Everything You Wanted to Know about an MBA Degree, But Were Too Afraid to Ask!

MBA TextIn 2002, when I applied to business school, I knew that “getting in” to a top MBA Program was no easy task.  There were so many parts to the process, including:

1) Understanding why I wanted to get an MBA in the first place.

2) Learning about the different types of MBA Programs and various Business Schools.

3) Researching financing options.

4) Approaching recommenders that could detail my strengths.

5) Completing applications and essays.

Once I took care of these parts, I realized there was so much more to do.  From interviews and on-campus visits to actually choosing the right school for me and preparing for academic and networking success, it seemed like a never-ending journey.  But it was one made a bit more manageable due to the influence of a few mentors, including some truly wonderful faculty members at UCLA and at the University of Michigan.

I was fortunate.  Not everyone may have mentors at the schools to which they apply.  As such, it is important for prospective applicants to do their own due diligence.  There is no substitute for research.  Furthermore, the importance of visiting schools and establishing connections with students, alumni, faculty, and staff cannot be overstated.  After all, the culture of the school is largely shaped by its community of scholars, and this culture is something that cannot be researched.  It must be experienced.

The value of an MBA from a top school is immense.  Graduates of the top schools earn salaries that are, on average, double or more of what graduates from other schools make.  Increased salaries are not the end of the story.  Greater career choice, increased job security, faster job promotions, more interesting work, higher status, and numerous other benefits also result from a top MBA, so it is no wonder that so many people want to get into the best school they can manage. Join me on College Smart Radio as we discuss all this and more…it will cover everything you have always wanted to know about an MBA degree, but were too afraid to ask!  If you have any specific questions not addressed on the show, I am happy to address them off-the-air.  You can reach me at npmehta@umich.edu.

This post was provided by Nirav Mehta, Associate Director at the University of Michigan, who was a guest on College Smart Radio “Tackling the Runaway Costs of College” on May 17th, 2014.  Listen to this broadcast on YouTube here.

Photo Credit: OpenSource.com

An Affordable Option for Low-Income Students to Obtain a High-Quality Degree

Berea College LogoThere is a college in the US unlike any other.

  • A college that offers full tuition scholarships to all admitted students and admits only students who lack the means to contribute at all to tuition.
  • A college that offers a high-quality liberal arts program as well as majors with vocational/professional character including nursing, education, business, agriculture, sustainability and agriculture.
  • A residential college with an attractive campus, well-equipped facilities, a faculty active in research and scholarship, a staff that contributes to the educational enterprise through supervision of students in the work program, international programs, and vibrant extra-curriculars including inter-collegiate athletics, lectures by distinguished visitors, many events in the performing arts and community celebrations of our distinctive character.
  • A college that not only admits students, but hires each and every one into work positions that help support efficient campus operations and provide valuable work experience.
  • A college that was founded before the Civil War and was the first interracial and coeducational school in the South; still with a diverse and interesting student body, faculty and staff, including substantial numbers of international students and a broad mixture of domestic students.
  • A college that accentuates the celebration of its regional association. It is located in the city of Berea in the state of Kentucky, near Lexington, and does its utmost to provide an educational opportunity to students living in Appalachia as well as other services to distressed communities in that part of the country.
  • A college that through that commitment offers opportunities to all its students to learn through the offering of service to those in need.
  • A college that has put a high emphasis on sustainability of its operations—we operate the first LEED certified hotel in Kentucky, have built one of the only platinum-level LEED certified residence halls in the country, and are renovating all of our buildings to reduce substantially reduce our carbon footprint—and also offers living and learning experiences in Sustainability and Environmental Studies.
  • A college, that because of its compelling mission and model, is supported by an array of friends, foundations and alumni so that its unique financial model remains robust and sustainable, and so that it enjoys a triple-A bond rating.
  • A college that leads the way in many areas of national recognition including Kiplingers, the Washington Monthly, and other rating services. The U.S. Department of Education’s College Affordability and Transparency Center’s report that shows Berea has the lowest tuition and fees in the nation. The national average for private, four-year not-for-profit colleges for tuition and fees is $22,786. Berea’s is $910.

