A Wiser Retirement®

288. What is the FAFSA, and how does it work?

• Wiser Wealth Management • Episode 288

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In this episode of A Wiser Retirement® Podcast, we discuss how the Free Application for Federal Student Aid (FAFSA) is crucial in determining eligibility for financial aid, including grants, loans, and work-study opportunities. Whether or not your family qualifies for aid, understanding the FAFSA’s purpose and process is essential for anyone navigating college costs.

Related Podcast Episodes:
- Ep 136: Financially Preparing for Your High Schooler to go to College
- Ep 270: What College Expenses are Tax-Deductible for Parents?

Related YouTube Videos:
- ​​How do I save money for my child's education?

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This podcast was produced by Wiser Wealth Management. Thanks for listening!

What is FAFSA?

Speaker 1

What is this FAFSA? What does it mean?

Speaker 2

Yeah, so essentially it stands for the Free Application for Federal Student Aid. So, like we're talking about, it's essentially, you know, going through and figuring out okay, well, are you a candidate for federal student aid and what does that look like for the university you're choosing to attend?

Speaker 1

Welcome to a Wise retirement podcast. Are you curious about how the fasfa works? I'm casey smith. Today, I'm joined with financial advisor michaela dowdy. Each week, we bring you practical advice on retirement, investing and planning for your financial future. Don't forget to subscribe or write a review for our podcast, wherever you're listening. Let's get started. Hey Michaela.

Speaker 2

How's it going?

Speaker 1

Welcome back to the podcast.

Speaker 2

Happy to be back.

Speaker 1

So it is summertime in Marietta. You've moved to the big city, though I have. You went south against my recommendation.

Speaker 2

I know, but I'm in such a walkable area. It's so nice. You know, my son had in such a walkable area. It's so nice yeah.

Speaker 1

You know, my son had a ball game down there.

Speaker 2

Oh really.

Speaker 1

There's like a school. Like he plays in these really big tournaments so they can't do it in one place. So this is for baseball. So there's a school. All they have is one field.

Speaker 2

Interesting.

Speaker 1

And so we were like down in Midtown in this one ball field and, um, uh, it got well, it would rain for like the first four hours, so we ended up kind of looking for a place to eat and we ended up in this really cool spot. It was. Uh, where were we? Um, it was a, it was a shake shack oh, by piedmont park.

Speaker 2

Yeah, okay, sort of maybe somewhere in there.

Speaker 1

You know, okay, I for the disclosure. I'm an outside the perimeter guy. If I go inside the perimeter it better be a Sunday morning, like it was, because I do not like to go inside the perimeter.

Speaker 2

Big OTP guy.

Speaker 1

I'm an OTP guy, yes, but I was like I can see why Michaela would like it down here, because I saw a little grocery store and then there's where the people it's like, live, work, play. Yeah, you don't work there, you have to drive up here I know, I know, but the commute's not that bad all you young people start down there because it's all pretty, and then gotta have the city life you want to buy something someday and you're like I gotta get out of here very true, very true, yes no a home, itp.

Speaker 2

Here in the perimeter is not as affordable as you would like, but yes, no, they're so close together.

Speaker 1

It's like all these houses are just like on top. They really are Nobody. I remember we had a person. It was work-related, but they visited us and they literally lived in Manhattan and they were not staying at our house, but they were working on a project for me and I was taken to the airport and had to swing by the house because we were headed somewhere else so we wouldn't pick up my wife and I said, hey, I'll pick up my wife and then we're going to go down to the, I'll drop you at the airport and we're headed South. And, um, she got to our house and she got out of the car and she was like, wow, this is a backyard.

Speaker 2

Like my kids, don't even know what this is like.

Speaker 1

We walk four city blocks get down to the park. Yeah, I was like wow, that's uh.

Speaker 3

No, that's crazy.

Speaker 1

That's crazy like yeah there's people, there's kids who've never seen, like a backyard with grass and a playset yeah, they experienced it on the tv.

