Brad Baldridge is one of the nation’s leading college financing 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 own finances and retirements. For twenty years, Brad has shared his expertise and insights through his private practice and as a blogger and podcast host for his company, Taming the High Cost of College.
Today, Brad joins the show to discuss the difference between education and college, changes to FAFSA, and advice for those in both early and late stage college planning.
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00:55 – Jonathan introduces today’s guest, Brad Baldridge, who joins the show to talk about his career trajectory from a financial advisor to one who focused specifically on college
07:08 – The difference between Education and College
19:13 – Early stage and late stage college planning
25:01 – College visits and entrance exams
32:09 – Changes to FAFSA (Free Application for Federal Student Aid)
39:37 – What Brad offers in his courses on college planning
42:08 – One piece of advice for college planning
45:51 – The one question Brad would want to know the answer to and one thing Brad would like others to know about him
49:22 – Jonathan thanks Brad for joining the show and for the work he’s doing
“Anytime someone says, ‘college for everyone,’ it drives me crazy. There’s a whole bunch of people who need an education. But education and college are not the same thing. You can get an education by being an apprentice, going through the military, or the School of Hard Knocks.” (08:25) (Brad)
“If you talk about the average student, if the professor said, ‘I’m canceling class next week,’ they would say, ‘Great!’ Not, ‘Wait a minute. I paid for those classes. I’m here to learn and now I’m getting less for my money. Am I gonna get a refund?’ It’s just a completely different mentality.” (16:41) (Brad)
“‘Do you qualify for need-based aid? I don’t know. Well, here’s how you figure that out.’ And once you have this answered, if the answer is, ‘no, need-based aid is not something you have to worry about’ then you don’t have to worry about it.” (40:10) (Brad)
“If education is important to you, then you better walk the walk and not just talk the talk.” (42:30) (Brad)
“Ten to twenty years ago, everybody just did the best they could. And today, ninety percent of people are still doing the best they can. Ten percent have realized, ‘Oh, I can hire somebody to help me, or take a course, or study online information, or read a book.’ I think a big chunk of the population doesn’t even know that there’s something out there.” (48:16) (Brad)
Contact Brad: (414) 885-5111
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Jonathan DeYoe: Hey, welcome back. On this episode of the Mindful Money podcast, I’m chatting with Brad Baldridge. Brad is one of the nation’s leading college financing 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 own finances and their retirements. For 20 years, he shared his expertise and insights through his private practice and as a blogger and podcast host for his company, taming the high cost of college. He’s done college funding workshops and seminars to numerous to count, and he’s directly helped thousands of families save for college. He shows them how to find the right school, maximize need based aid scholarships, minimize student loan debt, and make your kids college come true again without wiping out that finances, uh, in the retirement program. Brad, I’m excited to have you on. Welcome to the Mindful Money podcast.
Brad Baldridge: Hi, thanks for having me.
Jonathan DeYoe: So, first, where do you call home?
Brad Baldridge: I’m in the Milwaukee area suburbs of Milwaukee. But I’ve always been in Wisconsin my whole life and moved to the big city when I graduated from college.
Jonathan DeYoe: So you grew up in Wisconsin?
Brad Baldridge: I did.
Jonathan DeYoe: Out in the small towns.
Brad Baldridge: Yep. A little town called Mayville. And I literally lived on a street called Easy street.
Jonathan DeYoe: Do you live on Easy street now?
Brad Baldridge: I do not know. The real world caught up with me.
Jonathan DeYoe: Well, that happens. You must have kids college.
Brad Baldridge: I do, yeah. I’ve got two in college and one in high school right now. So I’ve been doing college planning for years, but now, recently, I am eating my own cooking, as they say.
Jonathan DeYoe: Yeah. Practicing what you preach so what did you learn about money and entrepreneurship growing up? I’m guessing small town. Was it a farm town, ranch town?