This college has many successful graduates in nearly every profession and career imaginable, including entrepreneurs in business, public servants in politics, professors and academic leaders, preachers, teachers, nurses, farmers and foresters. A short list of distinguished graduates might include:

In conclusion, one might rightly ask why there is not a Berea College in every region of the country? That seems to us a very good question.

This post was provided by Lyle Roelofs, President of Berea College, who was a guest on College Smart Radio “Tackling the Runaway Costs of College” on May 10th, 2014.  Listen to this broadcast on YouTube here.

It’s Never Too Early! Start Creating Your Financial Future Now!

Erasing Debt on a ChalkboardI am the ultimate warning to ANY college student or college graduate!

The big news story over the past few years has been about the student loan debt crisis and how so many college students are graduating in the red.

Well, I was not one of those students, because I was fortunate enough to graduate from college DEBT FREE with $10,000 in the bank! Most college students would look at me as the “one who made it!”, but they would have to understand that life doesn’t end at college graduation, but it is actually just starting!

Life started happening to me fast and not long after graduation I married my high school sweetheart. Shortly after we said “I do” I found out that he had $25,000 in student loan debt for just one year of college!

This number took my breath away because the entire time that we were in college I thought he was there on a basketball scholarship, but come to find out that the basketball coach convinced his parents to pay for the first year and that his scholarship would pick up the next three. There was one problem with that plan, the college cost $25K+ a year!

We were already married so I told him that was “his” student loan which meant “his” money needed to pay the bill each month. We had already been married a month so it was time to build us a house! Not just any house, but I built us a house that was bigger than both of our parent’s homes combined.

I had fallen quickly into the microwave generation where I had to have everything my parents had right now! I convinced myself and my new husband that it made sense for us to move out of our $750 a month apartment with all utilities into a $1500 a month home where will pay ALL the utilities and trash pick-up!

We moved into the house and within the first year my husband’s car began to need repairs. Since we are part of the microwave generation, instead of getting it fixed, we traded it in for a brand new $23,000 Chrysler 300!

As we were driving our brand new car off the lot I let my husband know again that it was “his” car which meant “his” money would pay for it! I still had not grasp what the preacher meant when he said “now you are one”, because that also meant “OUR” debt.

So to recap I graduated college debt free with $10,000 in the bank and within a few years I was more than $48K in the hole! I’m not going to lie I would have kept going further into debt because as long as the bills were being paid I thought we were fine.

We were not fine, life changed quickly and I was laid off from my job. Now I was $48K in debt, income cut in half, and we had a one year old at home! That’s when we woke up and took the necessary steps to get out of that debt in 2 1/2 years!

I now show college students all over the country those same steps and principles so that they can avoid the debt nightmare that I found myself in!

This post was provided by Ja’Net Adams, a Professional Speaker at DreamGirl, who was a guest on College Smart Radio “Tackling the Runaway Costs of College,” on May 3rd 2014.  Listen to this broadcast on YouTube here.

Photo Credit: Images Money

Where to Save for College? Part 2

Putting money in a piggy bank529 Plan, Stocks , Mutual Funds, UTMA, UGMA, Coverdell, Roth IRA, Cash Value Life Insurance… How do you decide which savings plan or combination of plans are right for you?

There are many components that should be considered in the decision of where to save your valuable college funds. In “Where to Save For College? Part 1”, we discussed how to calculate how much you’ll need to save and the basic (yet key) factors to keep in mind when taking into account different college savings plans.

Most commonly, I hear parents worried about taxation when deciding on their specific savings strategy. Taxation can be a big deal in a good way and a bad way. As an example, 529 Plans have the tax advantage that earnings are not taxed if the money is withdrawn for a qualified education expense. That’s the good taxation. The bad taxation arises if you need some of that money for a non-qualified education expense or if your student decides that higher education is not for them. In either case, you’d have to pay the tax plus a 10% penalty to get access to the money.

