The College Planning Blog

From the NY Times

By TARA PARKER-POPE

Published: April 29, 2008

As the frenzied admissions season winds to a close, many students finally know where they will be attending college in the fall.

But there remains a troubling question: how much damage was done along the way?

This year’s crop of applicants faced an unusually grueling admissions process. A demographic bubble has produced the largest group of graduating seniors in history, and they now are facing rejection by colleges at record rates — more than 90 percent at Harvard and Yale, for example.

There will be more disappointment this week as the May 1 admissions deadline passes and thousands who were on waiting lists learn that there are no spots left for them. And today’s high school sophomores and juniors may face worse odds. After a 15-year climb, the number of high school graduates still hasn’t peaked — that is expected to happen within the next two years. (more…)

Mary is 56 years old and got divorced last year. Her ex-husband, Larry, sort of a “handyman”, was always out of jobs, and hence, out of money…virtually the whole time they were married.

Mary owns her own landscape business, and has always worked hard, took care of, and raised their two girls while Larry wasn’t much of a help with the kids. Though he wasn’t working very much…he wasn’t around the home either. Larry sort of enjoyed hanging out at the local drinking establishment, talking a good game of life, solving the world’s problems…with the rest of the guys at the bar.

Mary got the girls off to school, went out on her jobs, picked the girls up from school, made dinner, took the kids to soccer and cheerleading, and so on. Larry occasionally went to the girls’ games, but that was about it.

Mary’s older sister, Leah, couldn’t deal with Larry, and made no bones about lambasting him every chance she could, to Mary and their mother. “Why do you stick with that bum?” was a common start to their conversations over a cup of coffee in Mary’s kitchen. “You are such a beautiful and smart gal, why do you take his crap when you could have anyone you want who will treat you with respect and be a true partner?” Leah said many, many times.

Mary would always answer with something along the lines of, “Well, he isn’t abusive or anything and he doesn’t cheat on me that I know of…Comments that would drive Leah crazy “So he’s not a serial killer or child molester means you have to settle for him?” she frequently asked.

Mary just stuck with Larry through the years. Through the girls growing up, through them both having children and moving out on their own. Last year, something happened to Mary. One day, she came home from work, a hot day, a long day, when everything went wrong on the job. Her client blamed Mary for the wrong bushes showing up (the subcontractor’s mistake), and told Mary that she wasn’t very “with it”, and asked her in a quite rude manner, how she could manage to stay in business.

Mary had to eat the cost of buying a new set of bushes, and was fuming. When she walked in the door at home, she saw the same thing she’s seen for decades: Larry sitting in front of the TV watching ESPN “Sports Center”, drinking a beer, with several empties on the messy coffee table. Larry had his feet up on the table, with a hole in one sock exposing his big toe. Mary absorbed the scene, and well, just snapped.

She told us that something just went off. She now says she doesn’t remember much of what happened that night, but the bottom line was that Larry ended up staying at one of his bar-buddies’ trailer, and she never let him back home. She called Leah and said, “It’s over. I need your friend Carla’s lawyer’s phone number. Now.”

A few months later, Mary was single again. The divorce was mature and amicable. They had very little in assets, and Larry let Mary buy out his half of the house with a new mortgage.

Mary was pretty tight on cash, but felt like the weight of the world was off her shoulders. Leah was thrilled and then encouraged Mary to start doing those internet “speed dating” things, which Mary flatly refused. “I just got rid of a major burden, and need time for myself”, Mary told her sister.

One day, Mary told Leah that she was really having money troubles. Leah gave Mary our number, and we set up an appointment with us. She insisted that Leah come with her, and was very nervous. We tried to ease Mary’s mind by reminding her that we have helped many people in much worse shape, that there’s nothing to be nervous or embarrassed about. We truly have seen it all, so nothing she could present would surprise us, nor should anything cause her to feel self-conscious.

Well, we were wrong. As we reviewed Mary’s financial situation, even we were shocked. Why?

Well, for example, we looked at Mary’s new mortgage on her house that she had taken to buy out Larry. Now keep in mind this mortgage was written in the summer of 2007, well after the sub-prime mortgage meltdown had hit the economy and every news outlet a million times over. Yet here we were looking at Mary’s new loan, which was at 8%, interest only, no escrow account, and adjustable after three years. She also paid 1 ½% points on a $200,000 home.

(Keep in mind that at the time, a 30 year fixed loan was somewhere in the 6.5%- 6.725% range with no points and little to no closing costs.) We couldn’t believe this loan could even have been written. Interest only? 8% now and higher rates in 3 years? No escrow account? 1 ½ points? Who did this? How did they talk Mary into this thing?