Brad Baldridge: A little bit, but again, just a small. We had small manufacturers and it was 4000 people. We had the stoplight when I was young. You go to the stoplight in town and you turn left or you turn right and it grew while I was there. So we had more stoplights by the time I left. But yeah, what I learned growing up was just kind of the very basics like most people, and actually went and got my engineering degree and then moved into finances as I became an adult, I got involved in rental real estate. That led me to financial planning and that led me to a, uh, career change.
Jonathan DeYoe: So I want to go back to the beginning a little bit. Do you remember any of those money experiences, like your first spending experience, going to the bank with a passbook, savings account, those sorts of things that your parents kind of worked with you through?
Brad Baldridge: Oh, sure. For me it was like the first summer I had a paper out from the time I was twelve or 13. I think it had to be twelve to get throughout. So I probably had a paper out from twelve and then summer jobs in high school and distinctly remember spending my own money to buy a Honda moped when I was 16, which then gave me all kinds of freedom because I could tool around town with it.
Jonathan DeYoe: Do you have any memories of conversations about money with your parents? Let me explain what I’m getting to. I talked to a lot of different people on here, and you kind of started with the idea that got these same lessons that most people get. And what I found is most people don’t get any lessons at all. So I’m just curious what it was that you got there.
Brad Baldridge: Right? Yeah, I mean, I guess it was kind of the life lessons of, well, if you want that, you’re going to have to pay for it yourself because we’re not covering it, but I don’t know that. And again, I’m, uh, a financial advisor as well. I would say that my upbringing wasn’t different than most people where money wasn’t really talked about. I had no idea what my parents earned or what happened there, which I think is very typical of the typical college kid that I’m working planning for. Doesn’t know a lot about the family finances either. So, yeah, like I said, I was probably pretty typical of, um, that’s money. We don’t talk about it, and from one side and the other side is, well, if you want to go out and waste money on a cheeseburger and fries. Well, that’s your money you’re spending, not ours, right?
Jonathan DeYoe: Very good. Heartland money lessons. I got some of those, but my parents were a lot more, I would say, open with how little we had. So I knew what we made. Like my dad showed me the tax returns when I was nine. Uh, and it was thinking back on that and having conversations about that is pretty scary. Hey, taming the high cost of college. But I know you’re an advisor, so I want to know because I don’t know many advisors that focus in this area and I want to know how you got from, hey, whatever you’re doing, to being a financial advisor to focusing on college planning specifically.
Brad Baldridge: Yeah, I got involved in college planning 18 years ago now maybe a little more. If time flies, it’s 2015, I guess. So, 18 years ago. And again, I did a lot of seminars and a lot of teaching on financial topics and then I got a little bit of training on teaching, another seminar on college, and that one I enjoyed a lot. And when we got a lot of response, so I kind of started focusing in on it. And the more I dove into it, the more I realized m college at the time was getting more and more expensive. It was becoming a big deal and most families are very stressed out about it and there’s lots I could do to help them where again, the average family didn’t understand need based aid or merit aid or loans or how the process worked and they certainly didn’t know how to optimize and how to build a budget and determine what the reasonable price to pay is and negotiate with the school and all the different things that you can do. Most families, again, just didn’t really understand most of it, so I could add a lot of value and I enjoyed it. So I just kind of kept doubling down and launched my own podcast and did all that type of thing. And the more I got involved, the more I specialized in it.
Jonathan DeYoe: I think there’s a nice lesson there for everyone that’s listening and, uh, you did a thing you really enjoyed, and it wasn’t that you were great at it, but you enjoyed it. And because you enjoyed it, you pursued it and you got better at it. Better at, better at, you added value. There’s a huge lesson in that for folks that are trying to launch and earn and build something or be better in their career. Pursue what you love to do, and if you pursue what you love to do, you’ll get better, you’ll iterate, you’ll get better. And that’s how you get successful. So you talked about college, uh, being expensive 20 years ago. I got an 18 year old going to college next year. I got to tell you, college is insane right now. Even more insane. It’s gotten more and more and more insane over the last 20 years. There’s some really massive, staggering statistics around student loans, student debt. Can you just paint us a rough picture of that real quick?
