Podcast with Ann Garcia: How to Pay for College

Hello, this is Shellee Howard with Parents, Is Your Teen College Ready? And today I have an amazing guest and author, Ann Garcia. Welcome to the show.

Thank you so much for having me.

Outstanding. So for our listeners out there, can you tell them a little bit about your background so they understand who they're listening to?

Absolutely. I'm a certified financial planner and, uh, partner at a, um, small independent independent registered investment advisor called Independent Progressive Advisors in Portland, Oregon. And a lot of my practice is working with families, and specifically families with kids who want to get them through college without throwing all their other financial goals off the rails in, in the process. Um, and, and as part of that, I have a website called howtopayforcollege.com, and I wrote a book, How to Pay for College, because I felt like more people need to understand this than I can reach through my financial advisory practice.

Right. Oh, I can't wait to dive in. So of course, I want to thank you for sending me your book. Of course, it was like great reading for me. Um, my book, How to Send Your Student to College Without Losing Your Mind or Your Money, was released several years ago, and I remember, um, why I wrote it. So I always like to ask authors, why did you take the time to write such an important book?

Yeah, it's a great question, and I suppose there's a lot of ways to answer that. Just from a, from a why did I want this out in the world, I would say that in my practice, I talked with, I talked with a lot of two groups of people. One are parents who just can't figure out how they're going to fit this massive expense called college into, into their lives. And another is young adults who have taken on so much student loan debt in the process of getting their education that they're really struggling to put together the basic building blocks of their adult financial life, whether that's saving for retirement, buying a home, sometimes even just having a savings account because so much of their free cash flow is going towards, towards their student loans. And I realized that, uh, if I could help that first group, you know, those parents who are trying to figure this out, I might see a lot less of that second group. And so I really dug into the topic. I started, um, I started by writing a blog and when the pandemic came along, um, an opportunity came up to, to write a book and And so I had a little extra free time in my days right then, like so many others. And so I jumped on it.

That's so great. It's such a great story. I'll tell you, mine was a very different situation. I made my son a bet when he left for college. He got into 7 top-tier schools, and I was so proud of him. Like, it's not about me, right? I was just like, way to go. And he said, Mom, when I do this successfully, you have to promise me you will write a book for others. Oh, excellent. And I'm like, sure, honey. Yeah. Okay. No big deal. Off you go. Right? I drop him off at Harvard. I tuck him in and I'm like super happy. Parents are crying. I'm like, what are y'all crying about? This is like brilliant. And I will never forget the day he crossed the stage to get his diploma. He comes directly to me and hands the diploma and he goes, Mom, where's the book?

I love it.

And I haven't even thought about writing the book. So the fact that you did it just to do it is so amazing. I truly did it because my son held me accountable to helping let other people know that it's possible. So because we know it's possible, I really wanna share that with the world. So Let's talk one question that I ask every person. Did you know in high school that you were going to write a book and be a financial advisor?

Absolutely not. Um, when I was in high school, I assumed I thought I was going to be an architect. That was, that was my plan all along. I started college as an architecture major and quickly realized that that was not what I wanted to do. And I, and I really fumbled around for a while trying to figure out what, what I wanted. Um, I loved a couple of history classes that I took. I ended up doing a double major in history and, and German, um, on the assumption that, you know, learning how to learn and absorb information and use it effectively was probably going to be a good, a good life skill for me. And so far so good.

So the reason I asked that question is I get so many families that come to me and say, my child doesn't know what they want to do, and it's making me crazy. And every person I've ever interviewed on this podcast has said— but one, there was one who said, I'm still trying to figure it out. Like, there, it wasn't just turn 17 and ding ding ding, we know what we want to do, right?

And I've had so many iterations of, of career too. I mean, this isn't— I did not go straight into financial advising. I worked in technology for a long time, um, I was a wine importer for a while and I've been doing this for about 15 years. So, so the long and winding road is okay too.

