Transcript from https://www.youtube.com/watch?v=lXvzAx9Ew88
hi I’m JD Wyczalek (WHY-ZALL-ICK) and I’m the founder of AZ college planning com thank you for watching this presentation
so I like to call this talk you don’t know what you don’t know about college but you really need to know and the
first thing is the ranking system so you guys are probably all seen publications like this one US News and World Report’s
probably the most prolific this of the College ranking publications Forbes has won People magazine there’s a
variety of different entities that produce these College ranking publications and rank colleges here’s a
couple criteria that are ranked and one of the odd ones to me is this one right
here where it says peer peer assessment 25 percent so 25 percent of the score is
based on peer assessment which means if you vote for me hey I’ll vote for you
which is kind of ridiculous right so have you asked yourself why would a
college give out some scholarships is because they’re kind and generous or because they need or want a specific
student and and the simple answer is they want or they need a specific student and it’s because of these types of
publications and the college ranking system what colleges have figured out is
that if there’s an upward trend in the ranking for that for their particular
College that attracts more attention with more attention comes more applications and with more applications
comes more application fees last year University of California Berkeley was
rated the number one public national university and they had over a hundred and one thousand students apply to their
college and they only take about four thousand freshmen so when someone
applies to school like Berkeley it seventy dollars to apply so let’s do the
math one hundred and one thousand times seventy dollars in application equals
and the answer is a lot a lot of money it’s 7.2 million dollars that was
generated just in application fees so of course colleges want more and more
applications they want more and more attention and and the bottom line is that they’re going to make more money so
if you don’t take anything away today take this away and that is colleges are
big business and they’re going to do things for business purposes and they
will they will manipulate the data in the ranking system to attract more
attention a couple of years ago Harvard did something kind of devious and every
year colleges the for the for the
private colleges the number one school kind of flips between these three
schools Harvard Stanford and Princeton and a couple years ago Harvard was the
number one school for several years running and then they got knocked out by Stanford the next year and Harvard what
they did that particular year to regain their number one status is they mailed
out tens of thousands of letters and tens of thousands of emails to every
high school student across the United States who had a 3.0 GPA or higher and
these poor kids are getting this letter from Harvard that says Harvard and they’re like oh I’m so excited Harvard
wants me they want me to apply I’m sorry no they didn’t want you they wanted you
to apply so that they could reject you and with that they rejected a whole
bunch of extra students that particular year that moved them back up to the number one status as being the number
one private university nationally and one of the categories that is ranked is
selectivity how selective they are so when you look at a school like Stanford this last year had
I believe it was 6% or maybe it was 4% admission ratio either way that’s really
really low so if it was 6% what that translates to is for every hundred students that applied ninety-four of
them are getting – no you can’t come here so if you really want to be if
you’re running crazy about this let’s create a college and we’ll call it JD University because I like the sound of
that and we’ll we’ll do a mass campaign and send out emails and letters to all
all high school students across the United States and the letter is going to read something like this dear and then
we’ll have it customized for their name dear your name you’re exactly the type of high achieving high ambitious student
that we will have you gotten these letters before and you’ll probably get them soon enough you’re the type of
higher ambitious high achieving student that we want to attend our college in fact we we want you so much we’re going
to waive the application fee if you use this special link so we’ll do that we’ll
send that out to all these high school students and then what we will do is we will reject 100% you know what that
makes us the most selective college I mean how ridiculous is that so when
you’re looking at colleges and and you’re looking at the rankings for these colleges understand that these colleges
are aware that the higher their ranked that the more attention that they’re going to get and because of that they’re
going to manipulate the data there are some colleges that have falsified data
falsified by the way means lied they falsified data so they can make
themselves look better on these ranking systems when we’re looking at colleges
the first thing that we want to look at is the cost of attendance and when we
talk about the cost of attendance that incorporates everything that incorporates tuition fees room and board
meal ticket lab fees parking pass student ID card all of that stuff
together we want to know what that number is and in here we are in Arizona
the three state schools NAU ASU and you a they are all hovering around $29,000
for one year okay if you haven’t visited
any colleges I would highly recommend that you go and visit some colleges go visit some colleges that are local to
your area if you’re here in Arizona especially in the Maricopa Scottsdale Phoenix area go visit these three
schools we’ve got the ASU Grand Canyon and Arizona Christian University and the
reason why I want you to go visit those three colleges is because it’s not a big time or money commitment for any of
those colleges if you live here locally it’s like a thirty maybe a forty-five minute drive and then an hour or two on
the tour so we’re not a big time or money commitment and then these three colleges are all very different we’ve
