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Ask an Advisor: Saving for College Tips and Options

Q & A with parent and Twin-Cities-based financial advisor Steven Schmidt on planning for college


Curious how a financial planner plans for his or her own children’s future? Learn a few tips from someone who understands this process both as a professional financial planner and as a parent with three kids in college.

Saving for college is a huge goal that many families work toward when it comes to personal financial planning.  A parent may start the process of saving for college for a baby. Higher education can be a huge expense, but with the right planning of saving, investing and money saving tips can help parents toward their goals.

Steve Schmidt

We asked financial advisor Steven Schmidt to share his perspective and tips, not only from his experience helping families in the Twin Cities plan for college, but also as a father of four kids — ages 21, 20,18 and 17. With three of his children in college, and the youngest in the planning stages, Steve understands the process of planning and saving for college. Steve has lived in the Twin Cities for 25 years, and resides with his wife and children in Arden Hills. As a Founding Partner at Ballast Advisors, He is a seasoned investment manager who has been advising families since 1993.

Q. As a parent, how do you feel about having children in college?

A. Excited and trepidation all in the same thought.  It is exciting to see your children grow up, especially during their first year away.  They come back home a different person after the first year of college. But, also, you hope they find their way with their field of study, a new friend group, etc.  I know how fast college felt for me. The first year you are getting for feet wet (it’s the hardest year), years 2 & 3 you are hitting your stride with school and friends, but in year 4 you and your peers are already planning for post-college lives.

Q. As a parent, what do you wish you’d known about planning for college before?

A. Start planning early, because the time flies by and your kids grow up fast.  Keep in mind, colleges look for well-rounded kids. Keep their activities diversified; not only sports.  Band, clubs, volunteering, jobs are all good things to have on your application. Encourage your children to work hard for exceptional grades.  Many kids earn more in scholarships for “A” grades than working a job during high school.

Q. As a financial planner, what insights can you offer other parents preparing to send their children to college?

A. Start saving early! Starting early allows you to leverage compounding interest. Said differently, saving $10k when your child is 1 looks much different than saving $10k when your child is 17 and about to go to college.  Here’s an example of how compounding interest can help you reach your education goals:

$10k invested for 18 years at 6% equals $28,543 when you child attends college

$10k invested for 1 year at 6% equals $10,600 when your child attends college

You have almost $18,000 more by saving the same $10,000 when your child is young.

When it comes to education planning, every family has different goals. Some families want to keep the cost from altering their other financial goals, while other families are more concerned about matching their child with the best fit school. We help the families find the best plan for their educational goals.

Q. Any tips for financial aid?

A. If you are not likely to qualify for federal financial aid, because your household income is high, there may be other options. I suggest looking for “generous” colleges; those that offer merit-based scholarships.  A merit scholarship is a financial award based on academic success, but good grades isn’t the only factor. Colleges will look for ACT scores, leadership roles, and extracurricular activities like school or community involvement. It is important to know that not all colleges offer merit scholarships, but those that do will often compete for your child if they have a well-rounded high school experience. Another tip for reducing the cost of college on your family is to narrow your search to colleges that accept credits from Postsecondary Enrollment Options (PSEO), a program that allows Minnesota high school juniors and seniors to enroll in college courses on campus or online. Students earn both high school and college credit by passing these classes.

Q. How do you recommend involving children in the financial process of their college education?

A. When you travel as a family, take an hour or two to stop by a nearby college as your kids grow. This is something we did as a family, and we found planting the seed of what college campuses are like early can help them decide if they want big or small, near or far, public or private, etc.

We also set up checking accounts for our four children with small attainable savings goals. We felt like our kids would appreciate their education more if they contributed to its cost.

Also, when it came to our kids leaving for college, my wife and I had a very specific conversation with them about the expenses we are willing to pay for and those we are not – like a surprise road trip or Thursday night pizza. It helped set the expectations.

Q. 529 Plans are a popular option for college savings. What do you do if you save for college and your child takes a different path…. what options are there?

A. Most college savings plans allow you to change the benefactor if a child chooses not to attend post-secondary school.  Also, 529 plans in particular, can be used for K-12 tuitions as well. Room and board, textbooks, computers and related equipment are considered qualifying expenses for 529 plans, so saving “too much” is hard to do.

Here’s are a few additional resources on the web for helping plan for college.

Click here to download our free College Savings Budget Worksheet 

If you’re interested in receiving additional financial advice on saving for college or an analysis of your financial plan, contact Ballast Advisors for a complimentary consultation at a location near you:


Ballast Advisors – Woodbury Area

683 Bielenberg Dr., Suite 208
Woodbury, MN  55125-1705
Tel: 651.478.4644

Ballast Advisors – Arden Hills Area

3820 Cleveland Ave. N, Ste. 500
Arden Hills, MN  55112-3298
Tel: 651.200.3100

Ballast Advisors – Punta Gorda & Port Charlotte County Area

223 Taylor St., Suite 1214
Punta Gorda, FL  33950-3901
Tel: 941.621.4015