College tuition for your children is one of the 7 Retirement Killers. This week, David Alemian discusses how to prepare for the expense, or avoid it altogether
College tuition for your children is one of the “7 Retirement Killers.” Just when you should be really focusing on saving for retirement, along comes this massive bill called college tuition for your kids. It’s bad enough if you only have one child, but if you have 2 or 3 children, or more, it’s absolutely staggering. For physicians, it’s even worse because the children of physicians often go on to get advanced degrees. Some of them go on to become physicians themselves.
A big question that many families ask is: Which should I save for first, retirement or college tuition? The answer is you save for both at the same time. First, create a retirement plan like the one described in Episode 3 of The Alemian file. Having a bank finance your retirement plan enables you to put extra money into the retirement plan so it will be there for your child’s college education “IF” you need it. I said “IF” you need it, because you might not need it and I’m going to show you why. The absolute best way to put your kids through college is to have someone else pay for it.
There is a nonprofit 501(c)(3) organization called Power of Working Together. This organization works together with families to help them get merit award money from colleges. They have an absolutely terrific program that the student goes through. It’s a lot of hard work, but it’s definitely worth it. Merit award money is free money that you do not have to pay back. It comes in the form of discounts on your child’s college tuition. That means it is money that is not taxable because it’s a discount, not actual cash. Below is an example of merit award letters for the twin daughters of a physician.
These 2 young women each received a $105,000 scholarship from Hofstra University for a total of $210,000 dollars. That’s money that the physician would have had to pay if he did not have help from this organization. He was absolutely amazed that his daughters received this kind of award, because his household income exceeds $750,000 per year.
Colleges love to recruit the children of physicians, because they complete college, become successful and then give generously back to their schools. The same way that students compete to get into the best schools, the schools also compete to attract the best students. Each school has a profile of what they consider their ideal student. The organization Power of Working Together works to help the student match the profile of the school of the student’s choice.
Contrary to popular belief, students do NOT have to be athletic or academic superstars to get merit award money. The student simply has to match the profile of the school’s ideal student. Students should start as early as 8th or 9th grade. The earlier they start the better, because it gives the student more time to prepare.
If you have questions, send me an email to David@TheAlemianFile.com, and check out my website PhysiciansRetirementPlan.com. Make sure that you come back here next week to Physicians Money Digest for another edition of The Alemian File.