For sure. You know, we start with assessments and helping students really figure out their future because I know it's very heavy on their hearts when somebody says, what do you want to do? And they're like, I don't know. So that is part of where we start. How do you start with families? What would a family expect you hear financial advisor and that kind of just sounds like show me your money, right?

You know, we, and we look at it a little bit differently. I work with families several, several ways, but our big question for people is, is always what does it mean to live your best life? And both today and in the, and in the future. So this is not about creating the biggest pile of money. It's about giving yourself the, giving yourself the best chance of doing the things that are important to you in your, in your time on this earth. And so we actually start with a lot of assessments about what matters to you, you know, who are the people that we're planning for? What are the life events that we're, that we're planning for? What does, you know, what does, what does feeling destressed about money look like to you? You know, what are— and, and really, what are the things that are, that are important to you, and how do we, how do we allocate dollars so that you can, so that you can do those things? Um, you know, obviously balancing college and retirement is, is a big thing for, for a lot of families, and so that's where, you know, that's really where, where we spend a lot of time. To me, I think the most important thing is helping families understand that a great college experience is available at any price point, and With 4,000+ different colleges out there, you're going to find a lot of good choices. I mean, my, my kids just graduated from college last spring. My son has a friend who graduated for $0. So she did 2 years of free community college. And then she was working at Starbucks. And Starbucks has a tuition partnership program with Arizona State. And so she finished her degree online at Arizona State. She knew the career path she was interested in weren't very high-paying ones. So she said, I don't want to spend a whole bunch of money getting a degree. Even I know I need one and I'll probably need to go to grad school at some point. And so that was a really, you know, that was a, that was a great choice for her. That's not necessarily the choices everyone wants to make available to, to their, to their kids. So a lot of it is about, you know, how do we create a good set of choices by aligning, you know, savings, ability to spend out of pocket, identifying colleges that are going to give you scholarships, planning for, the FAFSA and the CSS Profile with creating good college choices.

So refreshing to hear. So many families, when they contact me, are already discouraged because they stay online and what they hear is, my child had a perfect GPA and a perfect test score and didn't get in anywhere. And I'm like, that's really not what it's like at all. It's like if you Google that your thumb hurts, right? Cancer. Like, there's so— you have to be so careful. There's almost too much information, and you don't know who to believe. And so I, like you, want families to have those choices that they get to make. Um, and so once you sit down and you help them to map out— I call it getting their financial house in order. That's just my take on it. We focus on the building the resume, the standout strategy, the admissions, how to pick the right colleges, all of that. And then we turn over to wonderful people like you and say, how do we bring down their SAI? How do we help them to qualify for the most scholarships? So in your world, how do you start that process once you assess what's important to the family?

Yeah, well, so we always— I always start by looking at their budget. And ideally, this is something we do well before senior year of high school. You know, with my clients, I like to start having a really hard look at the budget when their kids are in middle school. And that's a combination of, you know, what is their current savings rate and savings balance going to look like when the student graduates from high school? How much can they afford to spend out of pocket? Are they eligible for the education tax credits? How do they feel about their student taking out the direct student loan? Add those all up and say, this is, this is what your budget looks like based on what you're doing now. Are you okay with that? You know, is that— we're in Oregon, you know, is that you good with Oregon, Oregon State, or, you know, do you want Gonzaga and Santa Clara on, on the list? And if so, here are some adjustments that we need to make. And by the way, here are the automatic scholarships that students get at Oregon and Oregon State, so you can plan your course load so that you get the right GPA to, you know, to actually, to actually get that, that money. From there, once we have a sense of budget, which virtually none of my clients' budget is $85,000 a year because, yeah, because that's not, that's not me. Yeah, I don't believe anyone should spend that much for, um, for, for college. Um, but once we have a sense of what their budget is, then we look at what type of scholarships they're eligible for. You know, is this a family that has financial need, or is this a family that needs to be looking for colleges that offer merit scholarships? Because, you know, as, as you and I know, and we want everyone else to know, every student is eligible for scholarships. Now, every college offers scholarships, but not every college offers scholarships to every student. So, you know, your job as a parent working with your advisors is to Know what types of scholarships you're eligible for. You know, do you have financial need? Can you have financial need or is it merit? And then work at, you know, focus your application and time and energy on colleges that offer the types of scholarships that you are eligible for. Mm-hmm.

