College funding is the third largest financial outlay next to retirement and eldercare and yet only 3% of financial advisers and insurance professionals focus on the economics of a higher education. The Higher Education Research Institute at UCLA found that 75% of students were accepted at their first choice of college. But only 43% of that group attended that college. 62% of students said they couldn’t afford it. 25% said they were offered no financial aid at their college of choice. 60% said that money was the most significant factor in their decision.
Is it wise to borrow from your 401(k) for your child’s future from your own retirement future? You’re paying interest to borrow your own money. You may not be able to transfer it to another place of employment until the loan is paid off. And significant borrowing against your 401(k) may compel you to work longer than you anticipated. Borrowing from the equity position of your home also charges interest that must be paid monthly. If the value of the home decreases the loan could be called. The Baby Boomers have used both these options to their own hurt. But the real pain is the over $245 billion dollars available in student grants, scholarships and loans, most of which is not being accessed.
Selecting a major can be a life-impacting decision. There are tests available to help the potential student select a major that best suits them. Keep in mind, however, that this type of testing is an indicator and will not necessarily predict whether or not your child has the skills necessary to perform a particular type of job or complete a particular academic course of study. This is extremely important when so many students change majors thereby extending their undergraduate education an average of 1½ year, adding an additional 30% cost to their education.
It’s extremely important to discuss and determine the best major suited for the student and correlate that with the best college in that field with a trained college funding professional. It’s your life. It’s your time. It’s your money.