Speaker 2

That's about it.

Speaker 1

Yeah, I feel like even in our mid, in our midtown houses, we still have backyards, though yes, we don't have high rises.

Speaker 2

I mean, yes, if you're actually looking for a home, yeah, you're still going to have a backyard to some degree, right? And I feel like typically, even with the way Atlanta is laid out, it seems like in the perimeter, most of the homes are already around a park of some kind.

Speaker 1

Yeah, that's true how they designed it.

Speaker 2

Yes.

Speaker 1

A lot of them are kind of centric to a park itself. Well, it is that time of year to be filling out FAFSA forms. I mean, I've seen the form. I have worked through the form a couple of years ago for a client because I felt like they were getting taken by somebody. Yeah, I probably should say that story. Now there's these people out there who call themselves school planners or college planners?

Speaker 2

Yes, college planners.

Speaker 1

I think, and there are real college planners, but in this particular case the guy was trying to get them to buy whole life insurance as a college planning technique, calling himself a college planner. It was very um clickbait or very you know carrot carrot. You know, I don't know.

Speaker 2

What am I trying to say? Was this the same?

Speaker 1

switch. It was a bait and switch.

Speaker 2

Was this the same situation where it was like moving assets to other areas as well?

Speaker 1

They had uh they had only had like a hundred thousand dollars in cash. And he's like oh, this cash is gonna cause you to have to pay more in college tuition, so we need to get rid of this cash and I want you to buy a hundred thousand dollar life insurance policy, a whole life insurance plus, because whole life doesn't get counted as an asset on the form. And then I said I looked at the whole thing, I researched it. I was like actually neither just paying off your home, why don't you just pay off your home?

Speaker 2

Yeah.

Speaker 1

And they're like what? Well, your house doesn't count as an asset on the fast flow, so just pay off your home. It's the same thing as if you're going to do it, yeah, if you're going to lose a thousand dollars, and then I said oh, by the way, if you clear the deck on the hundredth of a grand, which I don, save $600 a year.

Welcome to Wiser Retirement Podcast

Speaker 1

Yeah $600 a year and now you get more interest than 600 bucks just by leaving it in the in a high yield savings account. So, man, there, there, I'll say this over and over again, but the buried entry to be a financial advisor is super low, super low. It is you, just you pass a test and you're good to go. And so many firms sell stuff, and in this case this guy. He's probably making you know, I don't know 35 to 45%. On the whole, I premium.

Speaker 3

Yeah.

Speaker 1

That would be paid in. So it's ridiculous. So let's talk about um FAFSA and what it is uh why we need to do it. Uh, my kids haven't needed it yet.

Speaker 2

Um, thankfully in your school didn't yes didn't even use it right so they had it if you wanted to, but they didn't require it for merit-based scholarship. And I was someone that I mean thankfully, like my family, like just did not qualify already for federal aid, and so it got to the point where it's like, well, if I'm not going to get federal aid and I don't need it for merit money or academic money at all, then there's no need to really submit it and go through the process.

Speaker 1

That's kind of my point right now. This is my question to you, Michaela what client would we have here that was going to get financial aid by filling out FAFSA?

Speaker 2

Most are not, but it is important that most schools, though, do require it, even for merit scholarships.

Speaker 1

So if your kid's really smart, you're still going to fill this out.

Speaker 2

Correct, and that's kind of for their own demographic sake, I would say is they want to know what kind of demographic of students are coming in their family. I think it's more of a demographic-based reason that they do it.

Speaker 1

Well, I jumped way ahead in some ways. So when we talk about what the form is, what's the form. What is this? Fafsa? What does it mean?

Speaker 2

Yeah, so essentially it stands for the free application for federal student aid. So, like we're talking about, it's essentially, you know, going through and figuring out okay, well, are you a candidate for federal student aid and what does that look like for the university you're choosing to attend? And so it gives them an overarching view of your family situation and whether you sit on the fact that it's fair that parents are considered or not, into that assumption, into that calculation. I mean, that's neither here or there, but many of those state schools, even private schools, are still going to require you to fill it out to see what that aid need is and then, pretty automatically, I think most people get at least like a $5,000 like extension of some kind. That is typically a loan. That is not just aid given to you, so be mindful of that, and you typically have to opt out of it to not receive it as well.