So, so refreshing. So as a family, I don't— tell me if you ever get this in your practice, Anne, but somebody will say, well, you know, they're 17. I think this is really the best time for them to kind of figure this out on their own. And, you know, we're just going to let them take out their loans, and, you know, we don't really want to pay for it. They're an adult now, they need to figure this out. Do you ever face that in your practice?

I do sometimes. And, you know, the interesting thing in my practice, you know, again, because I'm doing financial planning for, for parents, it's usually the couple that I'm talking with. Rarely do both parents feel that way. Usually it's one parent who feels that way and the other who doesn't. But there's a whole lot of that, that I put myself through college, my kids can do the same. And the world has changed. The world of college has changed since we were in college, then versus now. And it's really extraordinarily difficult for students to put themselves through college, in particular because their cost of college is a function of their parents' income. And so if you're a high-income parent who wants your child to go to college, you need to be supporting them financially in, in that journey.

Yeah, that, that is the challenge, right? It's— you can't do it alone, and you can't— and, and then I've had parents who say, well, they can then just get a loan, not realizing they don't have collateral and there is no way for them just to borrow $27,000 without you signing it total for 4 years.

That doesn't pay for most colleges.

Right. And so it's some of the— I call it the what they don't know. Right. And that's the beauty of our books is we're bringing it to the light here. This is what we're trying to help you know what you don't know. Are there any things that you find in your clients consistently that are like, Darn, I just wish I could teach them this sooner, or it's consistently this keeps coming up. Is there anything that you found?

I, you know, I would say, and this is, I would say consistently across families that I, that I talk to, we let too much of the college narrative be driven by the Stanfords and Harvards of the world. And so people internalize this notion that I'm not poor, so I have to pay full price and full price is $85,000 a year. And I should just be grateful that my kid gets accepted at a college anywhere. You know, the vast majority of students do not pay the full price to attend college. Most students get substantial tuition discounts, whether it's on the basis of financial need or on the basis of merit. Those discounts are all out there. And as I said before, every student is eligible for scholarships. Scholarships are not the sole province of poor kids and student athletes. You know, it's really the mathletes who clean up in— in the scholarship world.

I love that. I never— I'm gonna borrow that one. That's a good one. Um, it's, it's really important for families to realize that the scholarships are available. Um, I, I often will tell families, last year we had 51 seniors in our program. They earned $23 million in scholarships. So that's a lot of money. I mean, don't you want some of that? Like, it's there.

Yeah, my son was not a great student in high school. Um, you know, he was a very normal boy who had normal interests, none of which were homework. And, um, you know, so he didn't have a very good GPA. He did really well in the ACT, and he literally— we always joke he was like a— he was like an '80s or a '90s kid, right? Wrote— had a job after school, played sports, you know, took the ACT because it was free at school, and we had a free after-school ACT prep course, and that was kind of all he did. He applied to two colleges, and he got a fabulous academic merit scholarship to his top choice college, which made it— it was cheaper for him to go there than to stay in-state and go to the University of Oregon. So those scholarships absolutely are out there. Here's the other crazy thing, um, so he went to, you know, a large public university that you basically sign up to go to, and I don't say that to downgrade his university. I'm absolutely thrilled with the education that he got. My daughter went to a single-digit acceptance rate private college. They both graduated in the spring and they both have identical jobs, you know, but for the fact that my daughter was computer science, my son was finance, but they're both working for Fortune 500 companies in management training programs, same salary, same benefits, you know, all the same, totally different college pathways. Um, so it's, it's much more about how you go to college than where you go to college.

