This is Final installment of a 4 part series covering the Complex World of Scholarships featuring Meredith Ritchie, a Business Support Consultant at Wells Fargo and mother to college-age triplets. See part 1 here, part 2 here, and part 3 here.
As promised, this week, I sat down with Meredith Ritchie to learn just how they managed to plan for and fund THREE college educations at the same time. What I learned may surprise you. At the very least it will give you some ideas as to where to start; it may challenge you to rethink how your family allocates its resources vis-à-vis saving for college.
KGF: Thank you so much for meeting with me. Paying for college is the source of so much stress for so many people, myself included. It is amazing to me, given how expensive college is, that there aren’t more people out there having honest, even uncomfortable conversations. I really appreciate you taking the time to have a frank conversation with me about your experiences. Since you are a mom to triplets, I am sure the stress you felt was magnified.
MFR: Happy to share my journey. I hope it might help other parents navigate their own unique set of circumstances.
KGF: When did you first start to worry about financing your children’s college education?
MFR: I’m a worrier, so I think it might have been the day after I found out that I was pregnant with triplets. The prospect of financing THREE college educations at the same time was daunting. That said, the stress prompted me to take action early. I threw myself into figuring out how to make things work for my family. Luckily for me, I have an MBA, which trust me, I needed. I like to joke and say that my MBA and my ability to manage projects prepared me for my children’s college application processes. ;)
KGF: What was the major source of stress regarding paying for college for you when your children were little?
MFR: Trying to figure out the facts from the urban legends was very challenging. I found that everyone had something to say, but I quickly learned that there is a TON of misinformation out there. Sorting fact from fiction was going to require a substantial amount of time and effort. For example, I heard that there is plenty of money out there for the taking and that families with multiples (i.e., twins, triplets, etc.) would receive lots of money for college. Yes, I got some. No, it was not plenty, and I put a lot of work/time into the organizations that we did get scholarship money from. My kids and I had to dig deep to find accurate information.
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KGF: What initial steps did you take to start saving for college?
MFR: We went to a financial planner early on, one that himself had put six kids through college. The personal experience he shared was important. I still remember him sitting in our dining room after my kids went down for a nap. He helped us see our biggest asset: time! Many of the best educational saving options have annual investment limits. He helped us understand all of the different funding parameters (like how to plan for the years we would fall under annual income limits). Similar to retirement planning, knowing these limits and options early on, really helped us form a plan and stick to it. Also, like retirement planning, we funded this education plan first, not last, to take advantage of time.
KGF: What surprised you the most?
MFR: The complexity of the entire process surprised me the most. I like to say that my MBA prepared me for my children’s college application and funding process. I say it tongue in cheek, but there’s a lot of truth there too. It made me wonder how kids with fewer resources navigate through such a difficult path. School counselors only have so much time to shepherd students through the whole application and financial aid/scholarship process. There are many that fall through the canyons -not cracks. In many ways, I feel that the very people these scholarships and grants are intended to help are too often excluded by the complexity and time-consuming nature of the process.
I was also shocked that student loans are classified as ‘financial aid.’ In my book, loans are debt, not aid, since they must be repaid. Stafford loans, if you qualify for them, just push the financial burden farther out. In 2020, our country’s student debt reached $1.6 trillion dollars and grew 12% from 2019.
The highest Pell Grant for 2020 was $6,195. A Pell Grant is federal money that does not need to be repaid. When I graduated from college, it was $3900. In almost 30 years, the maximum Pell Grant (federal money that does not need to be repaid) increased 59%. In the same time period, the average in-state public cost of attendance per year at public university (now a hefty $25, 615) went up 128%! That’s more than double the rate of growth, leaving those who need financial aid most (like our family) scrambling for non-governmental options like loans and outside scholarships to fill the gap. There is an enormous gap between need and resources, and also in the amount of savvy that students have at their disposal to play the college funding game.
KGF: In hindsight, what were your biggest takeaways from the scholarship process?
MFR: Start EARLY, as in 9th grade or before. It is important that students understand that their access to merit aid is impacted by their grades - starting DAY ONE of high school. Helping your students understand that might be a motivator for them to work hard, especially if they have their eye on a private school. Also, joining organizations early on in the process is beneficial. For example, our wonderful credit union offers annual college scholarships to its members, so when my high school kids were ready to open their first checking accounts, guess where I took them? Consider any and all organizations to which your family belongs. Find out if they have any scholarship programs and what parameters exist to apply. Membership and commitment are huge consideration factors when these organizations are allocating their scholarship awards. Finally, questions about the student’s level of community service involvement are always popular on outside scholarship applications, so make sure there is a good story to tell.
