The Value of Saving for College in Middle School

Jonathan Hughes, MEFA's Associate Director of College Planning, provides helpful insights into the college financing process and its common misconceptions.

Jonathan Hughes, MEFA's Associate Director of College Planning, provides helpful insights into the college financing process and its common misconceptions

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Transcript

Penny Hauck: [00:00:00] Welcome to the Massachusetts Educational Financing Authority MEFA podcast. In this episode, MEFA will answer important and frequently asked questions specific to planning, saving, and paying for college. Today's featured expert is Jonathan Hughes Manager of College Planning and Education. Since 2001, Jonathan has provided information, guidance, and clarity to Massachusetts families as they navigate the college planning process from explaining the benefits of the U.Plan Prepaid Tuition Program, to walking a student through the FAFSA, Jonathan consistently uses his far reaching experience and knowledge to help students and parents plan for higher education success.
As a MEFA representative in the community, Jonathan also travels across the Commonwealth presenting seminars at high schools, colleges, and community-based organizations on the topics of college financing and the importance of saving. Jonathan, thanks so much for taking the time to [00:01:00] talk with us today.
How about we get started? What advice would you give students and families in middle school thinking and preparing for college?
Jonathan Hughes: [00:01:09] I would say that the most important thing is to do something no matter what it is and do it as soon as possible, especially in terms of savings. I think that the specter or the thought of paying for college can be so overwhelming to a lot of families that they don't know how to get started.
Maybe they're afraid of, of doing the wrong thing or saving in the, in the wrong way using the wrong program. Uh, or maybe it's just that. It becomes more real that way, as soon as they start saving. And they're not as prepared for that as, uh, maybe they'd like, uh, but it's so simple, important to start saving for college early because it gives families a real leg up on the admissions and the financial aid process.
It gives family's some emotional security that they've know that they've started preparing for this, uh, ahead of time. [00:02:00] So they're not coming to it. Right out of the blue. And of course, ultimately it helps financially. Um, one thing I can tell you from talking with parents who have saved and parents who have not saved by the time their child is ready to go to college, is that nobody regrets saving anything.
So nobody has ever regretted saving, uh, that's the saving set on the other side, I would just say in terms of mentally preparing. To just kind of have that conversation with your child, with your son or your daughter, what is it that they want to do for their life and their career, and is college a part of that and just sort of, you know, keep that communication open and cultivate those interests.
Is college a part of that? Where might they want to go to college? Um, that can be really motivating and really fun for a kid to think about where they're going to go to college and, um, and everything. I know it was for me. Um, so. Basically, whether it's doing the mental preparation, uh, or the financial preparation, just, [00:03:00] I would say to not think of it as something that happens later when your child is 17 or 18 years old, that it really can start now.
Penny Hauck: [00:03:08] That's excellent. What should they know about the process of applying and paying for college? How does it work? What should they expect?
Jonathan Hughes: [00:03:15] Yeah, for something that is so important to families and to individuals, the process of applying to college, applying for financial aid and paying for college in general, uh, really is a mystery to a lot of people until they get them.
And maybe sometimes through that process, uh, but families who have younger children should understand that first of all, it's going to be a long process. So whether or not that means applying for, uh, scholarships when they're freshmen in high school to choosing high school courses that are going to challenge them academically, so that can help them with admissions to filling out the SATs, to filling out the financial aid paperwork.
It's going to be a long process, but it's natural to be confused and [00:04:00] overwhelmed at times. Uh, there's nothing wrong with that, but you don't have to take the entire process on your shoulders at once. You can break it up into little bits. I would take it as it comes and know that at every step of the way, there are organizations that are available to help you, uh, like MEFA or like high school guidance counselors, or financial aid and admissions offices at colleges and any other number of, uh, you know, public organizations that are there to help you.
So I would take advantage of those. If you're feeling stressed, if you have questions, don't, um, stress about it, there is help available if you need it. Uh, the other thing I would say is keep your eye on the, on the big picture. I know sometimes in this process, parents or students can tend to develop a bit of tunnel vision regarding, you know, what school they're going to go to, or a type of education that the student has to get, or a type of [00:05:00] school.
Maybe the student wants to go to a particular school that all their friends are going to, or they want to go to this particular private school. Um, it doesn't necessarily have to be that way. Keep your eye on the big picture and know that the point of this is going to be to put your student in the best position to succeed after they graduate from college.
