Chelsea Watkins, College Admissions Expert, Answers Questions about Getting Into College without Going Broke

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1 Chelsea Watkins, College Admissions Expert, Answers Questions about Getting Into College without Going Broke What big mistakes do parents make in paying for college? Not understanding how the college admissions system works: The financial aid formulas assess parent income at percent, and assets at 5.6 percent-20 percent depending on how they are positioned. Tax-deferred contributions to retirement accounts are assessed at the income rate (21-23 percent) That means the colleges will EXPECT a family to spend percent of their adjusted gross income and retirement contributions on college along with a percentage of their other assets EACH YEAR. If families are NOT ALREADY diverting at least 20 percent of their income to a savings vehicle, they will get caught not having the cash flow available to pay their Expected Family Contribution (EFC), and will have to use costly student loans and/or spend down other assets. Thinking they will not qualify for any aid: Many families hear horror stories about low or no financial aid awards and do not even apply because they think they will receive no aid. What most families don t realize is that with proper positioning and planning, many families end up qualifying for need-based financial aid. Also, many schools only offer merit aid and low cost student loans to students who have filled out the financial aid forms. Thus, many families disqualify themselves unknowingly from merit scholarships and low cost student loans. Not planning for all years of college for all of their children: Most families have saved enough to get their first child through the first year. When it comes to the remaining years and/or the rest of the children, they have no plan. Planning for retirement over college: Many financial gurus advocate retirement planning over college planning. The problem is that if families don t plan for college simultaneously, they will ruin their retirement planning because they will get caught without the cash flow to pay their college costs. Furthermore, the financial aid forms mandate that the parents income and assets go on the forms until a student is 24 years old. Thus, even if parents do not want to pay for college, the student s college costs are assessed as if they were. Following conventional financial wisdom: Conventional financial wisdom, such as saving for retirement in a 401k, saving for college in a 529 and paying off your house as soon as possible has failed the middle and upper-middle classes when it comes to paying for college. These families end up severely overpaying and oftentimes have to refinance, and/or take money out of the 401k once the 529 is depleted which usually happens after the first or second year. How do you make a difference in the lives of high school students and their parents? Give five examples to demonstrate this difference. 1. Challenge: Anxious family was facing challenge of putting three kids through college over a 6- year period. The family already had $70K in student loan debt. Also, the grandparents had

2 transferred income property worth over $700k to the family for estate tax purposes, which basically eliminated any chance of financial aid. Result: The oldest student qualified for more than $6000 in additional financial aid. Middle student, who had aspirations of being a movie director, was accepted to several film schools and received a scholarship for more than $6500 from Columbia College. Youngest student is currently enrolled. 2. Challenge: Family was facing challenge of putting three kids through college over a 10-year period. Despite a high W-2 income (over $300K), the parents had suffered tremendous losses in outside businesses ($1M). As a result, parents were facing risk of zero financial aid but no available cash flow. Result: Student received need-based and merit aid from Loyola Marymount University in the amount of more than $45,000 per year. 3. Challenge: Student s top choice for college was Vanderbilt University. However, student did not have SAT/ACT Test scores within the range of freshmen applicants. Result: Student was accepted to Vanderbilt University via Early Decision. 4. Challenge: Student was already attending college and working towards a degree in marketing. However, student found architecture to be a more desirable career path, but had no architectural education or portfolio. In addition, parent occupation as restaurant business owner gave distorted view of finances due to ups-and-downs of that specific industry. Finally, student had incorrect past negative credit issues due to credit card co-signing issues. Result: Student was accepted to several schools including the University of San Francisco and SCIARC (Southern California Institute of Architecture), among others. Student received a scholarship over $13,000 from UCLA. Student credit report repaired and parents paid minimal out-of-pocket costs for college. 5. Challenge: Family had two students enrolling in college in next five years. However, oldest child had little interest in even applying to college, and parents feared he wouldn t even get the chance for a college education due to his apathy. Result: Student was accepted to several colleges in Oregon, Utah, and Arizona, and is attending the University of San Francisco. Younger child is currently enrolled. What is significant about your approach to the college application process? It is no longer about just getting admitted to any college. With college costs increasing by 7-8 percent a year, students must get admitted with a great financial aid package. Even if a family does not qualify for need-based aid, a great application and the right school list will qualify a student for merit aid and will lower the family s college costs. My approach is original and significant because it combines three areas of the college application process (application, financial aid, funding) to achieve a rewarding college education without going broke. Families who follow my process achieve four important goals: their children get admitted to schools that are right for them; they pay least burdensome amount; they have a workable plan to pay affordable college costs; and, they increase their net worth at retirement.

