Registered Representative, Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Baldridge Wealth Management and Baldridge College Solutions are affiliated. Cambridge and the Baldridge companies are not affiliated. 6-13 The Impact of Divorce on College Planning The Impact of Divorce on College Planning The Impact of Divorce on College Planning The Impact of Divorce on College Planning Taming the High Cost of College Taming the High Cost of College Taming the High Cost of College Taming the High Cost of College! Presented by: Brad Baldridge, CFP® Baldridge College Solutions, LLC 10521 W. Layton Avenue Suite 200 Greenfield, WI 53228 414-529-9400 Ext. 107 [email protected]www.BaldridgeCollegeSolutions.com
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The Impact of Divorce on College Planning Impact of...Career/life planning – Choosing a major – Career planning – Learning life skills Admissions – Applications – Essays
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Registered Representative, Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Baldridge Wealth Management and Baldridge College Solutions are affiliated.
Cambridge and the Baldridge companies are not affiliated. 6-13
The Impact of Divorce on College PlanningThe Impact of Divorce on College PlanningThe Impact of Divorce on College PlanningThe Impact of Divorce on College Planning
Taming the High Cost of CollegeTaming the High Cost of CollegeTaming the High Cost of CollegeTaming the High Cost of College!!!!
Presented by:
Brad Baldridge, CFP® Baldridge College Solutions, LLC 10521 W. Layton Avenue Suite 200
Registered Representative, Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Baldridge Wealth Management and Baldridge College Solutions are affiliated.
Cambridge and the Baldridge companies are not affiliated. 09-12
Brad BaldridgeBaldridge College Solutions, LLC
10521 W. Layton AvenueSuite 200
Greenfield, WI 53228(414) 529-9400
www.BaldridgeCollegeSolutions.com
The Ingalls Family
Charles, age 50, Mill Worker, Salary $45,000Caroline, age 52, Office Manager, Salary $40,000
Mary (2014) age 17, Junior#2 in her class GPA: 4.4ACT 32Interested in Math or Engineering
SCHOOL LIST: MIT, Northwestern, Madison, MSOE, Bradley, Valparaiso
Laura (2015) age 16, SophomoreStrong Student (not quite as strong as Mary), the writer in the familyGPA: 3.7Laura wants to go to South Dakota State with her boyfriend Almanzo Wilder
Carrie (2018) age 13, 7th gradeStraight A’sStrong soccer player – top 5 of all 7th graders in the state.
The Huxtable Family
Cliff, age 54, self employed doctor , Salary $75,000Additional $100,000 as draws from the medical practice
Clair, age 52, office manager, at medical practice, Salary $40,000
Theo (2012) age 19, College Freshman at MadisonBiology major….doing well.
Vanessa (2015) age 16, SophomoreGPA: 3.87ACT: 29Class Rank: 19/225Musician
SCHOOL LIST: Dreams of Juilliard, considering Lawrence University, NYU, Boston College, Carroll, Carthage
Rudy (2019) age 12, Sixth gradeGood kidWill go to college
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The Connor Family(divorced 10 years)
Sarah, age 47, works two jobs, Salary $35,000
Bill, age 49, Sales Rep in Texas, Salary $50,000
$25,000 behind in child support
John (2014), Age 17, Junior at Marquette High School
GPA: 3.9
ACT: 29
Class Rank: 15/225
SCHOOL LIST: Marquette University, Carroll
Grandpa has $40,000 in an UTMA at Vanguard. Grandpa is the custodian and John is the owner.
Late Stage College Planning
College finances– Financial aid planning– Financial aid forms– Offer letters– The appeal process– Saving and investing– Tax planning– Cash flow
College selection– College visits– College fairs– Finding the “good fit” school
College testing– ACT– SAT– PLAN/PSAT
Athletics– Division I, II, III– NAIA– Marketing
Academics– High school curriculum– GPA– Class rank
Career/life planning– Choosing a major– Career planning– Learning life skills
Admissions– Applications– Essays– Recommendation letters– Early decision/early action
• Average cost of public school: $21,447 per year*
• Average cost of private school: $42,224 per year*
Includes: Tuition and fees, room & board, transportation, books & supplies and personal expenses (COA)
* Based on data from The College Board, Trends in Pricing, 2011
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Cost of Wisconsin Colleges
• Alverno College $33,216
• Lawrence University $50,370
• Marquette University $46,644
• University of WI-Madison $23,774
* Based on data from College Board, Fall 2012, living on campus
College Costs
• Does everybody pay the same price for College?