got ASU which is a large public university we got Grand Canyon
University which is a mid-sized private school and then on the very end we’ve got two Arizona Christian University and
Arizona Christian is a small religious school when you visit a school like Arizona Christian look at it through two
different lenses the first lens to look at it through is the size of the school what’s it what’s it feel like to have a
college that’s this particular size and then the second lens to look at it through is going to be the religious
lens so at that particular College they do have some religious requirements so look at that and then go visit those
three schools the reason why I want you to visit those three schools is as I said it’s not a big time or money
commitment so that when you do go to Chicago and visit a University of
Chicago or DePaul or you go to Texas and
visit Austin College or you fly up to Seattle or visit Seattle University or
Seattle Pacific University now you’ve got something you can weigh belts compare and contrast when you visit a
college and you talk to a recruiter or if a recruiter comes to your high school
and you talk to that person if you don’t walk away with the impression of wow that school is amazing I want to go
there they did a bad job understand that that’s their job to make you want to
apply and ultimate attend their college one of the rankings that i think is really kind of silly is
most expensive college and Sarah Lawrence that college likes to claim the
number one spot as being the most expensive college and they’re hovering just shy of seventy five thousand
dollars for one year seventy five thousand dollars for one year of college
and when I say that number that incorporates everything tuition room and
board meal ticket the whole gambit on that okay which makes UCLA look like a
bargain at sixty-two thousand dollars for one year okay so if you really want
to scare yourself go to the college’s website and in the search window type in cost of attendance and it’ll bring you
to that page add all those numbers together and that’s what your cost is for one year then take that number and
multiply it times four years then multiply it again times the number of kids you’ve got two kids three kids etc
and have you asked yourself how in the world are we going to be able to afford that the first thing that I always say
is don’t throw out a college based solely on the sticker price until you’ve looked at all these different numbers
but once we have an idea of some colleges then we want to come up with
some ideas on how to pay for it and always the first one that comes up and
I’ve talked to literally hundreds of families the first one that comes up as a way to pay for college is well we’re
going to get a private scholarship so let’s put a definition on what private scholarship means a private scholarship
is a scholarship that your student applies for and wins if your student
receives a letter or an email that says congratulations you’ve won that scholarship and they did not apply for
it it’s probably a scam especially if that letter says mail is $100 and will
tell you which one you’ve won okay so the first thing is they have to apply
for it to win it and if they win that scholarship that scholarship that private scholarship is
portable they could take it up to NAU they could take it down to University of San Diego they could take it over to
Texas Christian University again it’s portable they could make it take it anywhere versus if the student won the
wildcat scholarship at university of arizona that scholarship is only good at
that particular college so private scholarships are portable now
of the hundred and thirty six billion dollars that’s with it be hundred and thirty six billion dollars of financial
aid that’s available less than two percent of that consists of private
scholarships so everybody’s going after these pennies when I want to go after the lion’s share and the lion’s share is
going to be in these three categories the first two you are federal and state funds and then the third one which is
the Big Kahuna of the three and that is the colleges endowment funds there are
some colleges that are rich and there are other colleges that are just flat over rich Harvard claims the number one
spot as being the wealthiest College they have over 37 billion dollars in
their endowment fund 30 think about that for a second 37 billion dollars that is
an enormous amount of money the interest that that account produces is enough to
give every student that they admit a full-ride do they do that
heck no they don’t do that so some colleges are rich and others are just
flat Oberer rich one of the other wealthy colleges is right here in town Arizona Christian Arizona State
University and ASU they’re hovering around eight hundred million dollars just shy of a billion
dollars in their endowment fund that is an enormous amount of money so let’s not
neglect the lion’s share and go after these private scholarships these pennies
let’s go after where the big money is and the big money is going to be from the colleges in their endowment systems
the second one that always comes up is well my kids an athlete my kids going to get an athletic scholarship
and I’m sorry to say this that an ex unless your student is the next NFL the
next NBA or the next Olympian the likelihood of getting a full athletic ride probably not going to happen
however I’m not going to say no to any athletic dollars if you go to the NCAA’s
website the average men’s baseball scholarship is fifty eight hundred
dollars I’m not going to say no to fifty eight hundred bucks but that’s still way short of the total cost of attendance okay
the next strategy that parents have told me as a way to pay for colleges we’ve saved some money and if you save some
money great good job what I a statistic
that I read recently is that the average family has saved ten thousand dollars or
less to apply for college or to apply to college now that $10,000 is way short of
the total amount that we need how we’re going to make 10 grand go where a hundred or even two hundred should now
if you save more than that then god bless you you’re better than the average now the question is the money that you
