Business Innovators Radio - Interview with Brad Baldridge Founder of Taming the High Cost of College

Episode Date: November 15, 2024

Brad Baldridge is one of the nation’s leading college financial experts. He teaches families the best ways to plan, save and pay for college so they can make their children’s college dreams come true without wiping out their finances or their retirement.For over 20 years, he has shared his expertise and insights through his private practice, as a blogger and host of the Taming the High Cost of College Podcast, and as a presenter at numerous workshops and seminars.Learn More: https://tamingthehighcostofcollege.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-brad-baldridge-founder-of-taming-the-high-cost-of-college

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us, Brad Baldricks, who's the founder of Tamey, the high cost of college. Brad, welcome to the program. Hi, thanks for having me. Hey, so I always love when I hear the name of a program or a company or a website and you can just read into it what you're about to get.

And we know that college costs a lot of money and we definitely need to tame that. So I'm excited to learn what you teach your clients and work with your clients on. But before we dive into that, give us a little bit of your story and background and how did you get into the industry? Yeah. So I have an engineering degree, but I got involved in personal finance early in my career and just kind of walked away from corporate America and said I'd much rather get involved in the financial industry. So I've been a financial advisor for about 30 years. And about 15 years into that, I started specializing in what I call late stage college planning, which is families that have high school kids and they're just trying to figure it all out. Yeah, that can take a big chunk out of the retirement, you know, planning bucket when you have to help or pay for college, right?

Absolutely. Yeah, and as I got involved with it, you know, I talk about a little bit and people would listen. I'd talk more. And then I realize that there's a lot of strategies that you can use. The challenge is there's a lot of the strategies only work in certain situations. So they always and never, almost never works out, right? If you're this, this might work, but if you're not, then it's not going to work. So you should do something different.

And for a lot of families, you know, college is important. I've never had a family tell me, you know, we didn't plan well, so college is canceled. They're going to sign up for the loans. They're going to do bad things if they have to. But they're not going to disappoint their kids. And certainly the ones that I'm meeting with. They find education to be very important. But we've got to understand, you know, what we're getting into.

I think that's the biggest challenge for most families. Yeah, I think that brings up a really huge point because I think people have in their mind, you know, college will be expensive. But then when they get into it, they don't realize some of the fees or the cost or in some cases, which is probably where you focus your attention on, you don't know what you don't know. And if you focus on one thing, you might be missing out on an opportunity. So where do you start with a parent? If they're coming to you and they hear that you can potentially help tame the high, cost of college. Where do they, where do you begin with them? Right. So there's kind of two steps to college planning. One is getting a good price for college, whatever that means. And then from there,

paying that price as efficiently as we can. So a lot of people hear about the very expensive colleges and they are expensive. The most expensive colleges are about 90, 95,000 per year now. most state schools are in the 25 to 35,000 range per year. And that includes everything, tuition, room and board, books, fees, beer, and pizza. And, you know, it's the whole cost of a typical year. But those are big numbers. Now, a lot of families don't pay the full price, though. They get scholarships, whether they're merit scholarships or academic scholarships or need-based scholarships.

And they pay substantially less. The challenge is it's hard to figure out which colleges will be scholarship friendly for your situation. So that's one big piece, right? I don't care what the list price is. What am I actually going to pay? Because a lot of schools that list at $75,000, your net cost might be $25. That makes it competitive with the state school. But you have to figure out which schools are a good fit for that.

And I think that's kind of that reduction there. Some of those things to help reduce that cost would be, like you said, merit scholarships or, you know, maybe even some buried kind of scholarships that you wouldn't have thought of, right? I mean, really digging deep. Yeah, absolutely. And like I said, there's a lot of scholars. It's very challenging because most colleges are a little bit opaque when it comes to how it's

going to work. Generally, when you get into the weeds, they start saying things like, well, just apply and then go through the financial aid process. And then at the end, you'll know what it will cost. And a lot of families are like, well, if I knew it was going to cost this, I wouldn't even have applied. Wasted the time. Or, you know, or did I pick the right ones?

It turns out the five schools we applied to are very expensive. But I wonder if there was better choices. And that, I think, is the challenge because some colleges can be very friendly for certain situations. You know, as an example, Stanford put out a press release that said, if your family income is under 100,000, then they will give you 100% scholarship. They will cover all of tuition and all of a room and board. which, you know, essentially, if your income is that in that under 100, it's going to be free to go to Stanford.