Well, Mary said she had been referred to the loan guy by Larry. Uggh. It turns out the man is no longer in the mortgage profession, and has not been seen since the end of last year.

Then we looked at Mary’s retirement plan. It was weird. She thought it was an IRA. But it was not in fact an IRA of any kind. The salesman had told her it was an IRA, and of course, it wasn’t. More ugghs. (The agent was a guy Larry had come over to the house, one of his high school friends.)

When we looked at her tax returns, (she filed “married separate”), we couldn’t believe what we were seeing. Thousands of dollars in missed tax deductions for her business, no retirement plan, missed tax credits, and well, you get the idea. Her bookkeeper/tax preparer is the common-law husband of the barmaid at the bar Larry goes to the most. Yikes.

We asked Mary how the tax returns, the new loan and “non-IRA IRA” had occurred, and she started to cry. Leah affectionately patted her back, and said, “It’s OK honey. Don’t worry, these folks will fix everything, but I would like to know how you got talked into this mortgage and life insurance, and why your accountant didn’t do anything to reduce your taxes. Did you know what you were buying and doing?”

Mary really started to sob. “I knew the tax person sucked, and that the loan and IRA sounded really fishy, but I didn’t want to confront these guys, so I went along with their advice and suggestions. I feel like such a fool. I am so stupid… I hate confrontation, and get so intimidated when I feel it coming, that I clam up and do what I know to be wrong for me. Like my idiot husband. I knew he was a loser from the day I married him, but in order to avoid confrontation, I just shut up and took it all. Oh God, why did I let all this happen?”

Leah held her sister, and just sat quietly, letting Mary get it out of her system. When Mary calmed down, we asked her to come back in a few days, and we’d have some news for her she would like. When she returned, we had already lined her up with a 6% fixed loan for 30 years with no points she would get immediate approval for, and showed her how to start a real SEP IRA so she could save up for her retirement and save a few grand a year in taxes. We also showed her tax info to a CPA we work with and she found over $5,000 a year in tax savings Mary could now take legally advantage of in addition to the IRA.

We all reassured her that she was neither foolish, nor stupid. She got caught up with dishonest and incompetent people, and that was not something to be ashamed about.

Mary came by the other day, and told us she had closed on the new loan, and gave us the paperwork to get her IRA going. She was smiling, and looked, well, younger or something. We commented that she appeared to be feeling better, and she replied, “You have no idea how much better I feel. Just knowing I have people I can trust, has taken so much of my mental burden away. I knew those crooks were dishonest, and the tax guy was a dummy, but didn’t have the gumption to tell them to get lost. Now that I have seen what it’s like to work with people who actually care about me and are professionals, I feel like there is another side of life I need to seek. Thank you so much. You’ll never know how much you have helped me.”

We like our job, we really do.

While your situation might not be the same as Mary’s, you shouldn’t take that to mean your planning needs aren’t just as critical! PLANNING BEFORE TAKING ACTIONS IS THE MOST FUNDAMENTAL, AND IMPORTANT ELEMENT OF FINANCIAL SUCCESS!!

So make sure you take heed, and get help BEFORE making any moves.

Hey Guys,

What to do if you’re waitlisted or rejected from your top choices…

Well, this time of year is always an emotional rollercoaster for me.

On the one hand, for the majority of the families I work with, everything goes according to plan….they get in where they’re supposed to, they get the aid they’re supposed to, and everything is great.

But, I also spend a LOT of time dealing with the handful of families where things do NOT go like they’re supposed to….whether they don’t get the right amount of financial aid, or they get waitlisted or rejected altogether. In fact, often the phone calls come back to back in rapid succession, so by the end of the day, I’m completely exhausted emotionally.

So, today, let’s talk about what to do if you’re rejected or deferred (waitlisted).

First off, if you’re rejected, for the most part, that’s going to be a tough one to overcome. But it’s not totally impossible. For instance, just today, we had a student who was flat out rejected from her first choice get admitted. I’ll talk about exactly how to do it in a second. However, the important thing to understand is that she had been rejected from a small, private school that SHOULD have accepted her in the first place.

If she had been rejected from UCLA, which had over 55,000 applications this year for 3,900 freshman slots, we would have told her not to bother.

Waitlisted is a little easier. For some schools, it’s just that….a waiting list until they figure out their ‘yield’, which is a fancy word for ‘how many students are actually coming here in the fall and will we have any room left over’. For other schools, they don’t really mean it, but it sounds politer than a ‘no’.

So, here’s what to do if you’re rejected or waitlisted from your top school.