have saved how does the financial aid system look at that and there are three buckets of money the first bucket of
money is mites in the student’s name and that gets assessed at the highest percentage anywhere from 25 to 50
percent the second bucket of money is made in the parents name and that gets assessed at a lower percentage anywhere
from five to fifteen percent depending on the financial product and then and and sometimes by rolling over who the
owner is no the students not the owner of this product that parent is the owner of this product sometimes we can qualify
for more need-based aid now there’s a third bucket over here in that third
bucket has an umbrella over it and that umbrella is a retirement system and any
money that is parked in that bucket is not assessed so we want the bulk of our
money in in one of those types of products in a retirement system so again
sometimes boy rolling over who the owner is no the student the parent is the owner or from one financial product to a
different financial product we could qualify for more need-based aid but what
about 529s when President Bush left office one of the last things that he
did was he signed a bill that said 529s or considered the asset of the parent
Thank You JD for telling me that because we have a 529 I need to add some more
data to that when we are applying to a college and we tell that College I’ve
got a 529 they’re gonna go tag that’s my money I want it and they’re going to
take that money they’re going to split it into quarters I want 25 percent of freshman year 25 percent sophomore year
25 percent junior and 25 the senior year so again sometimes by moving money from
one product to another product we could qualify for more need-based aid here’s
my disclaimer on that before you move money around or any of stuff you need to know what the ramifications are both
positive and negative sometimes it’s smart to move money around sometimes it’s not each family
and each student situation is unique and different so we will need to check that out another strategy that parents have
told me as a way to pay for college is we’re going to pay as we go most colleges do not have a payment plan
typically they’re going to want a full semester or an entire year upfront now
granted there are some colleges that do have payment plans for example La Sierra in Riverside California the last time I
looked at that college they had a payment plan and it was 75 dollars on
top of whatever the payment was okay so again typically they’re going to want a
full semester or an entire year upfront the next strategy that parents have told me as a way to pay for college is we’re
going to borrow the money and there’s a loan out there called the PLUS loan PL us and that stands for parent loan
of undergraduate student now theoretically if a student applied to a
college like Sarah Lawrence with a sticker price of $75,000 and that
student did not receive any scholarships at all theoretically that college could offer
the parents a Parent PLUS loan for seventy five thousand dollars for one
year okay please don’t do that by the way but I want to tell you what some colleges are doing I had a family who
came in for one of my complimentary consultations and they wanted to know what the heck it was they were about to
sign for and I have a stack of award letters here and the award letter is
kind of like an invoice it says here’s how much we’re giving you in scholarships grants loans work-study
we’re gonna give you an iPad or you know whatever we want we want this we want
these award letters from each of the colleges that your student applies for before you make a financial decision and
then you want to compare the different award letters so this family came in and
they were they were very excited because their award letter said PLU s $25,000
and they’re like whoa we got a $25,000 scholarship and I said I’m sorry that is
not a scholarship that is a loan so they had three realizations the first
realization was this is a loan we’ve got to pay it back that was a first
realization the second realization was this is a loan we’ve got to pay it back now now I know what you’re thinking
you’re thinking that student loans are deferred as long as the student remains in college and that is true for the
student loans this is a parent loan and parent loans are due 30 to 60 days after
disbursement so if your student starts college in September they’re going to want their first payment in October
November December somewhere in that time frame okay that was their second realization their third realization was
yeah this is five hundred and fifty dollars a month and we can afford that on our in
now but that’s just his freshman year what if we were to take out a second
PLUS loan the sophomore year for an additional five hundred and fifty dollars so those loans stack now they’re
at a thousand dollars do it again the junior year now they’re at fifteen hundred dollars do it again the senior
now there are over two thousand dollars a month and they’re asking how in the world are we going to be able to afford
that because that’s just one of our three kids I’m happy to report they didn’t go that route if you go to my
website easy college playing comm click on testimonial you can see exactly what and he says about her daughter Courtney
she got admitted to a private college and she got an incredible scholarship
package and she graduated 100% debt-free and parents did not take out any
educational loans as well that’s exactly what our students to start their lives with as little student loan baggage as
possible preferably zero the other thing about the Parent PLUS loan is that the
interest that is charged on it is not tax-deductible do consult with your CPA
on that one the next strategy to pay for college that some parents have told me
is we’re gonna pull money out of our equity out of our house I won’t go into
all the details on that you guys kind of have an idea of how that works anyway and then the last one is liquidate
retirement accounts please don’t do that but I want to tell you what some families are thinking so let’s create a
scenario we’ve got a scenario where we’ve got a family of four and jr.