Wow. A lot of people are turned away because the list price is 90-some thousand. But for the right families, you know, the actual cost is zero. And then many families, you know, once you're between 100 and 150, they will cover tuition, but not necessarily all of room and board. and from 150,000 to, you know, 300 to 400,000, depending on the family and the situation, they will give you some aid. So it's a mixed bag, but for a lot of families, that can be great. Now, if you happen to be high income and other challenges, they don't offer any sort of merit scholarship.

So you could have a fantastic rock star student, and they're not going to get a scholarship at Stanford, unless your income is proper. So there's a lot of families that end up paying full price. And again, the incomes are relatively high and they can afford it if they want to. But that's another piece of the puzzle of, well, what is a reasonable price? What are you willing to pay? And, you know, for some families, you know, there's a hard cap just due to financial constraints. But many of the families I'm working with, you know, we can't afford to pay it.

We just don't really want to. We're not sure if it's worth it. And we want to figure out if there's alternatives, right? You know, I can afford that crazy expensive sports car. But I don't know that I need a crazy expensive sports car. A general sedan will just be fine for what we're doing. And that's, you know, so there's a lot of different variability as far as what you're looking for, what you're willing to pay, and how need-based aid and merit aid will work out for a lot of families.

So getting all that. And, of course, the Stanford example where you could get the full ride. that might be the case for the tuition, but then you still got to get accepted, get in, and then there's all of the aspects that go along with that, that you would guide your parents of college-bound students to help with essays or applications and all of that. So there's a lot that goes into it, I'm sure. Right, exactly.

And I tend to work a lot with parents, so I'm doing a lot of coaching for the parents as far as these are the things that parents are doing or on visits and working with financial aid and filling out financial aid forms and deciding how much they should save and invest and how much they should take in loans and what's a reasonable budget when you've got multiple kids and what happens when you get an inheritance or you're a small business owner that has variable income. So again, there's a lot of different avenues that you can pursue and what it really boils down to is, you know, there's five or 10 or 20 strategies that will work great for you, but they're different than what work for your brother-in-law, most likely.

And so if you understand and dig into the weeds, a lot of families just aren't willing to work that hard and get that far into it. And that's where, just like me, you know, either you figured out on your own or you hire someone to help you. And I think that's the reality. It's complicated enough. Most of us aren't willing to change our own breaks anymore. We're not willing to, do our own taxes potentially. We're not willing to even mow our own lawn or some of those things. So you can find people to help you with all these things. And, you know, that's one of the, I think the key advantages is most of the time I can save much more than I cost as far as just doing it efficiently and making sure you get all the tax breaks you can have and all the financial

aid and all the scholarships and all the different avenues to where I can help people through the process while also saving the money. And making sure that you haven't missed out on any things that would typically fall through the cracks that maybe the parents might not know about. So, yeah, that's a really big point is bringing your wealth of knowledge into finding every possible opportunity out there. And, you know, you say that students can potentially attend private college for around the same price as public universities. How is that possible? Because I know that private colleges can tend to be really expensive. Right. Well, in general, a lot of families are saying, well, my local state school, and it could be a really strong state school, like a University of Wisconsin, University of Illinois, University of Michigan, you know, the UC schools, UCLA. And you know, I can go to those schools for $25,000, $35,000, somewhere in that range. Why would I spend $90,000 at Stanford? And I kind of go back to the previous discussion. Well, for a lot of families, Stanford's not going to be $90,000. It's going to be $20,000.

or 30,000, in which case it's in the running with your state schools. There are many schools that have, you know, another great examples, they'll have scholarships for the kids at the very top that are full rides or full tuition and that type of thing. So you take a student that can just barely get accepted to Notre Dame and he might be able to get a decent scholarship at a Loyola or a Marquette and may get a full ride at a small regional school that most people have never heard of because at that school he looks like a rock star. Now, the challenge is kids that can get accepted to these higher-end schools, a lot of times want to go to the higher-end schools. And parents often want to send their kids to the higher-end schools.

So now it's a balancing act of how much are we willing to spend to get that name brand school? And is it reasonable given our budget and that type of thing? And also wouldn't you want to have kind of like the old Stephen Covey statement begin with the end in mind? So what industry do you want to be in when you graduate? What kind of job do you want? And would that industry or job necessitate you coming from Stanford? You know, like some jobs out there, as long as you check the box, you have a college degree, you're good to go. But then some industries and some jobs, you're going to need that hire in school.