Speaker 1

So I wonder if this is another way of them to get demographic information.

Speaker 2

No, I think it is.

Financial Advisors and College Planning

Speaker 1

Or if you wanted a certain family say hey, we need more affluent families. I, you know, I'm just guessing, but if you made $1.5 million a year and you're a school, wouldn't you want a family like that in your school to some degree?

Speaker 2

You would think so. I think the question that I think some even high income earning families have is then it's like, well, if I give them this information?

Speaker 1

are they going to now?

Speaker 2

expect more, or are they going to give my student?

Speaker 1

less. Oh yeah, um, but nobody knows the answer to that.

Speaker 2

Technically they're not supposed to. Technically it should be merit academic. Like you have to have your parameters.

Speaker 1

I mean, I thought about interviewing someone. I'm on a board of a college. I thought, huh, I could probably interview someone about this. But I thought, well, you're not going to get any truthful answers on that one. No, one's going to stake their career on a wiser podcast.

Speaker 2

Yeah no, not at all, but I mean essentially what it is. It's just like collecting all of that information about a student's household, what their income looks like, whether it's the students or the parents. And you know I think that's where another, you know, whole conversation comes in is for students who are going that, you know, don't have parental support and there's really no way for them to segregate themselves from their parents in this form, and so they don't actually even qualify for the aid that they could qualify for, just because they are still associated with their parents, whether they're providing any sort of assistance or not. But essentially, it is used to calculate the student aid index, and so that's just the number that again, like we're saying, is utilized to determine how much aid you can be awarded overall.

Speaker 1

So what, what, what, what? The threshold is probably household income. Less than 60 grand is what I'm thinking.

Speaker 2

I don't even know if it's that high. To be honest, I want to say, for federal aid itself, it's like somewhere in the $30,000 range for full aid for full aid.

Speaker 2

I wouldn't think there's too many people for for Pell Grant specifically, I think that's 35,000 or less of annual income, um, and then from there it does go up, and so whether you get subsidized or unsubsidized is where that kind of shifts.

Speaker 2

But one thing to note that I didn't mention just a minute ago is just that this does open, and while why we're kind of going through this podcast now is that this application, yes, opens in October, that's when a lot of people start talking about it for colleges and students needing to fill it out, or their families needing to fill it out, but it's not actually due till June. So that's why we're here in June. I'm recording this podcast to have it go out and so that y'all can kind of have a better understanding of what the FAFSA is. Or if you have a college anticipated, you know, um, or rising senior, junior, whatever it may be that then you can just have educated understanding of what the FAFSA is so that when that does come available in October, you can already be well-equipped to have those kind of conversations and to fill it out as you need to.

Speaker 1

So what is the form unlocking?

Speaker 2

So it's essentially unlocking those federal Pell Grants that we were talking about. So that's essentially need-based grants that don't have to be repaid at all, and so that's just full payment for education at whatever institution that you choose to go to. Typically those are still public institutions, but you do qualify for those Pell Grants at that point, which is that income threshold of that like $35,000 that we're talking about. Then for subsidized federal loans, those are loans where the government, essentially, is paying your interest while you're in school. So then there's not really interest accruing on your loans while you're in school, which is helpful for the sense of you know most people, if they're going to college they're not making a full-time salary yet you know they might be working full time but it's not for a full salary that you would see like you're in the workforce at, and so that's can be a great benefit to having those subsidized student loans that even while you're working you're not collecting that interest year over year um into your loans that you've had extended to you um, which is different from the unsubsidized federal loans.