applies to a college and the cost of the college is fifty thousand dollars for
one year and junior got a half scholarship so it’s going to cost
they got $25,000 scholarship and it’s going to cost twenty five thousand to go to that college and this family has an
adjusted gross income of $75,000 so follow me on the numbers on this please
so they make seventy five and it’s gonna cost twenty five thousand to go to a
college and they’re looking at it saying you know what we’ve got money in our four Oh okay let’s pull that money out now
here’s the double whammy on that one the first one you’re already aware of and that is that if you’re under age 59 and
a half you need to get hit with those extra taxes and penalties yeah we know that one okay the second whammy hits them the next
year because at $75,000 they qualified for this much aid that 25,000 that they
took out is now considered income now they’re not a 75,000 now they’re at a hundred thousand and they’re going to
qualify for less aid the next year so again before you move money around or
and stuff you need to know what the ramifications are both positive and negative that’s pretty much the end of
the depressing portion of this talk I tell you it’s not to give you a heart attack it’s a reality check we all know that college is expensive and we’ve
probably seen some of the statistics that colleges have and one of the statistics that colleges like to to talk
about is that the average college graduate earns a million dollars more
over their work lifetime than a high school counterpart and it’s well it’s
1.2 million dollars is what the number came out to and if you do the math on it it’s about a $40,000 a year difference
which is pretty significant and another statistic that I came across and it must be true because Harvard was the one that
did the research on it states that a college graduate is likely to live 7
years longer than the high school counterpart so I guess the fighting on that is if you want your kid to live longer send him to college right okay
there are a few acronyms that you need to learn the first one we talked about
CoA which is cost of attendance and the next one is EFC and that stands for
expected Family Contribution expected Family Contribution the EFC is what the
colleges and the federal government think or expect you to pay for college
regardless of if that number is astronomically ridiculous or not
case in point is I had another family who came in for a consultation and they
wanted to know why their EFC was a hundred and one thousand dollars so
here’s what that translates to if their kid applied to a college that costs
fifty thousand dollars a year then they would be able to just write a check for $50,000 and and your kid the reality of
it is that that’s not true because their adjusted gross income was eighty nine
thousand dollars and I said your AGI is eighty nine thousand and your EFC is
more than a hundred percent every income how did you do that and I’m going through the numbers and on the financial
aid form one of the questions was how much do you have in your investment accounts and they said we are investing
in our retirement so we have five hundred thousand dollars in our 401k we’ve got another two hundred and fifty
thousand dollars in a Roth and then we’ve got another fifty thousand in a
brokerage account so eight hundred thousand dollars and they put that number on there and that totally blew
them out of the water for getting any need-based aid what they did was they
falsely reported that information remember that third bucket over here that bucket that has that retirement
system over it so they falsely reported their 401 K and and raw amount if you
want to learn more about the EFC you can find this document online it’s called the higher education Opportunity Act
higher education Opportunity Act I do
have to warn you it’s four hundred and thirty two pages of the most god-awful
boring lawyer speak you can imagine so if you’re having problems sleeping at night put it off a couple of those pages
it’ll knock you right out okay I did have the joy of reading it it took me about a month and a half to get through
that sucker but it covers every scenario any student might be facing whether they’re in a traditional household with
a mom and a dad or they’re in a situation where parents are divorced or
separated or in a scenario where one parent is deceased or both parents are deceased or
the kids homeless or living with a guardian or relative it covers all those different scenarios in that what we want
to do is we want to try and get our EFC as low as possible and there are some
legal and ethical ways to do that if you know the rules it’s easier to play the game and with
knowledge we can lower our EFC there are
two main financial aid forms and the first one is the FAFSA form and for
those of you that are watching this video please write it down as you see it their FAFSA ad gov is the correct
website if you go to an online presence Google or Yahoo or some other search
engine and type in financial aid for college or FAFSA and allow that to
search please don’t click on the first one because the first website on there will will ask you all the same questions
that are on the FAFSA form then it will say would you like us to submit this on your behalf what’s your credit card
number and then they charge you anywhere from 75 to a hundred and thirty dollars to submit it if you go to the correct
website there is no charge hence the name Free Application for Federal
Student Aid so that’s the first form and the FAFSA is going to be the form that
will calculate out your EFC your expected Family Contribution it’s going to ask you a whole bunch of
questions what is your adjusted gross income how much do you have when you’re checking savings accounts how is she
having these other types of accounts that are exposed and how many are in
your household what’s the age of the oldest parent those are all things that that are calculated into figuring out
the EFC the expected Family Contribution number another way to look at the EFC is
kind of like a car insurance deductible that god forbid you’re in an accident
before the insurance company will pay to repair or replace your vehicle you have
to come up with a deductible number first so it’s a kind of a similar concept with a college before the