Brad Baldridge: Yeah. I mean, the challenge, I think, for most families is college is expensive, and if you don’t plan well, there’s a couple of different loans that are available at the end of the process where you can say, well, we didn’t plan well, but here’s this loan. We just sign up for this loan, and it solves our problem. So I think there’s a certain population that, again, as kind of a default, they sign up for the loan because they don’t know what else to do, right. And maybe they needed to have a loan, maybe they didn’t it, depending how well they planned. But that’s part of the problem. The other part of the problem is college has always been worth it mathematically. So the colleges raised their prices, and we still came, and then they raised prices, and we still came. And now the market for college is all of us that went to college as parents, and we’re saying, I loved college. I want my kid to have the college experience, and if there’s a way I can make it happen, I will. And that’s what’s part of what’s driving up the cost of the residential, uh, concept of college.
Jonathan DeYoe: Just real quick. So are you suggesting that college may not be the right path for some, and we should think about that.
Brad Baldridge: It’s absolutely the wrong path. Anybody that says college for everyone, that drives me crazy. There’s a whole bunch of people that need an education. But education and college are not the same thing, right? You can get an education by being an apprentice. Going through the military school of hard knocks, there’s all, starting your own business. There’s all kinds of ways that you can become an expert. And let me give you a great example of that, right? You can become a musician, and if you can play your instrument well, nobody cares how you learned. Show me what you can do. Oh, you do that well. You’re hired. Not well, you went to the wrong school for that. We can’t hire you.
Jonathan DeYoe: Right.
Brad Baldridge: Graphic design would be another great example. Most businesses are like, oh, you made that. I want something just like that. How much does it cost? No. Where’d you get your education, right? And then you get to other areas where it’s like, well, you need to have the degree in order to get the job, even though you might have enough experience doing a very similar job that you can run circles around the typical graduate. So there’s a lot of that politics around the degree that I think is one of the problems and that’s changing. Businesses used to say must have a four year degree on every position just so that they were reasonably confident you could read and do basic math because a lot of high school graduates now don’t necessarily have much skills in that area and they weren’t being challenged around lawsuits or discrimination or whatever it was. So it was an easy way for them to take the 1000 applications and win it down to 500 and then go from there. Now that the markets are tight, a lot of places now are saying we’re going to take that off because we need to get more applicants. And even some states are changing their rules around, well, these jobs don’t really need a degree. I don’t know why we say that. Let’s take that off.
Jonathan DeYoe: I wonder what you mentioned. One of the functions of college getting more expensive is we all want to go, we all want to go, we want to go. And at the same time there’s not more apply. So what are the options? I’m not going to go to college. Like list four or five of the things that kids who are maybe entering high school should be thinking about.
Brad Baldridge: Right. And again, there’s the high academic achievers. It’s definitely the right path. And then there’s certainly careers where you’ve got to have the degree. But alternatives would be instead of just a four year degree, is the two year going to the trade schools, being apprenticeships, just getting out there and going to work. There’s a lot of certificate programs now where you can learn to program or do other things like that. Again, it’s education, it’s just not a formal degree.
Jonathan DeYoe: I wonder if you have this experience in your client base. Some of my most successful clients went all the way through college and then started a painting contracting company or a plumbing company or an electrical company. And they’re doing so incredibly well, having nothing to do with learning what they did and doing what they did in college. And I wonder if that’s your experience as well.
