00:35:24.529 majority of colleges around the country. 00:35:25.159 --> 00:35:28.819 That contribution does not hurt the family's chances for aid. 00:35:29.369 --> 00:35:33.929 And it does not appear anywhere on the financial aid form, but if they apply to, 00:35:33.929 --> 00:35:38.179 let's say, one of the Ivy League or one of the near Ivy League or for the national 00:35:38.179 --> 00:35:45.289 brand privates and certain publics also, that contribution is considered untaxed 00:35:45.289 --> 00:35:50.484 benefit or untaxed income as if the student earned that $50,000 at a job. 00:35:50.934 --> 00:35:53.064 So it actually has a huge impact on aid. 00:35:54.474 --> 00:35:58.294 Not only that, if you're thinking about gifting let's say it's $50,000. 00:35:58.294 --> 00:36:02.554 The annual gift limit is not $50,000, but if you donate, if you 00:36:02.554 --> 00:36:06.364 pay for it directly at the college, there's an unlimited exemption. 00:36:06.384 --> 00:36:08.454 Candace Dellacona: So, Jack, what you're really saying here is that 00:36:08.454 --> 00:36:14.094 every year, every person has the ability to gift to each person $19,000. 00:36:14.094 --> 00:36:20.034 So for our listeners, that is the limit in 2025 that everyone can make a gift. 00:36:20.034 --> 00:36:24.534 The total is 19,000 without any gift tax consequence. 00:36:24.834 --> 00:36:26.094 So if you're married. 00:36:26.209 --> 00:36:27.259 You can double that. 00:36:27.259 --> 00:36:30.559 So 19,000 times two is $38,000. 00:36:30.769 --> 00:36:31.969 So that's a lot of money. 00:36:32.299 --> 00:36:37.729 And so what Jack is saying is that you would make those gifts of $19,000 for 00:36:37.729 --> 00:36:44.479 your annual exclusion gift, or 38,000 if you're married, and you can pay 00:36:44.479 --> 00:36:46.789 the educational institution directly. 00:36:47.299 --> 00:36:50.989 You can pay even more than that in certain circumstances. 00:36:50.989 --> 00:36:54.709 So for those grandparents who are trying to move money out of their estate. 00:36:55.224 --> 00:36:55.494 Jack Wang: Right. 00:36:55.884 --> 00:37:00.714 Candace Dellacona: Then this is an opportunity for them to do two things, 00:37:00.714 --> 00:37:04.134 move money out of their estate, and also help their grandchild with college. 00:37:05.514 --> 00:37:07.944 So it's killing two birds with one stone. 00:37:08.334 --> 00:37:13.434 And what you're really doing is you're reframing the way that you can move 00:37:13.434 --> 00:37:17.694 a lot of money out of somebody's estate and still help with college. 00:37:17.694 --> 00:37:23.634 On the flip side though, and to Jack's point, if you're applying to, let's say 00:37:23.754 --> 00:37:31.094 Wake Forest, Wake is gonna know about the gift that the grandchild received, and so 00:37:31.094 --> 00:37:38.234 if you'd otherwise qualify for financial aid, having money paid on behalf of that 00:37:38.234 --> 00:37:43.274 child will definitely have an impact on any aid that they would otherwise receive. 00:37:43.489 --> 00:37:44.299 Jack Wang: Yeah, exactly. 00:37:44.299 --> 00:37:48.689 And it also really what are the grandparents' intentions, right? 00:37:48.689 --> 00:37:52.139 Is it really for college or is it really to benefit the child in some way? 00:37:52.139 --> 00:37:55.529 So as an example, one of the ways that grandparents can get a lot of 00:37:55.529 --> 00:38:00.839 money outta their estate is they make that the five year forward gifting. 00:38:00.839 --> 00:38:04.949 So they can give up to five years worth of the gift exemption all at one time 00:38:04.949 --> 00:38:07.199 into a 5 29 plan, which is great, right? 00:38:07.199 --> 00:38:07.979 If they have the money, that's 00:38:08.214 --> 00:38:09.934 Candace Dellacona: So that's called front loading, audience. 00:38:10.039 --> 00:38:10.849 Jack Wang: Front, front loading. 00:38:10.879 --> 00:38:11.089 Yes. 00:38:11.089 --> 00:38:11.364 Thank you. 00:38:12.384 --> 00:38:16.289 Candace Dellacona: You take 19,000, you multiply it times five. 00:38:17.554 --> 00:38:22.624 Instead of giving a contribution in dribs and drab $19,000 year after year, 00:38:22.624 --> 00:38:26.164 you can actually gift it all at once. 00:38:26.794 --> 00:38:32.854 You have to file a gift tax return, but once you do that, it's all pushed out of 00:38:32.854 --> 00:38:38.014 your estate, including the gain that you would've otherwise made on that gift. 00:38:38.374 --> 00:38:40.884 Jack Wang: You know, for as much as I do this and talk about this I had 00:38:40.884 --> 00:38:42.834 the term in my head, I'm like, no. 00:38:42.834 --> 00:38:43.974 It's overfunding. 