First, figure out which school you’re most interested in of the schools that HAVE accepted you, so we have a plan B. You might even send in a housing deposit if it’s close to the May 1st deadline, but figure out what you’re going to do if this doesn’t work first.

A word from me: if this doesn’t work, let me tell you what I’ve learned over the years of doing this. You are much better off accepting an offer at your second choice, working your tail off, and transferring in a couple of years than you are attempting to take a year off, even if you do something really cool….like live in Europe or work on a cruise ship. That will not help your chances of getting in the next fall, so you’ll be back at square one. So, if you really want to go to college, go to college. On the other hand, since I tend to contradict myself even in my own thinking, I’ll have a great article for you in a few days about some students who have very successfully taken a year off, and been much better for it.

Anyway, let’s get down to the business of getting you in to your top choice:

Next, you need to make a list of all your accomplishments that have happened since you originally turned in your application to them. What awards have you won? What killer grades have you gotten? What community service projects have you been involved in? What internship have you set up for the summer?

In other words, why should they pick you versus all the other talented students that are applying there? This is NOT the time to be shy! You need to be polite, but frankly, it’s your job to convince them that they should want you. And remember, be as specific as you can….don’t tell them you’ve improved your grades…tell them exactly how much you’ve improved them and exactly what you’ve been up to since you applied.

After that, make a list of all the reasons why you want to attend there. And use the same formula: be as specific as possible about why they are your number one choice. For instance, I just helped a client with a letter like this, and we referenced the fact that an alumnus of theirs had just won his fourth academy award and that, given the chance, we would make them as proud of us (well, the student) as they were of him. It showed we were paying attention.

So, to recap so far, what we’ve basically created is a letter that addresses two subjects: why you are perfect for them, and why they are perfect for you.

Now, once you’ve made an interesting and specific letter that is persuasive about why they should pick you, we’ve got to look up who to address it to. It should be addressed to the Dean of Admissions BY NAME. Meaning, don’t put ‘Dean of Admissions’. That’s as bad as putting ‘To Whom It May Concern’. Go to the trouble of looking up his or her NAME, so it’s addressed to Dr. Jane Doe, Dean of Admissions.

Then, be sure to CC anybody at the college who had helped you or would be interested in seeing you get in the school, like a coach, admissions representative, music teacher, friend of the family that works there, or anybody else you can think of.

OK, are you ready for the best suggestion of all? I swear to you, nobody else knows this.

Send the package via Fed-Ex.

Yep. Not Priority Mail, DHL, UPS or anything else. Fed-Ex ONLY.

Here’s why: the first battle is getting this all seen by somebody, so we’ve got to make sure that it gets to the right people. And NOTHING does that better than a Fed-Ex package. Don’t ask me why, and NO, I don’t own stock in them. But, you can write the best letter ever, but if nobody sees it, it won’t do you a damn darn bit of good.

Fed-Ex ONLY.

Last point: I often get asked whether you should include a picture of yourself or not. I feel that you should. Here’s why: it personalizes the package. You don’t have to have model looks, either. It just helps them to identify with who you are. And, if you’re going to include a photo, make it of you with your family, your dog, or doing something interesting. Do NOT make it of you with your boyfriend/girlfriend or wearing a sweatshirt from their college. It just doesn’t help your case.

OK, one more point before I sign off: don’t worry if the letter is not perfect. You’re taking a step that most people won’t, so you’ve already set yourself apart. Like John Francis Tighe said ‘In the land of the blind, the one-eyed man is king.’

Or like Woody Allen said ‘50% of success is just showing up.’

Or like Gandhi said…………just kidding, but I think you get the point.

You do NOT need to attempt to use every SAT vocabulary word that you’ve ever learned, or to write prose like Hemingway…you just need to list some honest reasons why they should pick you.

Now, like Larry the Cable Guy says ‘Go get ‘er done’.

Oh yeah, and if you’re reading this and NOT a client of ours, or you haven’t been in to our office yet, you need to get on the phone and call us ASAP! How well your kid does in school, what school they select, what MAJOR they pick, and how well they prepare for that major all will have a huge impact on the rest of their lives.

AND, how you choose to pay for all of that, and whether you get any financial aid or not, and paying for it with pre-tax dollars versus post tax dollars will have a huge impact on the rest of YOUR life!

And we are the specialists for dealing with everything related to college, and we know all kinds of neat planning techniques that nobody else seems to know. WHY? Because this is what we do! So, pick up the phone and call us to either schedule an appointment or register for one of our college planning workshops at 281-822-6200 right now!

College Financial Advisors is the nation’s leading expert on all things related to college and careers. You can view tons of free information from our website www.college-financial.com