Brad Baldridge: Oh, absolutely. And there’s a whole lot of people when you ask how did they get here? And obviously you understand this because you asked that question on your podcast and you just asked me, but I have an engineering degree. I moved into financial planning. Now, do I regret getting an engineering degree? No, I learned numbers. I learned problem solving. I learned how to learn, and then I just took all that ability and applied it to financial planning, right? And that’s one of the reasons I’m doing college planning, right. Is a lot of the stuff I’m doing, I invented. There was nobody to teach me how to do it. It’s, gee, I got to learn how this stuff works. And there’s a few of us out there where we’re working together and saying, how do you explain this? Or what’s your opinion of that? There is some knowledge sharing, and it’s a growing field, right? I mean, ten years ago, I knew of five or ten people that did this. Now it’s more like 50 or 100. So it’s growing. And again, there’s a lot more people that need help than we can ever help one on one still. So financial advisors, et cetera, are moving into the space. But put that in context. There’s thousands of advisors now that help students. So one of the things that most families don’t realize is there are professionals out there that can help you. I help, typically, parents figure out how to plan and pay for college. There’s my counterpart that would help a student figure out how to apply to college, choose a major, figure out what they want to be when they grow up, write the essays, all those test prep, all the things that the student needs to do. There’s experts now that focus in, um, on those various areas. And again, sometimes it’s a very specific expert. I’m an essay writing expert. All I do is essays for you. So if you need the whole thing, well, you’re going to need more than one person, or test prep would be a common one. Right. This is where you go for test prep. All the other stuff is somewhere else.
Jonathan DeYoe: This is not where I wanted to go, but you’re talking about something that I think is really critical to understand. And there’s all these resources that are available to people, both for the student and for the parents. And those people who access those resources have a higher probability of success in college, both getting into the right college, the essays, and paying for college. So it suggests to me that there is m. I’m going to just seize the word. There’s a privilege, and that privilege is actually creating kind of an arms race in college. Do you think that adds to the expense? The people who are paying for all these services can then also afford the college, and the college notices that raises the rates, raises the prices a little bit. It seems like it’s I don’t know where that ends.
Brad Baldridge: Yeah. And there’s some very truth to that. Right. But there’s a great book out there. Who gets in and why? I can’t remember who wrote it, but he talks about the top 50 schools or 100 schools. M. And again, it’s kind of a slippery slope. There’s no official line where you cross from one to the other. But Harvard, as an example, they could charge whatever they want.
Jonathan DeYoe: Right.
Brad Baldridge: What they do is a combination of politics because of their. And other things. It doesn’t really impact their budget that much. I heard somewhere, and I know how accurate this is, but their tuition receipts is like 14% of their budget for their undergrad tuition. So it doesn’t really matter. And they could easily cover that with their endowment if they wanted. It’s just not an issue. And they are getting top dollar because they can. And what it really boils down to, it’s just like the name brand. It’s Gucci or what other name brand. It’s like, do you really need a $2,000 pair of shoes? What do they do that an $800 pair of shoes doesn’t do?
Jonathan DeYoe: Or a $40 pair of shoes.
Brad Baldridge: Or a $40. Right, exactly. But in the end, why do they charge 2000? Because they can.
Jonathan DeYoe: Yeah.
Brad Baldridge: Uh, and people will pay it. And that’s the reality in some markets with college, other markets, they’re much more tuition driven and they are cost conscious. And their target markets don’t have unlimited funds. So they have to prove that what they provide is worth what you’re paying. And that’s why I think a lot of people, they take something very general. College for everyone. What does that mean? When you say college, are you talking about the four year residential thing? Are you talking about some form of two year. Four year online courses, whatever. So when you get from the sound bites and the general understanding to the specifics into the weeds, it’s a completely different process.
Jonathan DeYoe: Why do you think, like, Khan Academy and all these online learning areas where we sat our kids down during the pandemic and said, okay, your teacher is not really doing a great job with precalc. Sit down in front of these videos and you can learn precalc or calc or astrophysics or biochemistry. How come that hasn’t affected the price of college? Because you can learn the same stuff from great, intelligent, brilliant people for free online, and it doesn’t seem to be affecting college tuition rates at all.