Speaker 2

So then that's where you're. You know it's available to pretty much all students, but at that point you're not really getting that subsidized basis of where you know you're having to have that interest. It starts accruing once you receive the loan. Then lastly or not really lastly but one of the other options is a federal work study, and you know that's study and you know that's for students who you know can even work part-time, like at the school. There's a lot of things that schools choose to do and they'll pay you, you know, salary or a portion for part-time work, but then they'll also, you know, maybe associate that with a scholarship or they'll associate it with some sort of financial aid as well.

Speaker 1

You think that's mostly in public universities. That would offer that.

Speaker 2

Some private universities allow it as well. I will say, though, if you're going to do that, typically you still have to have a FAFSA on file regardless. In order for any sort of work study, they have to have a FAFSA of some kind on file to at least see what your aid need would be, because those are still limited to those students that need that aid, then for student or state and institutional aid. So just many schools are still going to require the FAFSA for any sort of those like grant considerations, anything like that. That is more of a need-based scholarship.

Speaker 1

Okay, so I guess really the next question would be who should be filling this out? It sounds like everybody.

Speaker 2

Yes, overall, everyone should be filling it out. But I think you can make an educated understanding that if your child is going to a school that you know isn't going to necessarily make any difference of opinion on whether you fill it out or not, you know that you're already above the need threshold. You're likely not going to take any sort of subsidized or unsubsidized loans from the government for your education, for your child or yourself. Then it can be something to consider. Well, if my school's not going to require it, then is it really even necessary for me to fill this out? Because it is very time consuming and you have to fill it out every year. So this isn't something that you fill out once. You do fill it out every year.

Speaker 2

Now, most places do say it takes about an hour to fill it out, but that kind of I think depends on as well as who you are as a person. If you're a child, having to go to your parents and say, hey, how much did you make this year, how much did you do this? Or you know what is the value of your accounts, all of that then. One that can feel intrusive in some ways, but it can be a difficult conversation. But two, it can also be um a area where it could just be a little bit more of a hassle. So if there is a way that maybe you don't have to, that's fine as well.

Understanding FAFSA Requirements

Speaker 2

So I think it's just understanding that there is an option here which I think a lot of times is not seen as an option. And I mean, I know, even going to Samford I like would flippantly mention at times like oh yeah, I've never filled out a FAFSA because it would come around every year and all of my friends would have to fill it out. And they're like what do you mean? And I was like I never submitted one. You don't have to at Samford, like you don't. You're not required to submit one. I still have my merit scholarship and academic scholarship money and I still got a great scholarship there. I was like, but I knew I was never going to qualify for the need-based, so it just it didn't matter at that point to submit one.

Speaker 1

So again that goes back to high net worth families. Maybe you should ask a few questions before you start wasting time filling out the form. Is that fair to say?

Speaker 2

Definitely, definitely. I think that's a great question to ask, even on like a college tour is say, hey, are scholarships dependent on FAFSA? Like merit scholarships Need-based are always going to require a FAFSA. I mean, you can pretty much guarantee that, right. But if it's not a need-based scholarship and it's just merit, do I still have to submit a FAFSA? If I'm only after merit-based scholarships and that's a great question to ask at those you know tours, right, and those tour guides should be equipped to answer those questions you ask at those you know tours, and those tour guides should be equipped to answer those questions, you would think. Before we jump back into the episode, do you know if you are ready to take off and launch into retirement? Get your pre-retirement checklist, a free guide from Wiser Wealth Management, from cashflow to social security, we've got your countdown covered. Go to wiserinvestorcom slash guides to download your free guide today. Now let's get back to the episode.

Speaker 1

So how does high income disqualify us from scholarships and financial aid?

Speaker 2

So for merit-based it shouldn't.

Speaker 2

Ideally, I think you do come across.

Speaker 2

I will say if you are to Google this and go down a deep dive rabbit hole, you are always going to have those families that'll say oh yes, my Johnny boy didn't get as much merit scholarships because we submitted a FAFSA and they saw our you know income statements and because of that he didn't get as much awarded to him as he should have, because that school knew we could just afford a few extra you know dollars or whatever for his school.