So that's going to factor into some of those decision-making processes, too. Oh, absolutely. I mean, if you want to be president in the United States, if you have the opportunity for an Ivy League type education, you probably should take it because that tends to be where our presidents come from. Now, if you want to be a local school teacher, again, many, you know, there's lots of places you can get your education degree and lots of them work really well. There's a wide variety of choices when it comes to that. if you're uh you know and and you think about it when the last time you went into the doctor's office and you know the nurse was saying i'm going to take your blood pressure you know well where did you get your nursing degree from oh no no you can't touch me i mean nobody cares yeah in the end most of the time

where you got your degree once you're out in the working world and have a few years experience you know how you got there often doesn't matter nearly as much so once you've kind of zeroed in a a little bit on the type of school and some of the choices. What are some of the strategies that you're recommending to your clients, your parents for paying for college? You mentioned some of the grants or scholarships, but going deeper into that, what are some of the other strategies that you're recommending? Right. So for some families, and again, that always a never problem, right? But for some families, need-based aid strategies will work because they're in the realm of need-based aid.

So need-based aid is based on the families. income and the family's assets. And if you can do things to adjust your income or adjust your assets so that you get better answers, it makes sense to go ahead and do that. Now, for some families, that's not going to make much of a difference. So, you know, again, you focus on a different strategy. For some families, there's tax breaks, the American Opportunity Credit, as an example. You get $2,500 back on your taxes if you pay for education. Now, that phases out for a married couple between 160 and 180. So I've seen families that are

earning around that 180 saying, well, so if we put more in our 401K, not only will we get the benefits of the 401k and those deductions, but we'll also get $5,000 in tax credits this year, that's pretty appealing. But you have to know where

the lines are and how it all works. Other strategies around business owners, right? Business owners can hire their kids into the business. They can set up tuition reimbursement plans. I work with a lot of families that are in the middle of a divorce or other family changes that are going to change what they thought they had. All of a sudden, a death, a disability, a divorce, kind of now we have to replan and come up with how is this going to impact things. So I've worked with families, you know, where the kids are in college or the kids are in high school.

when these sudden changes kind of upend what was the original plan and how to deal with that. Another big one is an inheritance. I've been working with family who's quite a bit on inheritance because, again, need-based aid is based on your income and assets. And now how do we roll this inheritance into your life without it blowing up retirement? I've seen situations where, you know, I had one young man inherit a third. $300,000 trust from Grandma, she designated it for education. He ended up going to an expensive school and he spent it all.

Now, Grandma didn't know what grandma didn't know and had she left it to mom instead, then there probably would have been a much more financial aid. And some of that money would have been left over for grad school or other goals. Yeah. It definitely sounds like with some of these. Lots of moving parts and there's never one cookie cutter templated solution for every single person that comes down the pike or else you'd go Google how to save money on college and oh, there's my 10 point checklist. Let me just do it. So every situation is different and it's fluid and everyone needs to look at the full picture and make sure that they're not missing out on opportunities.

And I would even venture to say that some of these things, whether they're laws or or opportunities or tax breaks or whatever, they change from time to time. So parents are doing good just to get food on the table and get kids to school and back, much less understanding all of these nuances. So that's where you come in to have your finger to the pulse of the industry and say, okay, let me ask you these questions. Let me figure out some opportunities. Let me show you some strategies. I think that's a big thing that people need to realize is, yeah, your fee might cost a buck or two, but if we can save a whole lot of money, it covers that plus some. Absolutely.

Right. And I think that's, you know, I've had, you know, hundreds and hundreds of kids go through college now. Most families, you know, you're up against your first one or your second one, and you kind of remember the way it worked, you know, if parents have a college education, you know, that was 25 years ago or 30 years ago. and, you know, the game has changed pretty substantial in the last 20 or 30 years. So making sure you play it well, I think, is in everyone's best interest. Most people get the idea that they want to do it. But life is really busy. And next thing you know, the kids are graduating from high school and you're like, oh, my,

forgot to get this done. And now what are we going to do? And then there's that last minute scramble. You know, I'm sure that there are some parents that would say, hey, I apply. your decision to go to college. Good luck. Let me know how that works out for you. I'm sure there's a certain percentage that would do something like that or another percentage

of parents that would say, I can only help X number of dollars. And then another percentage of parents that are just like, we want to help you get through college so that you don't have student loan debt. Wherever the parents fall in to that those examples that I've just kind of rattled off the top of my heads, I'm sure that parents do worry about whatever level of help they provide their kids, it's going to impact their own retirement, whether it's totally delay or really, really impacted negatively. What are some of the things that you're working with your parents on to make sure that they're balancing, helping to pay for college, and then also making

sure their retirement is in place? Right. Well, I have a great example of that. A few years ago, I was working with a dad who was, you know, he was a mid-level manager and making reasonably good money. But his oldest daughter got accepted to NYU's Tish Performing Arts Center, which is very prestigious right there near Broadway, a great opportunity for his daughter. She was very talented in singing and dancing. She got a great scholarship, so the net cost was going to be $35,000. But as he was working through that and saying, well, $35,000 times four years is $140,000.