Yeah, and it starts in high school, right? If you just go to class and you go home and you play on the computer or on your phone and don't do much, you can't expect much. If you go to college and you're participating and you're really learning, it just opens up that window for opportunity.

Absolutely.

That's a beautiful example. So when you, um, meet with these families and you start to formulate the plan, do you typically— what When do most people want to start this conversation with you? Because I'm sure it's different than what I experienced, but I just thought I'd ask.

Well, I think a lot of families think this is a conversation that you have during high school and like during junior and senior year of high school. I like to start this conversation as early as possible. I mean, if I have clients who are two college-educated, oftentimes with graduate degrees, parents with two kids chances are really good that at least one of those kids is going to go to college, and probably both, and maybe one of them will go to grad school, or maybe both. So, um, the earlier you start, you know, obviously the more, the more choices you have. To me, planning for college is equal parts the financial piece of planning for college and, and, and the admissions piece of planning for college too. It's equal parts financial planning and parenting, right? So we can come up with a great savings plan, we can come up with a budget, we can know that there are colleges that fit that budget, but if the parents aren't aren't going home and talking with their kids about their expectations, their budget, um, what level of support they're willing to give, what they're, you know, what, what they expect the student to be contributing, then it doesn't matter how good the plan is. Um, and so that is something, you know, it's really important for families to be having those conversations. Um, you know, again, never too early as long as you're being age-appropriate. I always think of, like, with young kids, it's great to have what I call college-adjacent conversations, which are things like, you know, Kelly and I are friends from college and we've done all these really fun things together over our lifetime. Or I never knew how thunder and lightning worked, and then I took a meteorology class in college. Or, you know, just introducing it as something that enriched your life and that you— that positioning it as something that you hope will enrich— will enrich their lives. I think once you get to middle school, it's okay to start bringing dollars up. And a good way to do that is to talk about college is important to us and we've been saving for your college and, and we want to help you go there. Probably not going to have, you know, every single option in the world available to you. It's also, you know, when kids are in middle school, you know, they're seeing their sibling, their friend's older siblings apply to college. And it's a great opening to start talking about the different in cost between different colleges and, you know, kind of what you're targeting for them. Once your kids are in high school, I think it's important to start talking specific numbers. And the best way to have those conversations, I think, is from the perspective of goals rather than constraints. So for example, it's really important to us that you graduate from college debt-free because we know that's going to create a lot more opportunities for you if you're not making student loan payments. And we have saved enough that we know you can get through are in-state schools debt-free. There are probably lots of other options out there that'll work in that budget and will absolutely support you in finding, in finding them. We just want you to understand the budget parameters for, for your college search. That's empowering to your child. That is, you know, helping them come to a good choice versus you got to stay in-state.

Yeah, yeah, because what's the first thing a teenager want to do?

Not instead of what you tell them.

We all know how that works. So, you know, it's brilliant. We, we often talk about the struggle of financial literacy. They don't teach it in the high schools. They don't teach it. They really don't teach it.

And there are more and more states are adopting graduation— that's what I was going to say— literacy graduation requirements. So hopefully change.

Absolutely.

Ideally, our system wouldn't be so complicated that 18-year-olds need to take a class to function.

Yeah, but there's also like when I start with See Our Future Now and I help the student get clarity about what they would do with a million dollars and they have no idea what they can buy with a million dollars. Like it is really quite extreme. There's a void. And so when you talk to them as a parent about, okay, this school's $80,000 a year— that doesn't mean a whole lot to them.

No, in their mind, no. And especially when you've got, you know, kids who've worked part-time jobs, maybe babysitting has been all of their income, and they see that a college graduate makes $60,000 a year, they're like, I could borrow $100,000 and pay it back in 2 years.

For sure. No.