college gives out any need-based aid that family has to come up with that EFC number first and the
FAFSA form is the form that will calculate out your EFC the second form is called the CSS profile and the CSS
profile is administered by College Board College Board and College Board IRG they
are the entity that make the SAT test AP test clap test and a few other things
College Board is a it’s a really good website it’s got a bunch of great information on there when we went
something that you need to know about College Board and the SAT in particular
is you’re probably already aware that in March of 2016 College Board announced
that they were going to revamp the SAT and make a new one and all that and they call it the redesigned SAT and it went
back to the old 1600 model so 1600 is a perfect score on the current SAT maybe
you’re also aware that a CT just announced that if a student has already
taken the a CT coming up in spring of 2020 that student will have the option
to retake that a CT and only one section if they choose to do that so that so
that’s the if the student did really poor on the math section of a previous a CT they could retake just the math
section of the a CT and the reason why
I’m telling you this is because more than likely SAT will do the same thing
coming up in in the next few months or maybe in the next year or so that’s my prediction so College Board is the
entity that does the SAT and as well as a CSS profile a little bit more about
the test I’ve had some families ask me this question which one should I take the SAT or the a CT and my response is always
take both and after you take both and determine which one you feel stronger about then focus on that one test because every
college will accept either one so the second financial aid form is
called the CSS profile and the CSS profile asks all the same questions that
are on the FAFSA form and in addition to that there is a supplemental section on
the CSS profile where colleges can ask any question that they want for example
MIT in the supplemental section on their CSS profile asks this question what is
your student’s cell phone number I have a conspiracy theory for that why are
they asking for my kid’s cell phone number on a financial aid form hmm it
kind of makes you wonder another question that is asked on there is what’s the make model and year of your
vehicles and JD why are they asking me that question
because if you’re claiming that your AGI or just a gross income is $45,000 and
you’re driving a 2020 Bentley those two numbers don’t match and they’re gonna
start asking more questions than a lot of stuff another question that’s on the CSS profile is how much will you
grandparents aunts uncles neighbors etc give you to go to college what should
that number be zero because if we look at going back to our EFC F stands for
family it doesn’t stand for what your neighborhood Net Worth nor does it stand for how much does grandma have on a
trust account now if grandma does decide to kick in some cash than god bless grandma but don’t let grandma write a
check and mail it directly to stanford because if that name and address comes
across their desk and doesn’t match what’s on file that’s going to throw up some red flags another primary
difference between the two FAFSA and the CSS profile is that the CSS profile does
account for your home equity your primary home equity where the FAFSA does not
and another primary difference between the CSS profile and the FAFSA is that
the CSS profile there is a fee to file it and it’s $25 for the first college
currently and $16 for each additional college so with a couple colleges
it could be 42 dollars or so to submit the CSS profile I’ve had families say
well JD we make too much money to really qualify for any need-based aid why
should we fill out these forms well there’s a couple reasons and one is it’s part of the game and one of the ways
that we can demonstrate interest and demonstrating an interest to the college is very important we want to demonstrate
interest multiple times and one way to demonstrate interest is to submit the financial aid form another reason to
submit it is because if the college does not receive everything that they want
then they could reject the call the student I won’t tell you the name of the
college I’ll just give you their initials USC so USC does require the CSS
profile and a few other things and all that and if if USC does not receive
everything that they’re asking for from that particular student they will automatically reject that student okay
so we want to play the game and supply to the college whatever financial aid forms that they’re asking for every
college is going to require the FAFSA form some colleges are going to require the FAFSA and the CSS profile and then
some colleges are going to require the FAFSA and their own proprietary form so
you see the trend there every college wants the FAFSA form I had a conversation with a dad a while ago and
he said JD we’re not going to qualify for any need-based aid at any college
and the reason is because I make over a million and a half dollars per year and
this was a very wealthy family he made 100 he made 1.5 million per year he had
two million dollars in his checking account put it somewhere where you can get more than 0.5% interest anyway you had two
million there he had another three or four million in a brokerage account and he owns several houses that were
million-dollar homes that were all paid for and all that so just a very wealthy family and his son John applied to you
and I can’t remember which one it was one of the George schools in DC if it was either Georgetown or George
Washington University one of those two can’t remember which one it was and that particular College is a need-based aid
only school what that means is if the student is admitted and that college
determines that there is no financial need then it will be expensive to grow
that college and in the case of John and his parents they were not going to
qualify for any need-based aid and I said let’s play the game and I showed
John how to market himself to the college and we submitted the financial aid forms and the college really wanted
John because they knew that John would increase their rankings in one or more category so they wanted him for that but
they also looked at dads