3 Most independent college counselors focus on only one aspect of the process. As a result, parents either have to hire several counselors at an increased cost, or their child gets accepted but receives no financial or merit aid, which causes them to overpay for college, or they do not have a plan to pay their costs, which ends up in costly student loan debt or spending retirement savings to pay for college. Also, conventional financial wisdom has failed middle class and upper middle class families when it comes to planning and paying for college. In summary, my process allows families to send their children to their college of choice regardless of cost. Explain each of your services and products: College Application Mastery Program (CAMP): The goal of the application is to reveal exactly who the student is in a unique and compelling manner. My approach is based on my proprietary curriculum developed over years of experience along with my background in screenwriting/filmmaking (MFA, USC School of Cinematic Arts). Available in individual and online versions. College Financial Mastery Program (CFMP): This four step program achieves the following goals: Get the student into the school that is right for him/her, lower the family s college costs, create a plan to pay the costs for all children/all years, and increase net worth at retirement. College Life, Study and Safety Skills (C-Life): Students who are not prepared for college have a much higher chance of getting poor grades, missing opportunities, transferring, and even failing out. In this course, students learn how to succeed in college without getting off track academically and personally. How do competitors perceive your business? My target market is middle-income families that are underserved and that need practical guidance. My competitors target market is high-net-worth families that can afford to pay $5,000-$10,000 a year for independent college counseling. Their perception of my business is that I m not working with the same kinds of families as they are. Many financial planners will not take on clients unless they have significant liquid assets (around $250,000). Thus, middle income families are usually excluded from college counseling services because they cannot afford them. Ironically, it is these kinds of families who are hurt most by current college admissions and financial aid system. I am confident that there is a great-fit school for every student, and not necessarily an Ivy League school. I also believe that with proper financial planning, every student from a middleincome household can afford college, without going broke.

4 What makes your services different than other consultants? Many independent college counselors are stuck in a one-to-one model. This means a college counselor spends lots of personal time applying strategies and solutions in fragmented manner. It s like a jam session where there s lots of improvisation on the part of the counselor. That approach may be succeeding, but it s not easy to measure progress, and it costs money and time. There is no system, no curriculum, no step-by-step process that a student can work on without a counselor being present. My curriculum-based system focuses on the process that trains students to create their best application. Our students have shown us time and time again that if they create a unique, authentic and compelling application, they will get into a school that is right for them. Our curriculum-based system is cost-sensitive, scalable and repeatable, allowing me to serve greater numbers of students. Let me add, too, that many independent college counselors have an acrimonious relationship with high school guidance counselors, who feel threatened by independent college counselors and actively dismiss their value. All this conflict wastes time and confuses students who need practical information and guidance. I work with and offer support to an over-worked high school guidance counselor, who often has to manage 300+ college applicants per year. With the release of our online College Application Mastery Program (CAMP), I am joining the ranks of programs such as The Khan Academy in offering high-quality online education. The online CAMP follows the philosophy of the flipped classroom, where a student first accesses lecture information independently, then works with a teacher afterwards. The online CAMP program is specifically designed so that a student can work through the curriculum on his/her own. It is also an excellent resource for high school guidance counselors, who are looking for time and relevant support materials to guide their students through the college application process. Why do parents want to do business with you? Parents want to do business with me because I relate to and inspire their children to do their best work. Here are two s I recently received from parents: Thanks Chelsea! I am beginning to relax now because I feel like Amy is in good hands! Jack is really enjoying his sessions with you. Thank you for all your hard work. I was listening in on your meeting last week there is NO way in the world that I could help him and guide him like you do!!! Thank you so much. Also, parents trust me because I am an expert in all the aspects of the college application process (test prep, admission, financial aid, scholarships, and funding) due to 20 years worth of

5 knowledge and experience. One more parent: We have full faith in your decisions on this matter. Thank you for guiding us through this process. Why do you do this kind of work? I love helping students achieve their college goals and dreams. I was very fortunate that I had the opportunity to go to the college and graduate school of my dreams (University of Southern California!), and it has changed my life exponentially. I also understand the financial challenges families face as I funded my graduate school education. Unfortunately, the system is stacked against middle-income families. It makes me really angry how ruthless colleges are when it comes to making families overpay for college. Thus, this amazing life-changing opportunity is marred by anxiety and disappointment when a family has to choose between sending their children to college and keeping themselves solvent. Have you read the latest report by Sallie Mae about college tuitions costs and payment strategies? Yes. A few things struck me: Only 38 percent have created a plan to pay for all years of college before their child enrolled. Even though borrowing decreased, withdrawals from retirement accounts increased ($8,870 up from $2,710). This problem is not going away and based on these numbers, the current system is not helping families. This is why we have a $1.3 trillion student loan crisis (7 percent of U.S. GDP). It is absolutely essential that families have access to current information and guidance that allow them to afford a college education without bankrupting themselves or their children.

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