College education is expensive. Very expensive. You would be very lucky if you can go to college without taking any loans these days. Fortunately, you can create “lucky” with proper college expense budgeting and financial planning.
For better-preparing your financials for your or your kid’s college education, our Q&A guest for today, Jim Chilton, can help shedding some light for you. Jim is the Founder and CEO of the Society for Financial Awareness (SOFA), a non-profit that deals with the provision of financial education across America through financial workshops and seminars, and here is indeed the right expert to talk about the trapdoors that we should avoid when preparing for college education financially.
Here is our Q&A.
Ivan Widjaya (Q): Hello, Jim – please kindly introduce yourself to our readers.
Jim Chilton (A): Greetings! I am one of those regular folks who gave up the spin and quit drinking the politically correct, institutional coffee of watching common sense get run over by most of America when it comes to money issues. So, I created SOFA… The Society for Financial Awareness back in 1993. Married 38 years, 5 kids, and have been an entrepreneur most of my working life.
Q: Please tell us a bit about SOFA – what is the vision and mission of the non-profit, and why does it matter to you and the community.
A: Our mission is to end financial illiteracy across America, one community at a time.
Q: I’m sure you consult others about college debts – what’s your view on parents/students taking hefty debts for going to college?
A: Going into debt without a model of showing how to pay it off is frightful! Living a life, dealing with money issues and not having a written plan is insane… yet, most Americans live this way.
Q: How much does it cost for parents to take their kids to college these days?
A: Depends on the distance from their home whether they fly, drive, etc… hotel, food, gas, etc… it varies per family.
Editor’s note: Jim shared with us some statistics from the College Board; for the 2014-2015 academic year, the average annual cost of tuition and fees was $31,231 at private colleges, $9,139 for state residents at public colleges, and $22,958 for out-of-state residents attending public universities. For room and board, the average annual cost ranges from $9,804 at public schools to $11,188 at private schools.
And those are just for the basic expenses. There are other (hidden) expenses that many are not aware of.
Q: What are the hidden college expenses that parents and students need to be aware of?
A: Car repairs, costs of being in a sorority/fraternity. Replacement costs for needing a new computer, printer, cell phone. Setting up your living space – desk, chairs, table, linens, towels, etc.
Not having the proper clothes to the geographic environment you’re now living in. Food, gas, most things are continuing to show little signs of holding a steady cost to consumers.
Q: Okay – I’m a big believer that college education is not what it used to be, ROI-wise. Please prove that I’m wrong.
A: You’re not wrong. But, what college will do, most likely, is mature the kid into a more “world-wise” young adult, making better choices and decisions of how to “do life”.
Q: Please kindly share your financial planning tips for preparing your budget for college.
Step 1: List out all known expenses.
Step 2: Find out when bills are due.
Step 3: Have 1 and 2 planned out 6-9 months ahead of schedule.
Step 4: Secure funding:
- Parent’s contributions,
- Tapping savings or college fund,
- Lining up part-time employment.
Step 5: Add up assets, subtracting liabilities and going in with “enough” money.
Step 6: If 5 shows you have inadequate funds, ONLY THEN look into student aid.
Many thanks, Jim, for your time!