00:38:44.004 --> 00:38:45.144 I'm like, nah, that's not right. 00:38:45.144 --> 00:38:47.184 No Superfund, nah, that's not right. 00:38:47.234 --> 00:38:48.824 I'm trying to like, so thank you Candace. 00:38:49.044 --> 00:38:52.424 But if the grandparents are really intending to help that student just in 00:38:52.424 --> 00:38:57.024 general, then that may not be the best way to go because I know a lot of times 00:38:57.114 --> 00:38:59.964 grandparents say okay, if you need it for college, it's there, but if you don't 00:38:59.964 --> 00:39:03.324 need it for college, if you eventually need as a down payment for a house or 00:39:03.324 --> 00:39:08.104 something, we want that money to help you too, which is great, except a 5 29 00:39:08.104 --> 00:39:11.764 would not be a great vehicle for that because 5 29s are meant for education. 00:39:12.214 --> 00:39:17.044 And so there's a lot of factors that go into what are you really intending? 00:39:17.074 --> 00:39:19.324 Do you want the grandparents still have some access to the 00:39:19.324 --> 00:39:21.254 money if they, if they need it? 00:39:21.254 --> 00:39:25.244 Or they trying to really get outta their estate now as quickly as possible. 00:39:25.554 --> 00:39:28.899 Or do they want to perhaps leverage up that gift with some life insurance 00:39:29.264 --> 00:39:30.734 and pay for it after the fact? 00:39:31.134 --> 00:39:32.934 The, all these factors come to play. 00:39:32.934 --> 00:39:34.284 So every time I hear. 00:39:34.884 --> 00:39:38.204 Oh, grandma and grandpa are gonna chip in some money for college, we gotta 00:39:38.204 --> 00:39:39.614 have a whole discussion about this 00:39:39.719 --> 00:39:40.899 Candace Dellacona: Yeah, maybe several discussions 00:39:40.934 --> 00:39:41.534 Jack Wang: you know Yeah. 00:39:41.534 --> 00:39:43.304 What do you actually mean by this? 00:39:43.634 --> 00:39:47.114 And by the way, if they wanna adopt me too, or my kids, we're available. 00:39:47.164 --> 00:39:50.044 Candace Dellacona: Look, we could talk for hours on this topic, which 00:39:50.044 --> 00:39:53.764 is actually really fortunate for you because you have this amazing podcast 00:39:53.764 --> 00:39:59.589 again called The Smart College Buyer because you really are buying this 00:39:59.589 --> 00:40:04.569 experience and you should be smart about the way that you're spending your money 00:40:04.569 --> 00:40:07.479 on college, and Jack is the resource. 00:40:07.719 --> 00:40:13.779 There are so few people in this country who know this level of detail and are 00:40:13.779 --> 00:40:19.809 actually this in the weeds with financial aid folks and financial aid offices 00:40:19.809 --> 00:40:22.404 at universities across the country. 00:40:22.674 --> 00:40:27.354 So I really encourage you to take a listen to Jack's podcast. 00:40:27.684 --> 00:40:32.034 We're gonna put all of Jack's information in our show notes so that it is 00:40:32.034 --> 00:40:34.224 available for all of our listeners. 00:40:34.884 --> 00:40:39.114 And Jack, I cannot thank you enough as a parent of three teenagers. 00:40:39.474 --> 00:40:42.924 One of whom is already in college, one of whom is about to head off, 00:40:42.924 --> 00:40:45.354 and one who is likely to follow. 00:40:45.354 --> 00:40:48.864 You are an incredible resource, so I really thank you so 00:40:48.864 --> 00:40:50.244 much for your time today. 00:40:50.554 --> 00:40:51.719 Jack Wang: Thank you so much Candace. 00:40:51.719 --> 00:40:52.989 I appreciate being on. 00:40:53.319 --> 00:40:56.679 Yeah, we could talk about this forever, but I appreciate all that you do in 00:40:56.679 --> 00:41:00.729 sharing information, because a lot of parents are in that sandwich generation. 00:41:00.779 --> 00:41:01.499 I get it. 00:41:01.549 --> 00:41:04.009 Which makes paying for college even harder because you're trying to 00:41:04.009 --> 00:41:05.959 balance sort at two ends, right? 00:41:05.959 --> 00:41:06.829 But thank you so much. 00:41:06.829 --> 00:41:07.519 I had a great time. 00:41:07.719 --> 00:41:08.309 Candace Dellacona: Thanks, Jack.