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Summary: College Planning Foundations for High-Income Clients
Session 1 of CP MC_ Foundations…
1. Why High-Income Families Still Need Planning
- Many affluent households assume they won’t qualify for aid, but this overlooks merit-based scholarships and tuition discounts that private schools often use to attract top students.
- Private universities can sometimes cost less than public out-of-state schools after discounts.
- Rising tuition (outpacing inflation) plus FAFSA rule changes (like inclusion of small business assets and removal of the sibling discount) disproportionately burden higher-income families.
📖 Fact check: College costs trends – College Board
https://research.collegeboard.org/trends/college-pricing
📖 Fact check: FAFSA changes explained – U.S. Department of Education
https://studentaid.gov/announcements-events/fafsa-simplification
2. The “MAGIC” Method Framework
Beth introduced MAGIC, an acronym for structuring college planning:
- M = Money – Define affordability and fund using a mix of cash, credit, and collateral.
- A = Academics – Student’s academic profile (GPA, test scores, rigor) drives merit discounts.
- G = Gifts – Match student aptitudes and interests to avoid costly transfers/dropouts.
- I = Integration – A multi-year project plan with coordinated roles (advisors, consultants, family).
- C = Confidence – Families feel empowered to negotiate and make ROI-driven choices.
📖 Fact check: Role of academic profile in admissions – NACAC
https://www.nacacnet.org/news--publications/research/college-admission-report/
3. Cash, Credit, and Collateral Approach
Beth recommends financing college with a three-pronged model:
- Cash – 25–30% via 529s, savings, and investments.
- Credit – Student’s “Academic FICO Score” (grades, test scores, rigor, essays) generates tuition discounts.
- Collateral – Strategic borrowing (federal student loans, HELOCs, life insurance loans, securities-backed lines). Federal student loans are favored for low rates, flexible repayment, and forgiveness protections.
📖 Fact check: Federal student loan basics – Federal Student Aid
https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized
📖 Fact check: Parent PLUS loan details – Federal Student Aid
https://studentaid.gov/understand-aid/types/loans/plus/parent
4. Common Myths to Debunk
- “We won’t qualify for aid, so planning is pointless.” → Merit aid can be significant, especially for top-quartile students.
- “Private schools always cost more than public schools.” → Net cost can be lower at private colleges.
- “Our child’s GPA guarantees scholarships.” → Grade inflation makes GPAs less reliable; standardized tests, essays, and curated lists matter more.
- “Award letters are final.” → Families can negotiate offers, especially with competing admissions.
📖 Fact check: Negotiating college tuition – The Hechinger Report
https://hechingerreport.org/yes-you-can-negotiate-college-tuition/
5. Advisor Action Steps
- Pre-Qualify Families: Establish a “spending ceiling” similar to a mortgage pre-approval.
- Incorporate Cash Flow: Recognize the “teenager tax” (ongoing household costs that shift into room/board).
- Coordinate Experts: Partner with independent educational consultants (IECs) for admissions strategy and FAFSA/CSS specialists for forms.
- Educate Families Early: Ideal start is freshman year of high school; but strategies still work even for late-stage planners.
- Negotiate Offers: Position students in the top quartile of applicants to increase leverage.
📖 Fact check: CSS Profile vs. FAFSA – College Board
https://cssprofile.collegeboard.org/
📖 Fact check: Independent educational consultants – IECA
https://www.iecaonline.com/
6. Practical Tools
- Spreadsheets and project plans help visualize multi-year cash flow and avoid over-borrowing.
- Dual enrollment/AP credits and “freshman year for free” CLEP exams can reduce costs.
- Advisors can frame college planning like buying a house: pre-qualify, shop in the right “zip codes,” and negotiate terms.
📖 Fact check: CLEP exams (“Freshman Year for Free”) – Modern States
https://modernstates.org/freshman-year-free/
✅ Bottom Line for Advisors:
College planning is both a financial and student-centric process. By combining financial strategies with admissions insights, advisors can help affluent families reduce costs, preserve retirement savings, and create long-term client loyalty.