times four kids is, well, that's a big number, you know. Yep. And then questions would come up like, well, just because I do it for one, do I have to do it for all? Well, no, you know, et cetera, et cetera. So there's kind of that philosophical decision. But then there's also just overall planning. If you can make your retirement a little more efficient, if you can make your college a little more efficient, make your insurance a little more efficient, all the different areas, then sometimes you can,

you can do all of it. If you, if you can, again, do good planning across the board. So sometimes college planning is retirement planning and sometimes retirement planning is college planning because they're all interconnected. And, you know, if you spend too much on college, you can mess up your retirement. I've also seen situations where if you're way ahead of the game in retirement, you can maybe slow down and redirect some of that towards college and, you know, go ahead and get, that more expensive college that everybody's been talking about and dreaming about. And you definitely need to do this before your senior year in high school, right? I mean, I'm sure that you would say, let's start in middle school.

But you definitely need to have some of this planning initiated and enough time to put it into place because like you would just mention, there could be some moves that need to be made that would benefit both the college planning side and the retirement planning side. I am not an expert in your world, but I've heard that, you know, the calculation that the FAFSA form has for, you know, the parents' contribution, like, what do you make? How much do you have? There are some ways that you can adjust or shift around something so that your family contribution looks a little bit more favorable. Well, maybe that move would benefit your retirement planning as well as college. So talk a little bit about some of the time frames ahead of college. You know, do you want people to come to you when their kids in kindergarten? or middle school or what does that look like? Right. So, what we're talking about. So I mentioned earlier, I said I specialize in what I call late stage college planning.

Well, late stage college planning is, again, when you have kids in high school and you're trying to figure it all out. Ideally, that would be freshman or sophomore year. In reality, it's junior year and sometimes scrambling senior year. We can always help. We can help more if we start earlier. and it also takes a lot of the pressure off, and it's much less stressful if you can spread the process out

at least junior and senior year. And for business owners or more complicated situations if we can get to sophomore year, that would be ideal too. Now, a lot of people that are hearing this didn't know what they didn't know, and all of a sudden they're at the middle of their junior year now or rolling into their senior year, and there's still time.

You could still make things better. better. And yes, it would have been better if we started earlier. But I think that's, you know, when you know you have college visits and you know you have a college bound student, somewhere in that freshman sophomore year, that would be ideal. To give you an example of why it's important, you know, if you have a 2027 graduate, which would be a sophomore, then you're going to fill out financial aid in 2026 and you're going to use 2025 taxes, which means you need to behave in 2025 well ahead of when your student's going to graduate in 2027. So the look back period encourages us to plan earlier. And again, most people don't realize it. And many times

I'm working with families where financial aid is going to be based on last year's taxes and there's nothing we can do about it because we started a little bit later. Those taxes are already done. There's not much you can do, you know, after the fact. So you just have to kind of live with it. Now, again, that's the bad news. The good news is you can still fix it because this is a multi-year process. You apply for financial aid every school year. So you'll be doing it four times for each child. And often we've got multiple kids. So now we're talking about, yes, maybe the first year was an ideal, but we can repair it, and then from then going forward, it can be better. Perfect.

Well, Brad, it's been really neat hearing some of the ideas and strategies you work with your clients on. If someone is interested in having you put together a possible plan and looking at some of those opportunities, what's the best way that they can learn more and then also reach out and connect with you? Yeah. So everything we do is at taming the high cost of college.com. So I have my podcast there and you can sign up for our free newsletter.

Scholarship Guide for Busy Parents is a great place for many families to start where, again, you can learn about how the scholarships work, whether it's all the ones that we talked about from the colleges themselves or outside scholarships, etc. And many other free resources there. And then if you just want to reach out and schedule something, we offer free initial consultations where we can learn a little bit more about each other and see how we can help. Excellent. Well, Brett, thank you so much for coming on today. It's been a real pleasure chatting with you. Yeah, thanks for having me.

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