There is no doubt that your college tuition payment method is one of the more important financial decisions you will make in your life. Prior to leaving for college, most students do not have experience in financial decision-making. Personally, before I left my parents’ house to attend college, the largest thing I’d ever paid for was a cell phone plan. Many students I’ve talked to have a similar experience (that is, a lack of experience) in the area of financial planning. So, should you hire a financial advisor for college?
Ask for help!
One of the most important lessons to learn in life is to know when to ask for help. For proof, just ask my father; it’s his favorite saying. There is always someone out in the world that has more expertise in a certain discipline than we do. One route students may consider when applying to schools is to hire a financial advisor. They can help with decisions and decode the complex legalese. There are pros and cons to hiring a personal financial advisor. It is vital that students and parents understand all sides of the argument before making a decision.
Should you get a financial advisor for college?
The first question to ask yourself before making a decision on a financial advisor is relatively simple; “What do I want to do?” It is important to consider the problem before attempting to solve it. If your plans are relatively straightforward, you may not need to hire an advisor at all. It may not be prudent for your approach. If you come from a middle-class family and plan to attend a state school costing less than $20,000, your finances may already be lined up for you to succeed. But let’s say, from this same family, you want to attend a school costing upwards of $60,000 a year. It may be a good idea to contact a third party for their opinion on ways to accomplish this.
It is also good to keep in mind that financial advisors, like most important things in life, are not free. The average college financial advisor makes about $40,000 a year, almost all on a third party basis. This means that, for the most part, their salary depends on their being hired by a family or a student to assist them. Obviously, you will not personally have to pay forty grand, but most financial advisors charge a flat fee of a few thousand, in addition to expenses.
What to watch out for:
However, the advice these advisors give when it comes to various payment methods can well exceed the cost of their input. For instance, one firm, the aptly named College Financial Aid Advisors (CFAA) promises to assist students in applying for all scholarships and grants they could possibly be open to. Their website puts forward the statistic that over 90% of families have to borrow money from some source to pay for college. They promise to help all their customers fully pay college tuition in a way that suits them best.
Organizations such as the CFAA provide a reminder that, sometimes, it is not 100% necessary to hire somebody to attend to your personal needs, as some firms provide basic advice free of charge. CFAA does this through their weekly Twitter chat, under the hashtag #CollegeCash. CFAA founder Jodi Okun moderates a discussion between individuals from all over the nation where people can ask questions, share hints, or simply feel more comfortable in the grueling process that is college application.
The ideas posited on #CollegeCash range from typical questions on the application process (“It’s the morning of the test… what would you tell students?” — from @JodiOkun) to motivating advice (“College is not just about admission. What you put into your four years will be way more important in how successful you are.” — from @JonBoeckenstedt). CFAA has taken advantage of social media to both increase their brand awareness. They help students from all over the nation find free advice and motivation for college without having to break the bank for a financial advisor.
Do your research beforehand!
If you’ve decided that a financial advisor is the route you or your family wants to take, please make sure that the firm or advisor you hire is legitimate. While a vast majority of people are representing themselves honestly, you can never be to careful, and through websites such as the CFA Institute you can confirm the legitimacy of your advisor or agency.
In short, the decision to hire a financial advisor comes down to personal need. Are you someone who feels they need help from an expert to manage your finances, or is your family able to do it on your own? Can you subside on the free tips offered by these firms, or do you need someone to help you full-time? Once you feel you know the answers to these questions, you are ready to make your decision.
And College Raptor can provide some free help as well. With our college match tool, you can discover college matches with personalized cost estimates!