Another frequently discussed feature is whether the college money should be in the parent’s name or the child’s name (UGMA or UTMA). The tax decision will depend on the child versus parent’s tax rate, when the money will be accessed and the kiddie tax rules. The other central feature that parents sometimes forget is access to that money. It is essentially the child’s asset and they gain control of it at age 18.

The Roth IRA’s taxation rules allow money to be taxed when earned, but not taxed during accumulation or withdrawal (subject to some limitations). Roth IRA limits contributions and these limits are dictated by family earned income as well as IRS rules (only $5000 per year for an adult under 50).

One lesser known savings vehicle is to save money is cash value in a permanent life insurance policy.  Savings will accumulate tax deferred and, if the policy is designed correctly, are available to being spent… tax-free!  Contributions can be high and money from the cash value in the policy can be accessed for any need (not only college).

When it comes to college savings and funding, a chief element for many familiesmay be whether the savings are visible or invisible to the financial aid calculation. Every family should assess whether it’s possible that they may qualify for need based financial aid, and if they do, then the financial aid visibility becomes all-important.

To give you a clear visual, the chart below compares different savings plans and the possible benefits of each.

Possible Benefits
Guaranteed Growth Tax Deferred Accumulation Tax Free Use for College High Contribution Limits Investment Choices Transferable (beneficiary) No Income Ceiling for Contribution Access to Money Financial Aid Invisible
529 Plans NO YES YES YES Some Limitations YES YES NO NO
Coverdell NO YES YES NO Some Limitations YES YES NO NO
UTMA / UGMA NO NO NO YES YES NO YES NO NO
Stock / Mutual Funds NO NO NO YES YES YES YES YES NO
ROTH IRA NO YES YES NO YES YES NO Some Limitations YES
Permanent Life Insurance YES YES YES YES Some Limitations YES YES YES YES

When we work with a family to design their college savings plan, it typically will include a combination of these different plans. This allows a family to take advantage of the benefits of each, but lessen the disadvantages. Give us a call to help design your unique college savings plan.

Listen to the April 26th College Smart Radio show to understand the pros and cons of different savings plans, so you can determine which savings plan or combination of savings plans will integrate best with your family’s needs.

This post highlights information discussed during our College Smart Radio “Tackling the Runaway Cost of College” April 26th broadcast where Beatrice Schultz and Mark Guthrie discussed the pros and cons of different college savings plans.  Listen to this broadcast on YouTube here.

Tax advice is not offered by Beatrice Schultz or Westface College Planning. Please consult your tax professional for additional guidance regarding tax related matters.

Photo Credit: Images Money

Where to Save for College? Part 1

Broken Piggy BankWhether you have dreams of sending your newborn child to Harvard, UC Berkeley or San Diego State, you have a lot of savings ahead of you if you plan to foot part of the bill.

You need to come up with a savings plan EARLY – and stick with it for many, many years.

 

Various types of savings plans exist. In fact there are a few specific ones that are commonly adopted by parents to save for college.  Those include:

  • Traditional investment savings accounts.
  • UGMA (uniform guest to a minor’s accounts in their name).
  • UTMA (uniform transfer to a minor’s account in their name).
  • 529 College Savings Plan.
  • Coverdell Education IRAs
  • US Savings Bonds.

But before deciding where to save, the first question most parents ask is “How much do I need to save?”

As an example, let’s calculate how much you need to save for your newborn to afford 4 years at a UC. Today, a UC will run you about $32,000 per year or $130,000 for four years. Tuition cost as well as room and board continually rises about 4-8% per year.  If we assume a 5% inflation, these parents will be faced with a $300,000 to $350,000 college bill when their child reaches 18 years old.

These parents of a newborn would want to stash away $1,000 per month, equaling $12,000 a year (assuming an average 4.5% rate of return over 18 years) to accumulate ~$320,000 to fund that one child’s college education. Wow – that’s a lot of savings and may be overwhelming for many new parents to consider!

So now that we know how much we need to save, the next question is how and where should these funds be saved for the next 18 years?

There are 4 key components that should be considered in the decision of where to save these college funds. Those 4 factors are the savings plan, the investment strategy, having access to your money and the spending plan.