Speaker 2

And you'll see that happen and people be disgruntled, granted though there's no full basis. Like you can't, you really can't get to the bottom of that, because merit base is kind of awarded based on your essay, which can be a little subjective. It's awarded on different just criteria there. That sometimes is not. It's more of your athletics, your artistic ability, your academic achievements, anything like that, and it should not be based on the income of your household. So that's something that it is typically not a factor into those merit scholarships. But, that being said, many schools still require you to submit that FAFSA in order to qualify for merit-based scholarships.

Speaker 1

I mean my son's on a full athletic scholarship, and there's the whole process was. I mean he didn't even do an essay to get into the school. I mean he didn't even have a normal application. I don't know if we even filled out an application.

Speaker 2

I'm sure we did, I'm sure he did, I'm sure he did, but no there was no FAFSA.

Speaker 1

So for I know, for I can speak from experience on the athletic side, that there was very little aid. That's a D1 school where a D3 doesn't offer athletic scholarships, so it's all academic.

Speaker 2

Definitely so.

Speaker 1

I could still see why you might fill one out on that front.

Speaker 2

Definitely, definitely but.

Speaker 1

I don't know. So on the back end, I also know that this stuff gets used through the school's advancement department, so they see this. And even in my own experiences I've seen people rolled into boards to have kids in a school and I'm like, wow, you're like you didn't, you wouldn't know anything about this school, and then now your kids here, now you're on this board. That's because someone, someone, they, they figured out your. It wasn't just your lifestyle, it was your.

Speaker 1

Yes exactly yeah, but also you have to be willing to say yes. So it's not like they were just held to a gunpoint and say hey, you're a high earner, we're going to put you on this advisory board.

Speaker 2

Exactly.

Speaker 1

So you had to say yes at some point. So for needs-based aid like Pell or standardized loans, I mean there's really no reason why you would fill a facet for that.

Speaker 2

So you would have to have a FAFSA for need-based If you had a high income.

Speaker 1

you're need-based no correct.

Speaker 2

If you have high income, then you're not going to qualify for that need-based aid. So at this point it would just be if you already know you're above those thresholds and those thresholds do change every year. But I mean, like we're talking about with the Pell Federal Grant, I mean that's $35,000. For most of who we have as clientele, that's not going to be.

Speaker 2

They're not going to fit into that category, and so it is something that, of course, subsidized loans also come into the equation, but I mean it can give you like access to those if possible, but for high earners typically, that's really not going to be an option for you either. The only thing you're really going to have options to is unsubsidized loans, which at that point, yes, you're getting more government loans opposed to private loans if you're planning to take out a loan for education, but that would be the only reason at that point that you might qualify for more of a need based due to the fact that you filled out a FAFSA.

Who Should Complete FAFSA?

Speaker 1

All right. So let's say we got to fill this thing out. What are some common mistakes we need to avoid?

Speaker 2

Really it's missing the deadline. That's a huge one.

Speaker 2

So, be sure that you're um, you know, communicating as a family. I feel like we see this a lot where it's like, oh well, our, our John to use Johnny boy again, our Johnny boys got it, he's filling it out, he's taking, having it taken care of and, honestly, what you kind of find out a lot of times is one if your kid did fill it out, they probably put a bunch of incorrect information on it. So you really do need to be involved in this process as a parent and then, of course, also just understanding that you know, maybe it is something you need to fill out yourself as a parent if you're not wanting your children to know your exact financial situation, and so that's something as well to go ahead and start looking into. But with that for missing that deadline, that's what's really important is going ahead and having that conversation, because you don't want it to be a oh, you got this, oh, no, they've got this, and then you haven't communicated and now you're needing to get it submitted.