Brad Baldridge: Well, uh, right. But if you talk about the average student, the average student in college, if the professor said, I’m canceling class next week. They would say, great, wait a minute. I paid for those classes. I’m here to learn, and now I’m getting less for my money? Am I going to get a refund? It’s just a completely different mentality. Right. Well, tell me what I need to know that’s on the test so that I can get the piece of paper. And that’s the mentality of a lot of students. Right. Especially at certain levels. There’s the person that goes back to school that says, I’ve topped out at my company, I need to have a degree in order to get the next promotion. Doesn’t matter what the degree is in, and it doesn’t matter if I learn anything. I just got to have the piece of paper. So what’s the cheapest, easiest way for me to get the piece of paper so that I can get the promotion? And then there’s colleges out there that cater to that market. They say, well, we’ll give you 57 credits for your life experiences, and then we’ll give you these courses and then go do this on nights and weekends, and then, Tada.
Jonathan DeYoe: You’ll have a degree that I’ve never heard of.
Brad Baldridge: Right. Um, and again, does that person get the same experience than if they went to the flagship state university in their state and worked hard for four years? Probably not, but again, it’s just someone’s looking to check a box. They don’t really care what they learn. They already know what they need to know. At least they believe that. And I think that’s the biggest challenge, is there’s people out there that are the lifelong learners that are curious and want to learn stuff. And then there’s a whole bunch of people that are going through the motions because they have to. I have to go to college. I have to get a degree because my parents expect it, because my future career expects it, because I got to do it. But if they’re going to make it easy instead of hard, I’d love that. Not why I want to learn as much as I can and be as productive as I can be when I get out and become the expert or something. Again, a lot of students don’t think that way.
Jonathan DeYoe: We have this heavy educational system so that we have structure for folks who need structure.
Brad Baldridge: Absolutely. Uh, you got to learn it because it’s going to be on the test next week, not because it’s going to advance your career five years from now. It’s, well, chunk it down to something that students can handle and did I need to learn all that calculus? Not really. I didn’t use it in my first job, and I certainly don’t use calculus much in financial planning.
Jonathan DeYoe: Right.
Brad Baldridge: But again, it’s one of those things where you got to learn what you’ve got to learn in order to get the degree. Whether it’s fair or not is a different question.
Jonathan DeYoe: So let’s talk about college planning, since that’s the expertise rather than the structure around it, than the philosophy. When you work with clients, or when I work with clients, I think of things in time frames. So when you’re thinking about college planning, how do you break it down?
Brad Baldridge: Right. So the first major time frame concept is what I would call early stage planning versus late stage planning. So early stage planning is pretty easy to understand. I’ve got a kid in middle school and college is coming someday. Should I be doing something saving or planning in some way, or grade school or, hey, we’re pregnant. Let’s get started on our college savings plan, whatever it might be. But then we have late stage planning, which typically starts sophomore, junior year in high school, I think, and it needs to start earlier in general, and we’ll remind me to get into that. But in high school now, you may have done a great job and have a big pile of money for college, but you still have to do the late stage planning, which is, well, how do we pick the school we’re going to attend, and how do we get accepted at school, and who’s going to do what around test prep and essays and applications? And if we have a big pile of money, how do we use it efficiently? Most people don’t have a pile big enough that you can just write the checks. And now they’re saying, how do we supplement with loans or additional savings? Or is a student going to work? How are we going to be fair among our three kids? What if one goes more expensive than the other? Is that okay? Or do they have to each get the same dollar amounts? And again, there’s lots of ways that you can do this. But then for a lot of families, do I really have to pay 75,000? I’ve heard some people only pay 45,000 at that same school. How does that work? And can I be that person, please? And the answer is maybe. So, understanding need based aid and merit aid, and the whole process is all kind of the late stage stuff again. And that’s where a lot of effort and planning, and you’ve got an 18 year old, so you’re probably in the thick of it, where it’s like, okay. Got, uh, to visit schools and figure it out and what’s the right path?