• Who Pays Less?
Which Would You Prefer
Attending the Best School
-or-
Attending the Best School for your Student
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Finding a School that is a Good Fit
• College Visits
• College Fairs
• College Reps at the High School
• Websites
• Social Media
Divorce Issues with High School Students
• Who does all the leg work...i.e., testing, visits, research?
• Who participates in the decisions or has veto power?
• Who will pay for all pre-college expenses?
This process can overwhelm a
single parent!
Selection Criteria
• Academics
• Majors
• Distance from Home
• Urban, Suburban or Rural
• Large or Small
• Finances
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Advanced Strategies
• What can the student do to increase the odds of receiving admission or scholarships?
Common Financial Aid Myths
• We earn too much.
• Our child has poor grades.
• We have too much equity in our home.
• There is nothing we can do. We will pay for college ourselves.
• Financial aid is easy to understand.
Where is the money going to come from?
• Current Income
• Savings / Investments
• Financial Aid
• Loans
• Scholarships
• Reductions in other expenses• Taxes
• Interest Expenses
• Unnecessary Expenses
• Life Style / Retirement
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Financial Aid
• Need based Aid� Income and Assets
� Parents and Student
• Merit Aid� Academics
� Talents
� Geography
� Others
Three Types of Families
Type 1: Those families who will qualify for large amounts need-based aid.
Type 2: Those families who qualify for some need-based aid. Good planning may increase the amount of aid received.
Type 3: Those families who will not qualify. These families need to focus their planning on other areas. (i.e. Tax, Merit-aid, Athletics, Cash Flow, Investment)
Need-based Aid
Cost of Attendance
- Expected Family Contribution
=Financial Need
COA - EFC = FN
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Top 5 Need-basedAid Factors
• Student Income
• Student Assets
• Parent Income
• Parent assets
• Number of Students in College
Who’s my Parent?
Free Application for Federal Student Aid (FAFSA)
“If your parents are divorced or separated, answer the questions about the parent with whom you lived more during the past 12 months.”
Download the fact sheet at www.studentaid.ed.gov/pubs 2012-13
Income
• Based on taxes from the prior year (AGI)
• Un-taxed income is added to AGI
• Student income is assessed more heavily than parents
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Divorce Issues Income
• If recently divorced or separated, tax return may be joint.
• Reconstruct as if you were single.
• Child support, family support, and alimony are all forms of income that may be assessed.
Assets
• Values reported are the values on the day you sign the forms
• Not all assets are assessed
• Student assets are assessed more than parent assets
Divorce Issues Assets
• Prior to finalizing divorce, probably divide things done the middle, 50/50.
• Post divorce – the assets belong to whoever received them from the divorce.
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Divorce Issues Assets (continued)
• Who should own 529 accounts
• What’s the proper mix of assessable versus non assessable assets for each spouse
• Who should have control of the college assets
2 Need-based AidSystems
• Federal Aid System
� FAFSA- Free Application for Federal Student Aid
• Institutional System
� CSS Profile
� Approximately 300 Colleges
CSS Profile Schools(Non Custodial Parent
Form Required)
• Northwestern University, IL • Principia College, IL • University of Chicago, IL • Saint Mary's College, IN • University of Notre Dame, IN • Wabash College, IN • University of Michigan, MI • Carleton College, MN • Macalester College, MN • St. Olaf College, MN • Lawrence University, WI
See CSS Profile handout for the entire list or visit http://student.collegeboard.org/css-financial-aid-profile
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Examples of Federal EFC
FAMILY #1 FAMILY #2Parent Income $75,000 $150,000Student Income $0 $0Parent Assets $20,000 $20,000Student Assets $1,000 $1,000Students 1 1
EFC (Est) $10,500 $31,500
*Hypothetical example for illustrative purposes only