Speaker 2

Last minute, granted, I mean this goes on for months, I mean the application is open for a very long time, but just something to note there, because it is huge that you want to get that in as early as possible. And that's really is because that those need-based, you know aids only extend so far to some degree at universities. Or if you're, you know, going for a need-based scholarship that's only through the university itself, then that's specific of, or really any scholarships. I mean those scholarships are going to go faster throughout the application process. You just want to make sure that you're at those first pools, which is honestly just general college application advice. I mean if you talk to anyone in college applications, the earlier you get your application in, the better. Overall advice. I mean, if you talk to anyone in college applications, the earlier you get your application in, the better um overall. I mean you're going to have more fun, they're going to look more fondly upon your application typically, and so that's just a big thing to note there.

Speaker 2

Also, leaving anything blank this one's kind of fascinating to me. But apparently, even if it's like you don't qualify or you don't have any of like, if it's investment accounts and say you know there's a zero there for whatever reason, then like you wouldn't just leave it blank, you'd actually put a zero or something like that. So knowing that that sometimes they might come back and say, hey, you've left these fields blank, and so just making sure that you are filling in everything which I know sounds very basic, but just something to note there that, even if it doesn't apply to you, making sure that you are taking care of that. And then the IRS data retrieval tool is also something that can be very beneficial, because it auto fills out all of your tax data, so then it's a little bit more efficient for you. You're not having to fish through your own tax return or your own financial documents.

Speaker 2

It's just pulling it directly from the IRS website, to begin with, and what you've already submitted over the years, which can be a huge benefit, especially with how we've already been talking, this process can be lengthy if you're not using the quick and easy little tools that they have available to you and then also not reapplying each year.

Speaker 2

That's a big mistake and that is something that can also just be known very quickly, and a lot of schools, like you know, try and make sure that their students are very well aware that they have to reapply every year. But if you're someone that doesn't pay attention to your email or you know your kid isn't great at paying attention to their email then you know, just maybe making sure that you're on top of that and knowing that you do have to reapply each year Because, say, you are getting need-based scholarships from the university themselves or, say, even a merit-based scholarship is also associated with some sort of need, maybe it's like a hybrid kind of scholarship and you want to make sure that you're not going to disqualify from that merit-based scholarship because you didn't submit a FAFSA for the year, and so it's not just important to have that FAFSA on file during your application and enrollment process, but you have to do it every year so that they understand what your needs are.

Speaker 1

Makes sense. So how can we help people with this?

Common FAFSA Mistakes to Avoid

Speaker 2

Yes. So really, it just comes down to you know, as a family, going into the process and, you know, even welcoming, you know, maybe a financial advisor, because I think this is a point, too, where this is a really big area, where your kid is likely 18, you know, 17, 18, 19 in that realm, and they're about to go into the real world and become adults, and so I think this is a really big option and opportunity here, where you are, you know, sitting filling out a FAFSA potentially, and they're going to have some insight into now what are the family, you know finances in some ways, and I think that's a great opportunity to start to, you know, have that conversation of, well, how do you manage finances correctly? And I think it's huge too, because most you know people when they're going off to, and children and I mean they're adults but still children at heart Um, it's a really big, you know, opportunity to start having those conversations of how to manage finances correctly, because they are about to be potentially in a new city, potentially across the country from their families, and have the ability to make a lot of decisions. I mean, we know not to get on another topic, but credit card companies love to come after young current college students and say, hey, we'll give you $1,200 and you can just rack it up, and if you don't understand what a credit card is, that can be really bad for your credit score. It can be really detrimental for that overall. I mean, you can always come back from that.

Speaker 2

But it's just being educated on those finances and those matters and bringing a financial advisor into that really just to also, you know, even talk about what is the eligibility that you might even have for aid, as we're talking through that too and saying, like, is there any opportunities there to even really qualify for aid, you know, or anything like that, and what that might look like at different universities, because it is something too that need bases do change for need-based scholarships that are specific to universities and are not federally given. Those do shift, and so that is something that maybe you do bring in your financial advisor to have that conversation of, hey, like we have the opportunity to get this need based, but we don't really know if that's fully where we're going to align. What do you think you know? And just having those kinds of conversations and then also on the flip side of that, with aid, if you're not going to get aid, or maybe, if you are, and scholarships wise, what is it looking like?