Jonathan DeYoe: Yeah, I’m not going to let him listen to this because of what you said earlier, he’s going to the Herb Albert School of music. And so the idea of, well, if you just know how to sing and play the guitar, you don’t need a, like, no, go get your degree. Like, go get your degree. He’s going to get his degree for sure, but he’s doing it in sort of music business and music production, so he’s definitely going to learn a lot of stuff. So talk about those two timeframes a little bit more. And actually, I would like to peel back the onion a little bit on the late stage. I heard this from our own college entrance support team at Mike’s kids school that a lot of people go to private school for roughly the same price as a public school because of not necessarily need based aid, but this thing called merit aid. Can you just talk about merit aid?
Brad Baldridge: Sure. Yeah. So there’s two major forms of aid from colleges, and it gets the label of scholarships. I applied to XYZ college, and they gave me a $32,000 scholarship. So let’s say a school costs $65,000 and they gave you a $32,000 scholarship. So now it really doesn’t cost 65. It, huh. Costs 33, and your local state school might cost 28 or 30, and you’re saying, oh, okay, well, that’s pretty much the same. And then for some students, they might put another leadership scholarship, $5,000, or need based scholarship, $5,000, or soccer scholarship, $10,000, or whatever it might be. So in a lot of cases, the private schools know they’re competing with the state schools, and they know what they cost, and they know where they need to be to have a shot at certain kids. In general, they don’t know you specifically, but a lot of colleges spend a lot of time and effort and money playing that game of, well, it’s a really tough sell to say the local state school is 28 and we’re 70. Right? A few people would pay that, but most won’t. But if the state school is 28 and we’re 32, we’ve got some things that are better. We got some things that are worse, too. Right? But there’s some people that would like us $4,000 better than the state school, and they’ll pick us. And then there’s other markets where they say, we don’t have to be that close. We can be at 45 or 50 for this type of student because again, the family can afford to pay it and they’re looking for our name brand and they don’t want to go to the local state school or the student can’t get accepted into the state, you know, into the flagship state school. So here in my state, as an example, there’s University of Wisconsin in Madison, which is our flagship, that is world renowned. But they take the top ten or 15% of the class. You’ve got to have decent test scores and grades. And in the suburbs it’s even more competitive than that because they can’t take all the high academic achievers from all the suburbs of Milwaukee because it would fill them up. And they still have to take kids from all over the state. So it gets pretty competitive from that suburb. So then some of these parents are willing to say, well, I’ll pay to send my kid to Loyola, uh, or to Marquette or to University of Denver or some other school that people have actually heard of versus University of Wisconsin stout, which again, if you live in Wisconsin, you’ve heard of it for sure, but if you’re not a Wisconsinite, you probably haven’t heard of it. And that’s the reality, right? Is some parents, there’s nothing too good for my kid and I will pay it whatever it is. And there’s some parents that say same thing, but there’s limits because we’re not completely wealthy. And then there’s some parents that are like, well, we need to make this work within our budget and we just can’t. There are limits to what we can do. And of course then there’s some parents, well, we really can’t help at all. Somehow our student is going to have to figure it out. Market for all of those people.
Jonathan DeYoe: I want to talk about a couple of preliminaries and one of the ones I want to talk about was the idea of college visits. And I don’t know if you get into that and recommend these kinds of things to kids, but I know when I went to school, I applied to four schools, I got into three, I visited two. I made a decision, right? My son, when he applied, he applied to 15 schools because that’s, I guess the new norm. Like twelve to 15 schools is just what’s required. Again, I go back to the cost of this process. It is insane. I mean, it’s $100 per application. If you have to do a supplemental application for something else because he’s in music, it’s another $50. And then to visit ten schools, you got to go to Boston, you got to go to San Diego, you got to go to Denver, you got to go flying over the country.