So for some families that might mean graduating debt free after going to a public university for some students that might mean doing two years at a community college and transferring to another school, um, there's a lot of different ways to go about this process and really the, the, you want to keep your eye on the big picture. What is going to put your student in the best chance to succeed?
Penny Hauck: [00:05:43] So on the topic of, of college financing, what are some common misconceptions about the college financing process that you encounter when talking to families with children in middle school?
Jonathan Hughes: [00:05:54] Well, that's a very easy question to answer because it's there’s two, and I'll put them together.
[00:06:00] The first one is that college is so expensive that there's no way you can save for it all. Uh, and the second one is that. Even if you do save, uh, you know, the college or the government or whoever it is, is going to look at all the savings and then say, well, you've saved all this money. You don't need any financial aid, so you're not going to get any aid.
Um, so that really can put people off of savings. And it shouldn't because it's just not true. As we know, um, you know, colleges don't penalize you for savings. Savings factor very lightly into your calculations as to what you can afford, whether it's the government formula or the college formula.
And just to tell a story. When my son was born, I have a two year old, um, a colleague to want it to just sort of torment me and say, well, let's see how much college is going to be for your son when he gets to be 18. So they put it in a private college in Boston for four years, and it was a lot of [00:07:00] money. So, and I had that emotional reaction that I think anybody has when they hear those numbers on the news, which is well forget it. I can't, there's no way I can save that amount of money and you know, that might be true. But luckily I work here and I know that I don't have to save everything, uh, that there is financial aid available and that by saving some money, it's not penalized. You get your aid, you get your savings.
And you know that a little bit of savings can go a long way towards bridging that gap and, uh, in the cost. So it might be the difference between taking out a loan for $10,000 for one year and a loan for $30,000 for one year, which would be a big difference.
Penny Hauck: [00:07:41] For those parents who have middle-school children, who are, you know, in between being closer to college, but not quite young anymore. Is it too late to save for college?
Jonathan Hughes: [00:07:54] No, absolutely not. I tell people who have kids who are juniors in high [00:08:00] school. It's not too late to save for college or seniors in high school. It's not too late to save for college because at a certain point, you're going to get to the point where you need to pay the college bill.
Um, and when you do that, there's really only three ways that you can do it. There's as we say, past income, meaning savings, present income, which is your salary that you make. Now, what you can pay out of pocket is always good to do. If you can do that. And then future income, which is loans. So you don't want to be in the situation where you're borrowing too much, uh, or borrowing, uh, certainly more than you can afford to pay back.
Part of being a wise borrower is not borrowing any more than you absolutely have to. So whether it's saving money for three, four, five, or one year that's money that you don't have to borrow when you get to college. So it's definitely not too late.
Penny Hauck: [00:08:53] Jonathan, can you talk a little more about how younger middle school families can better be motivated to continue to save?
[00:09:00] Jonathan Hughes: [00:09:01] Sure. Um, So, uh, first of all, I would just say that, uh, again, cultivating this child's interests and the thought that the child might go to college and where he, or she might go to college, so he can get the child focused on that and excited about it. Um, when you are saving, let your child see the totals as they hopefully continue to climb and climb.
Um, a conversation that I had with, um, a colleague of mine. She told me that her son loves to go in and see his totals and his college funds go up and up and up. And I remember when I was a kid, if I had money in the bank, I would love to see the same thing. So it can become a self perpetuating process.
Um, one woman I spoke to told me that when her daughter was growing up, if she got money for her birthday money, for first communion, anything, she made her save half of it, uh, and right into her college fund. And that became habit. First of all, it not [00:10:00] only it helped obviously, but it became a habit that she took with her later on in life. And she was a great saver.
That wasn't me as a child. But, um, so, but I know what can happen. So I've spoken to this person. Um, so that can be a great thing too. And it's a great skill for later on in life as well.
Penny Hauck: [00:10:16] Jonathan. If somebody wanted to reach out to you or to the resources of me for how would they go about doing that?
Jonathan Hughes: [00:10:24] Uh, so if somebody wanted to reach out to us, they can contact us. They can go to mefa.org, send us an email at info@mefa.org. They can call us up and talk to any one of us here, and we'd be happy to guide you through any questions that you might have regarding. Saving for college, applying to college financial aid, anything that you might have questions about? We can help.
Penny Hauck: [00:10:48] Thank you. And that concludes this MEFA podcast episode. We thank today's expert Jonathan Hughes. To get more information on how to plan, save, and pay for college. Visit mefa.org [00:11:00] email info@mefa.org or call MEFA for expert directly between 9:00 AM and 5:00 PM Eastern standard time.
MEFA experts are here to answer your questions one-on-one, invite you to upcoming events or seminars, or steer you to an online webinar, packed with the information.



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