And we— so what I often have people do is, is, you know, when we look up what, what a loan balance would be based on a certain choice and what that would translate to as monthly payments, think of something that you would have to give up in your budget to clear that much out. So, you know, let's say your loan payment's going to be $700 a month. You know, to a kid who's been, you know, making $15 an hour, um, all their life and projecting a future salary, that may seem like nothing. When you start talking about it from the perspective of our family would never go out for dinner in order to come up with, with that kind of dollars. So, so talk about it in terms, in terms of actual trade-offs. And I think it can be helpful, you know, for how, for, you know, in preparation for having those types of conversations, you know, talk about the things you do and don't spend money on. You know, it doesn't, you know, your only, your only money conversation doesn't have to be around college, you know. A great conversation to have is we spend a lot on family vacations because it's important for us to have some time, some quality time together as a family without the distractions of our, of our everyday lives. And because we spend this money, we don't do these other things. Or, um, we're saving for your college and that's the reason why you don't get a new pair of cleats every month for soccer.

Yeah. And it's so important. I talk about when people ask me, when is the best time to start? I say, think of college as you would a museum or an art gallery. There's no perfect time to take them to their first one. It's whenever there's curiosity, whenever you're near one on vacation. Like, it's okay just to walk on campus and say, what do you see? What do you feel? Well, what is— how is this different than what you've seen before? And as you would an art gallery or a museum.

Yeah.

And as they get older, those conversations start to take on their own as to, wow, these kids, da da da da da, and they start to be able to articulate because they've been there and it doesn't feel weird or scary.

Yeah. You know, it's funny you say that because one of my kids, when they were in middle school, every year their class did a field trip to a at one of our local colleges. And on paper, they all look really similar, right? You know, small private liberal arts colleges about the same size, and they're totally different. And it, it was, it was a great way for my kids to look at colleges because they knew they weren't going to any of those. My kids have always been like, we're getting out of Dodge. So they knew they weren't there, but so it, so it allowed them to look objectively at them about what they did and, and didn't like about them. And to think about how that might, you know, translate into, you know, into future things that they do and don't like. And I think it's funny, my kids both graduate, both gravitated to their specific colleges for reasons that had nothing to do with the college other than my daughter loved that at her college in the dining halls, each house, which is a subset of the dorm, had their own table in the dining hall. And she's like, Oh my gosh, Mom, no lunch table drama.

Oh, you know, that's what I say. That's the social element that if you don't weave into the fabric of the financial and the academic could be a really big problem.

Yeah.

The fact that she recognized that is because she had a past experience that wasn't great and she's like, I don't want to do that again.

Yeah, yeah. And, you know, and the social piece is so important to being successful in college. I mean, a good college experience is really about forming relationships, you know, relationships with your professors, relationships with your fellow students, figuring out how to, you know, how to make friends, how to, you know, how to get the resources that you need when you're away from home and on your own. And so, so, yeah, it's really important that you think, you know, that when you're looking at colleges, you look at how do people make friends here and how do people get involved and what types of things are people participating in.

For sure. So, so incredible. This time has flown by. Um, if parents were, um, looking to get in touch with you, find your book, find you, um, want to chat with you, what would be the best way for them to do that?

Yeah, so my book is How to Pay for College, and it is available from Amazon and Barnes Noble and booksellers everywhere. So just grab a copy from, from any of those. And then my website is howtopayforcollege.com, and that's got, um— so I work with, I work with families a couple of ways. You know, one is we do comprehensive financial planning through independent progressive advisors, and then I do just college financial planning through, um, through my online course, which is on my website howtopayforcollege.com. In addition, I have tons and tons of free college, um, financial planning content on, on my website. So book, How to Pay for College, or website, howtopayforcollege.com.

I love when it's that easy. And thank you so much. We really do appreciate you being on the show. And until next time, parents, remember, they need you. They need you to be a part of this transition into college or beyond. So, and thanks for being on the show.

Thank you so much for having me.