Speaker 2

The cost of college kids going to college, if you're providing for them, or if you're letting your kid, you know, go through and get student loans and that kind of thing because you want them to have some skin in the game. You know, as we hear a lot of clients say then, allowing them to do that, but having a good conversation with them of, hey, this is what a loan like, you know, this is what the loan is, this is what it means, this, what interest is. This is why it's so important to pay this down, even if you have subsidized loans, you know, and making sure that those are still taken care of in that way. And so I really think it's just coming and being transparent with finances to whichever degree is comfortable for you and your family, but knowing that it's really just a great educational opportunity before they go off and get their higher education Right.

Speaker 1

Yeah, that makes sense. Um, I think ultimately it comes down to do. We want kids to have loans. I I say a debt-free education is way better than the education that costs you money. Doctors and attorneys are probably going to have some type of debt. You got to be careful that they go into a career and within those fields they can pay that back. If you're going to be a immigration attorney or a adoption attorney, you need to go to school debt-free because you're not going to make any money.

Speaker 2

No, definitely.

Speaker 1

If you're going to do higher level stuff, then obviously you could be doing okay. A family physician doesn't make that much money, in my opinion. A doctor for what they have to pay to go to school. So that's something to consider as well.

Speaker 3

Get all the headache of the paperwork they have to do.

Speaker 1

I know right, so I would just be careful of that. But certainly if you're in a situation you have to listen to this podcast where you can fill out this form and get credit, get grants to be able to go to school. That's great. I'm glad that those are there to help people further themselves.

Return on Investment in Education

Speaker 2

Definitely Well, and I love what you're saying about it, and I think this is something where your education has to make sense and like in the sense of the like, the return on investment almost of what are you and maybe I come from a household that that's what was told of me a lot when I decided I want to go to a private school and education was well, you better get a great return on this investment.

Speaker 2

You know and so that's something that you do, though need to be mindful of. Okay, well, if I'm going to go and I'm going to get this very generalized degree that I'm only going to, you know, I'm not, I'm not going to pick on any sort of degree specific here, but you're going to get history, okay.

Speaker 1

History degree.

Speaker 2

Okay, you're going to get a history.

Speaker 1

That's all you get. You just undergrad in history, just undergrad history degree. You're not going on to law school, you're going to go back to your hometown and be a history teacher.

Speaker 2

Okay, you know, maybe something to that effect.

Speaker 1

All right, you're making 60 grand a year.

Speaker 2

And instead, you know well, above a, really a $200,000 degree right for an education that's really only giving you a $60,000 salary a year correct and at that point that doesn't make sense.

Speaker 2

and so it's understanding like at times, and sometimes it's the people that you're going to be with, it's the connections you're going to make at the university. But honestly, if those connections are, you know, worth the return on investment, then you should be sitting at higher than a $60,000 salary for how much you're having to pay to go to school. So that's something that we don't talk about enough. I think, when you're talking through the college planning and that goes beyond the FAFSA that what we're talking about today, but just something to note.

Speaker 1

There was a website many years ago I don't know if it still exists, but you put in what your major was at school. Tell you what the cost was. You say, this is what I'm gonna do in my career. And it would tell you what the average salary is across the U?

Speaker 3

S and it would tell you this is a good idea or not across us and it would tell you this is a good idea or not and I think that should be um by law, should be required before uh any student takes out a student loan.

Speaker 1

Like it's especially the private student loans, Of course. Uh, because if you don't understand what your ROI is yeah then then you could be stuck in a really bad way.

Speaker 2

No, definitely, and it can be really detrimental overall If you have all of those student loans and like they just compile on top of each other year over year and there are different interest rates and you come out and you're making 60, 70, $80,000 a year, and then you're looking at $180,000 student loan. Yeah.

Speaker 1

I mean, that's crazy.