KGF: I know this is personal, but how much in outside scholarships did your kids get and from where?
MFR: We had to think of it like a pie chart. The total amount to pay over four short years was staggering. Big slices of that pie were covered by our family budget and the federal student loans my kids qualified for. Smaller slices were covered with Work-Study grants, merit awards, and college-funded grants/scholarships. Outside scholarships were a lifesaver in filling the gap for our family. Combined over four years (because you have to reapply EVERY year), my children applied for almost 100 outside scholarships, many of which they did not get selected for. The ones they were awarded covered about 10% of their total cost of attendance over four years.
KGF: What advice can you offer parents and students?
MFR: Start early by saving as soon as your kids are born: compounding is a powerful force. Also, be aware of contribution limits. Ideally, work with a financial planner so that your college saving plan makes sense within the overall financial objectives or your retirement plan. As your kids prepare to go to high school, make sure they understand the stakes before they start freshman year. Understanding that just may motivate them to work hard from day one.
Think CAREFULLY about where to put your resources (i.e., time, energy, & money). For example, with few exceptions, spending large amounts of money on sports should NOT be considered an investment in college. The numbers don’t lie. Sports might be fun and fulfilling, but the odds of getting a college scholarship are slim to none. If you are spending thousands of dollars per year on sports, consider dialing it back and saving more for college or hire an educational tutor, which is much more likely to translate into merit dollars awarded. If you can afford to do both, great. Just understand the true cost-benefit and the real return on investment.
Understand that college is a business and treat the application process as such. Be prepared to negotiate. Understand and leverage your window of opportunity, typically during the application and acceptance process. Once your child is attending the school, it becomes much harder to negotiate a new price, even if your financial circumstances change.
Understand that merit money may be tied to SAT/ACT scores and plan accordingly, allowing enough time to take the test multiple times and meet a score goal that qualifies a student for more merit aid (hiring a tutor could yield a high rate of return).
Discourage your student from submitting any essay without having someone review and provide feedback. Make no mistake: their peers are not the only competition. The competition includes their peers AND all of the resources they have behind them.
Show your interest in your top schools by taking an official tour, liking their social media pages, or reaching out to an admissions counselor to ask a question. Schools have pools of money to offer and they want those awards to go to students who are most likely to accept them, meaning the ones who have shown how much they want to attend.
Don’t be afraid to advocate for your kids; they are, after all, just kids. Don’t throw them into the deep end without a lifeline. Allowing them to flounder and end up at the wrong college will not serve anyone well, much less your pocketbook.
Every year, your student should research what scholarships are available. New ones will come into play once they are attending the school or have selected a major. Many schools have generous scholarships funded by alumni, and the longer your student attends the school, the more funds may become available to those who need them.
KGF: If your student qualifies for a Federal Stafford Loan, borrowing for college is relatively cheap and is capped at $27,000 (federal loans), borrowed over four years, for dependent undergraduates. In running the numbers using a Loan Payment Calculator, a student who takes the max $27k in unsubsidized loans at an interest rate of 5.0% is looking to pay back about $286 per month for 10 years. For my money, I think this is manageable for a person with a college degree in the workforce. With few exceptions, I am a believer in the power of students having ‘skin in the game.’ What are your thoughts?
MR: I agree 100%, and all three of my kids have benefitted from this approach. It’s also a great way for students to start building positive credit histories when they pay those loans back on time. While letting some interest accrue while they are in school may not seem worth it to some, this was how we elected to proceed. Our kids work every summer to cover their own spending money throughout the year and/or pay down their interest-bearing loan balances. It has been interesting to watch them rise to the occasion and take their own unique approach to debt management.
KGF: I guess another option for families is having their kids take the loans for the skin in the game and looking at the option to help them repay them based on the family income situation in the future. Personally, I have worked hard; I want the option to retire; I do not want to work until I am 80 so my kids don’t have to work as hard. We all deserve the quality of life we have worked hard to attain!
Meredith, thank you so much for your time and willingness to share your college funding experience with my readers. I can’t wait for you to start working with my clients to help them tackle the scholarship process in a way that works for them.
MFR: It was my pleasure and I too am excited to help families maximize the chances of securing some outside scholarship money to help pay for college!
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