Financial Planning Advice for the High School Student Entering College
The previously published Summit blog entitled “Kids and Money: Tips for Teaching Your Children about Financial Planning” emphasized that successful financial planning should be a family affair. It’s no longer bad manners to talk about money with your kids; but rather, financially responsible families regularly discuss money and implore a strong sense of financial literacy within their children. If you have a financial planner or independent financial advisor, make sure that they share in your belief that financial planning is a family affair. Your financial advisor should create a solid financial plan rooted in your family’s shared financial priorities and expectations in order to help your family achieve its financial goals.
With summer break from school right on the horizon, it’s especially timely to start a discourse about financial planning for current high school students considering college. This instant blog will set forth some financial planning tips for high school students (specifically, rising juniors and rising seniors) interested in attending college after high school. Check back soon on Summit Brokerage’s blog for a blog post that will cover financial planning tips for students who will be attending college this coming fall or who are already college students.
Still in high school? Thinking about college? If so, here’s some financial food for thought for you to consider:
Be wary of applying “early decision” to a college: Over 450 colleges in the U.S. offer applicants the opportunity to apply “early decision.” Under an early decision plan, you apply early to one specific college and receive your admissions decision earlier in the school year (usually in December of your senior year of high school). In exchange for oftentimes a better chance of being admitted to the school, if a college accepts you early decision, it’s a binding agreement—you must go to that college. From a financial perspective, what this means is that you are locking yourself into attending one specific college, without knowing what type of financial aid award the college may award you. If the high cost of college is an issue for you and your family, it’s typically best to avoid applying early decision to one college and instead apply “early action” (an option where you apply early to a college, but the college’s admission decision is not binding) or “regular decision” to multiple colleges, so you will then be able to compare financial aid packages and make your college choice accordingly.
Keep an open mind regarding your choice of college: Perhaps you were accepted to a variety of colleges: a private, Ivy League caliber school, a public university in your state of residence that offers discounted in-state tuition, and perhaps a university that is offering you a larger scholarship or financial aid package, but is not your first choice or is a less prestigious school. What’s most important to you? Prestige? Name recognition? Graduating college with as little debt as possible? This is a personal choice, but one with far-reaching implications. In some cases, it may make more financial sense for you to attend a local community college while also working part-time and then transferring to a four-year university after a year or two. You may also want to look into taking a gap year, which means waiting a year between graduating high school and beginning college. You can use this year to work and save money for college—ideally working in a field you are interested in studying in college. Knowing ahead of attending college whether you like working in a specific industry will help keep you from being a perpetual college major changer, which can get very expensive very fast.
College isn’t for everyone: Just because a college accepts you, doesn’t mean that you should go. Researchers estimate that college graduates earn about $1 million more over the course of their lifetime than those workers who do not have a college degree (this is known as the college earnings wage-premium). Sure, the present value of the college earnings wage-premium seemingly far outweighs the costs associated with attending college, thus yielding a high rate of return. But you must consider whether you will be able to successfully graduate from college. At public four-year universities, only 36.5 percent of students obtain their degree within five years; at private universities, 57 percent graduate within five years. You must also consider the job prospects for your selected major—for example, how many high-paying jobs are available for student with a degree in Comparative European Philosophy? There are many jobs that require a college degree that are not high paying—for example a school teacher in North Carolina needs a bachelor’s degree to work, but only makes $30,000 a year ($14.43/hour). By contrast, there are many more “blue-collar’ careers, trades, and technician jobs that don’t require a college degree but pay considerably more. For example, the average annual salary is $63,000 ($30.28/hour) for a dental hygienist and $55,000 ($26.44/hour) for an aircraft mechanic, not including overtime wage opportunities.
Consider whether military service (and its higher education financial benefits) is right for you: While definitely not the right option for everyone, military service can help make your higher education dreams a reality. Depending on the length and type of your military service, with the tuition-fee assistance program and the GI Bill, a large portion of your college costs and fees may be covered by the military. Also, enrolling in the ROTC while in college can help not only prepare you for military service after college graduation but also pay for all or part of college at the same time. Depending on the program and the school, some students who participate in ROTC get their entire tuition tab picked up.
For more information on Summit Brokerage Services and our independent financial advisors, visit https://www.summitbrokerage.com or call us at (800) 354-5528.
About Summit Brokerage Services
Summit Brokerage Services, Inc. is part of Cetera Financial Group®, a leading network of independent retail broker-dealers. Summit Brokerage provides a broad range of securities brokerage and investment services to primarily individual investors. Summit Brokerage also sells insurance products, predominantly fixed and variable annuities and life insurance through its subsidiary, SBS Insurance Agency of Florida. Summit Brokerage also provides asset management services through its investment advisor, Summit Financial Group, Inc.
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