Don’t risk retirement when paying for college education

Garry “borrowed a truckload” of money for business and law degrees and worked at law and brokerage firms before ultimately founding a financial planning firm. When he finishes paying off his student loans in a few years, his oldest child will be a freshman in college.

He hasn’t paid off the debt — down to about $9,000 — because he’s been investing and earning a higher return than he’s paying on the loans, but he acknowledges the sheer size of loans for graduate degrees can be crushing and ultimately

“I tell (parents) not to do anything” in terms of college spending “that will jeopardize retirement, and they all fight me on that.”

making, Garry said. Get the student to evaluate courses based on skills he or she will need for the future, and to start early to translate those skills into internships and jobs. Stay up on aid changes. Be aware that changes may be coming to the financial aid application process.

Legislation was introduced this month that would raise the annual income level — to $30,000 from $23,000 — that ensures maximum federal grant funding. It also would allow families to apply using earlier tax returns, so, for example, a family could submit a 2012 return for a 2014 financial aid application.

“Right now, we don’t have a very well-aligned process” for submitting the Free Application for Federal Student Aid (FAFSA), said Justin Draeger, president of the National Association of Student Financial Aid Administrators, which supports the measure. Families have to scramble to file tax returns early or they have to file the FAFSA, then amend it later once the return is complete, he said.

Draeger acknowledged that using the earlier data could also increase the number of special-case applications colleges receive. A longer time period means more families with variable income, job loss or death of a breadwinner would have a very different financial picture by the time they apply.

But the key targets for financial aid, very lowincome families, tend not to have highly variable income that would change the financial aid equation, Draeger said.