Speaker 2

It's like how do you, how do you chip away at that Exactly, while also providing for yourself at the same time, like it can be very difficult. And so it's just being mindful of that decision and, you know, being very realistic with yourself which, as an 18 year old, is very difficult to have, and, as a parent, um, trying to guide them through that conversation and that process can be very difficult as well. But, you know, just giving them the opportunities and equipping them well with understanding of their education and, overall, like what they should be achieving in those which I know I think even now they're trying to have it to, where certain universities I think they're starting to talk about.

Speaker 2

you know, well, if you're getting this degree here, really you shouldn't be paying this amount because you're never going to make that right but then you get into the issue where people that are and I'm not trying to, you know, say anything specific, but you know, in a business school setting, oh, yeah yeah, then everyone that goes to a business school is going to be paying more to go to business I, I, actually, actually, and so we can have a whole conversation about the whole podcast but.

Speaker 1

I actually think that you should pay more to go to a business school. That's my opinion, yeah, and I sit as a chairman of the Campbell School of Business at Berry College, so I'm the executive advisory committee Sorry, this is my second podcast today, chairman and so I see a lot of this data and I I just firmly believe in and how, that, how a liberal arts degree works and barry's not a liberal arts school. Um, it's it. It has the likeness of a liberal arts school, but it's not technically a liberal arts school. But how I see it is the the um data, um, data analytics professor, okay, that's probably a 200,000 plus year position and cost.

Speaker 1

Where a lit teacher is, it's going to be like 80. Yeah, right, well, the school looks at it is everyone's equal, and so the business school is consuming all these resources. You cannot get the best talent in a business school because of that best teaching talent, and so I believe that if you were paying more and you could segregate each school by what it is, then you would be able to deliver a better education in my opinion. Um, but that's very radical thinking, uh, very radical thinking right now, but I think you could pitch that to the parents. I also like to point out that who makes the most donations to a school? If you want to sort it by building, Very true.

Speaker 1

At any school is going to be the business building.

Speaker 2

Yeah.

Speaker 1

Right, I've toured a lot of schools with my son when he was looking at golf teams. I go down to Columbus State. I didn't know the school existed not picking on Columbus state, don't know that much about it but we were driving around campus it was like, oh, absolutely not, like we're not going to school here. And then when I look at the uh, the uh, the uh, the business building, I was like, oh, wow, this is business buildings, really nice. Someone had poured a lot of time and effort into that building and obviously wanted to be good, good for the area. But I'm not not to, not to demean any other degree by any means, but that's just what the stats, that's what the data shows. And we need to have educations in other areas. That's important, but the data just says man, maybe we should be charging a little more for a premium degree in my opinion.

Episode Wrap-Up

Speaker 1

But anyway. So we have some other podcasts related to this. Episode 270, what College Expenses Are Tax-Deductible for Parents? Episode 136, long Time Ago Financially Preparing for your High Schooler to Go to College, and then we have a YouTube channel A Wise Ret. Ago financially preparing for your high schooler to go to college, and then we have a YouTube channel A Wise Retirement how Do I Save Money for my Child's Education? These are all things you can dive into deeper. Thanks for listening to today's episode. If you're interested in learning more about Wise Wealth Management or coming to work here with Michaela Dowdy. Man, this line of people that want to work with Michaela is crazy. They just filling up her calendar. I'm just chopped liver, like Casey and Shauna who, right, I don't know about that, but if you want to come here work with Michaela, you can do so by going to wiserinvestorcom. You can schedule a consultation online and we'll talk to you guys next week. Thank you, michaela. You can schedule a consultation online and we'll talk to you guys next week.

Speaker 3

Thank you, mikhail. Thanks for listening to a Wiser Retirement Podcast. We hope you enjoyed today's episode. Make sure to subscribe wherever you're listening. That way you don't miss any new episodes. We'd also appreciate if you could leave a rating and review. If you have any questions about anything that was discussed today, head to wiserinvestorcom and reach out. That was discussed today. Head to wiserinvestorcom and reach out.

Speaker 3

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