By: Kevin Reardon
I've spent many-a-day helping clients plan for the education of their offspring. I hesitate to say it's easy, but in the financial planning world, it's what we do.
What I learned this fall when the eldest of our offspring sprung off to college for the first time: planning for college and actually writing the tuition check are two things that feel entirely different.
The entire experience begins with "shopping" for a school, dealing with the admissions office, talking to the financial aid office, completing the FAFSA, and ultimately writing a check to pay the tuition bill - all of which has been enlightening, to say the least (this feels confusing, frustrating, overwhelming at times).
My wife and I have been saving diligently in 529 College Savings Accounts, since our boys were born. We established monthly automatic deposits into our 529 accounts (this feels good).
What it actually felt like is automatic withdrawals from our savings account
(this feels not-so-good). At one point, it even dawned on me that the monthly deposits into our college accounts were more than our mortgage payment. That's hard to swallow. Nonetheless, we persevered. Our boys' rising college account balances were both a sense of pride and of security, knowing that we'd be able to pay for most or all of their college expenses (this feels good).
August 1st we were presented with our first ever tuition bill. What we learned: colleges don't have permission to correspond with parents (even about tuition payment) without their (adult) child's consent (this feels weird as we begin to let go and to understand that it's a part of his growing process).
What we tried to do: we wanted him to feel a little bit of the pain of paying for tuition by putting the money first in his account... and expecting him to write the check to the bursar's office. If he actually felt any of this pain is yet unclear.
When I went online and had a check issued for first semester's room and board, I noticed the new account balance, reduced by the amount of the withdrawal (this feels very bad). There was a sinking feeling in my gut that reflected the sinking balance in the account. Ouch!! For the last 18 years, the account balance grew. Shouldn't account balances always grow?
Emotionally, I need to take a deep breath, and to remember that those assets are meant to be used, and will be completely consumed when our youngest graduates. This should make writing tuition checks for the next 23 semesters (3 kids x 4 years x 2 semesters) a little easier (this feels good!).
College is a good thing. Having the money set aside to pay for it feels even better.