  1. Savings Plan
    1. Should be easy – auto withdrawal.
    2. Flexibility.
    3. Contribution limits.
    4. Outside help – choose a convenient way for family to help.
  2. Investment strategy
    1. Choose your risk and expected return.
    2. How will taxation impact our rate of return (tax now, tax every year, tax later)?
  3. Access to the money
    1. Would you like access to this money during the saving period?
    2. Access if you have an emergency.
    3. Access for a great investment opportunity.
  4. Spending Plan
    1. Spending Plan
      1. Flexibility. Timing.
      2. Do you want to have all your money in a plan that must be used for college funding?

When it comes to college savings and funding, a vital 5th component may be whether the savings are visible or invisible to the financial aid calculation.  Every family should assess whether it is possible that they may qualify for need based financial aid, and if they do, then the 5th component becomes all-important.

Listen to the April 19th College Smart Radio show to start to run the numbers of how much to save and why these 4 or 5 components should be serious considerations for your savings plan.  Listen in to next week’s show to understand the pros and cons of different savings plans, so you can determine which single plan or combination of plans is right for your family.

This post highlights essential information pulled from our College Smart Radio “Tackling the Runaway Cost of College” April 19th broadcast where Beatrice Schultz and Mark Guthrie discussed the factors of where to save for your child’s college fund.  Listen to this broadcast on YouTube here.

Photo Credit: Images of Money

Secrets for Cutting the Cost of College

Bellevue University LogoIf you are thinking about returning to school the issue of finances has likely come up. You’ll hear a lot about affordability and the cost of school interchanged, but affordability is different than cost. Think of it this way: cost is just the baseline; affordability can be considered how you’re going to manage that cost. In order to best figure the true cost, you must get a clear picture of all the expenses, and look for ways to reduce them when possible.

 

Take a look at the following seven factors when conducting your research:

1. Cost per credit hour based on the academic calendar. Don’t just pay attention to the cost per credit hour – this can be different due to variations in academic calendars, leading to extra fees and valuable time spent. There are two factors to consider here. What is the baseline cost per credits and how are credits figured? Make sure you look at all the factors involved when you determine affordability.

2. Length of program. How long will it take you to complete your degree? Are you starting brand new, do you have some credits? What is the pace of the program? When you know how many credits you need, that can help you figure cost based on how many credits are included in tuition, or if you are paying per class.

3. Transfer credits. If you have previously earned credits how will they transfer in? Are you able to save time and money if you get credit towards graduation for previous coursework? When credits don’t transfer, you could be spending more to retake classes.

4. Books and supplies. For first time students the average cost of books and supplies was more than $1000, according to The National Center for Educations Statistics. Books can get expensive, but are required. Take advantage of shopping strategically to try to land used books, renting textbooks or selling back books when possible, and research how other savings opportunities can be found. Does your school offer text book grants or scholarships to alleviate the burden of this expense?

5. Fees. Get a comprehensive list of all fees that you are required to pay as a student. Are there student fees, semester fees, lab fees, parking fees, etc.? Determine how fees are figured in. Are they included in tuition, are they separate, how often do you pay them?

6. Housing and transportation. Once you have figured out the cost of credits and fees to complete your program, explore this sometimes costly expense. Will you be living on campus? How much will you be spending commuting to campus? What is the value in the convenience of being on campus? Is online an option for you?

7. Other ways to earn credits. Can you test out of classes to earn credits? For example if you can take a CLEP or DSST test in place of a class you could save money on the cost per credit hour as well as the cost of books. According to collegeboard.org, CLEP tests are accepted by over 2,900 colleges and Universities, so explore if the school you are considering accepts them, and work with an advisor to see how they would fit your needs. Also ask how corporate and military training can count towards your degree plan.

College can be expensive, but planning and research can ease the burden without sacrificing the integrity of earning a respectable, accredited degree. Utilizing previous credits, and finding a school that works on your timeline to help you make the most of your funds can reduce costs and make college more affordable.

