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Marc A. Hebert's Money Sense: When, how to start planning for your child's college education

July 14. 2017 10:42PM

I've always said that the time to start planning and investing for your children's college education is the day they are born, not the night of the senior high school prom. Time passes quickly, and starting early has its advantages. So, where should you start?

Review your college savings. Just how much have you saved? Are you still making contributions to a savings account? If not, should you start? Can you increase your current contributions. Do you need to?

In deciding on the amount you require, take a look at how much college could potentially cost. For an older child, you might want to research some of the colleges that have the program your child wants to study to find out what it costs to attend.

Demystify financial aid. You can start by getting an estimate of your family's Expected Family Contribution (EFC). This is a measure of your family's financial strength. The calculation takes into account your family's taxed and untaxed income, assets, and benefits such as Social Security. It takes into account things like the size of your family and how many family members will be attending college in the same year. You can get an estimate of your EFC by using the federal government's FAFSA4caster tool at This doesn't represent the amount of money your family will pay for college or the amount of federal aid you will receive. It is a number that school's use to determine eligibility for aid.

Most every college has a net price calculator. The net price is the amount that a student pays to attend a school in a single academic year after subtracting scholarships and grants. Scholarships and grants are forms of financial aid a student does not have to pay back. The calculator is designed so that potential students can get an idea of just how generous a college is. It will give you an estimate of what the out-of-pocket costs are to attend. As colleges differ in how much merit- and need-based financial aid is provided, this calculator will allow you to compare different colleges in a similar manner.

With older kids, it is a good idea to discuss with your children the plans they have for school. An open and frank discussion of what you will be able to pay for is helpful. The balance might be paid through loans. Be sure to discuss how much debt is too much. Your children should consider what they will likely earn with the degree they are going to pursue. Next, learn about the type of loans available and what the monthly payment might be. Budget and student loan calculators are available online to help you with the calculations. In the end, can the earnings support the loan payment?

The goal is to help the child avoid excessive borrowing. Loans can delay such steps as getting married, having children, buying a house, saving for retirement. If it does appear the debt will be out of line with expected income, some things still can be done. For example, look for colleges that offer generous grants, tuition discounts, scholarships and work study instead of forcing your students to borrow more.

Another is to ask your child to be open to other majors. We aren't saying not to pursue a dream, but be open to suggestions. It makes sense to look for degree programs that lead to good-paying job prospects. This can make for a more secure financial future for your child.

Marc A. Hebert, M.S., CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to Marc at Your question and his response might appear in a future column.

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