This post was provided by Dr. Mary Hawkins, President of Bellevue University, who was a guest on College Smart Radio “Tackling the Runaway Costs of College,” on April 12th, 2014.  Listen to this broadcast on YouTube here.

 

Go to College in the West for Less!

WUE“I can afford to study out-of-state? You’ve got to be kidding!”

Students — and their parents who are bankrolling their kids’ education — are often amazed to learn that they can afford an undergraduate education outside of their home state, thanks to a program called “WUE” that’s been around for a quarter of a century. Some say it’s like winning the lottery!

More than 25 years ago, the Western Interstate Commission for Higher Education (WICHE), a nonprofit higher education policy organization, forged an agreement with its 15 western member states called the “Western Undergraduate Exchange”, or “WUE”. WUE is a multi-lateral regional tuition reciprocity agreement whereby a resident of one WICHE member state can go to college at a participating public institution in another WICHE state, and pay 1.5 times the resident tuition of the enrolling institution. WICHE member states are: AK, AZ, CA, CO, HI, ID, MT, ND, NM, NV, OR, SD, UT, WA, WY and the Commonwealth of the Northern Mariana Islands.

WUE is the biggest program of its kind the nation; a 154 total of institutions — community colleges and universities – participate in the network. This year alone (2013-14), some 34,000 students saved an estimated $264.7 million by paying the reduced WUE rate, instead of full nonresident tuition. Individual savings ranges from about $900 up to $13,000 per student, but on average, a student this year is saving about $7,800.

The savings numbers are even more staggering when you look at the historical savings the program has provided for families since the first exchanges began in 1988: western residents have saved an estimated $2.2 billion on some 392,000 tuition bills! Depending on where you’re from and where you want to enroll, earning your degree may cost about the same and sometimes less than what you would have paid if you had studied in your home state!

Now you’re wondering: what’s the catch? What motivates institutions participate in WUE? Community colleges and universities like WUE just as much as students and families do. It helps them achieve their enrollment goals on several levels. The savings can entice students to enroll in difficult-to-fill majors. They can also use WUE as a merit scholarship, to attract the brightest students in the region, which also boosts their graduation and retention rates.

WUE also helps them diversify their student body; the more regional and ethically diverse their students are, the richer the learning experience for all. Some institutions also use WUE to attract academically qualified athletes in the region. Furthermore, some graduates will probably remain in the state where they received their degree, and become part of the local workforce. For growing states, this is a plus!

Prospective students must apply for the WUE discounted rate at the same time they apply for admission. The WUE rate is never guaranteed. Students must request it and meet the enrolling institution’s requirements.

Here are a few simple guidelines to follow:
1. Make sure your major is eligible for the WUE discount at the WUE institution where you’re applying. Some high demand majors are excluded. To find out, check your dream institution’s WUE profile. Remember, if you change to a non-eligible major, the institution will charge you full nonresident tuition.

2. Read the participating institution’s WUE eligibility requirements (GPA and ACT or SAT scores). Do you qualify? About 20% of WUE institutions use the program as a merit scholarship.

3. Apply directly to the institution where you want to enroll, and apply as early as possible! Check the institution’s WUE application deadline. An early application will increase your chances if you meet all of the other qualifications where you want to enroll. Remember: some institutions have a limit on the number of WUE discounts that they will offer to new students each fall—you want to fall within that number.

4. If you’re awarded the WUE discounted tuition rate, be ready to study hard and finish your bachelor’s degree within four years. Most institutions limit the number of semesters that they will give you the discounted rate. Community colleges may also set a two-year limit for full-time students. It’s important to note that WUE is for students who want to complete a full degree; it is not designed for a semester or one year study experience.

For specific questions about admissions requirements, contact the enrolling institution directly. If you have general questions about the program after reading the WUE FAQ contact WICHE staff at info-sep@wiche.edu 303.541.0270.

This post was provided by Margo Colalancia, Director of Student Exchanges at WICHE, who was a guest on College Smart Radio “Tackling the Runaway Costs of College” on April 5th, 2014.  Listen to this broadcast on YouTube here.

Photo Credit: OutOfStateCollegeFairs.net