Brad Baldridge: Yeah, exactly. So I would call that the far and wide kid. Right? I mean, there’s some kids out there that academics is their thing, or let’s say they’re an athlete and they’re getting interest all over the country. Or again, they’re a kid that wants to study someplace far away. Right. My daughter, who’s in high school currently has already told us she’s not going to any school in Milwaukee area. Case closed. Not happening. And that’s very typical. Right. And some students are just the opposite. Right. Is I really want to be close to home. I’m not going to go much farther than a two hour drive, let’s say, or I really want to live at home and go to college. So there’s all types. And I think that’s part of the challenge is most families need to start working on that sooner than they realize in order to work that out.
Jonathan DeYoe: How important are those college visits, do you think?
Brad Baldridge: My opinion is they’re very important. Okay. My oldest academics was his thing. He chose to go to a private high school and did well. And now he’s off at a relatively competitive college and doing well. My second son, he wanted to stay relatively close to home, kind of everything I learned with my oldest didn’t apply to my next. My oldest, we did visit sophomore year of high school. We started because I’m in the business, and I understand that you’re going to visit ten schools, and you can either do those, visit ten schools over a year and a half, or you can do it all in ten weeks. But either way, make your life a little easier and do it spread out a little bit again. Ten might not be the right number for you. Some families, the right number is three schools, but until you figure it out again, and that’s part of the process. Right. Well, my son, who’s wanted to stay relatively local, there wasn’t as much to look at, and it was a little easier process, and we didn’t need the head start. But now with my daughter, who said, I’m not going anywhere in town, kind of the same thing. Um, we did a sophomore visit with her this past spring, and it was a low key, low pressure, and we did a local school. So she’s already told us she’s not going to that school. And I said, I don’t care. It’s convenient. We’re going to go visit it. You’re going to learn about some possible majors, you’re thinking about their physical therapy isn’t any different than physical therapy in St. Louis. It’s just we don’t have to drive to St. Louis to learn. So let’s go here on a Sunday afternoon. It’s a nice day. We’ll stay as long as you want to, and we’ll leave when you want to. But you need to see what a college looks like because I’ve been on lots of college campuses. I have two older boys. But she didn’t go along. So when I asked her, do you want a big school or a small school? She’s like, well, I don’t know. What does a big school look like? What does a small school look like? And that’s part of the process, right? It’s getting them out there and letting them see some things and getting some feedback of, I like this, I don’t like that. This is a deal killer. But it’s like this. I’m not interested. Right. I’ve had parents tell me we took our student on campus and they wouldn’t even get out of the car. We drove onto campus. They said, no, not for me. Let’s go home. I would have made them get out of the car and do the tour anyway. Once you’ve invested that much time and effort. They didn’t. And that could have been avoided by doing some virtual work ahead of time where you can get a basic tour and see some of the basics just by going to the website and watching some of the videos.
Jonathan DeYoe: Yeah.
Brad Baldridge: So when we talk about visits, they don’t all have to be live in person, fly to the campus? Some of them should be. And how much of that you have to do really depends on your kid and what’s important. You have a music person, so you can probably relate to this. I had a student that wanted to learn trumpet in college, and he was interested in jazz. So one of his big projects was to figure out all the trumpet instructors. Were they classically trained or jazz trained? He didn’t want to try and learn jazz from a classically trained trumpet instructor. Sure. And it turned out really good for him because once he was on campus, jazz musicians on campus had quartets and opportunities, and they were out in the clubs playing and going to weddings and doing all kinds of stuff. And then when they needed a sub, they’d suck him in. So he got some experience. He got into the crowd by picking the right school, whereas I didn’t think of that, but he thought of it. That’s where when you start delving into this, when you go on a college visit, and they say, they keep showing me this fantastic stadiums that they have. I don’t care about football, so why can we go look at where the biology students study? Because I’m not interested, uh, in. Yeah.
Jonathan DeYoe: Know what you want going in, right?
Brad Baldridge: Yeah.
Jonathan DeYoe: Know what you want. Another preliminary question is mean post pandemic and post the college gate scandal a couple, three years ago, SATs acts. It was a huge argument in my house about, do we do it? Do we not do it? We ended up doing it. We ended up not submitting it. All the places. What do you think about, what’s your take on where that’s going?
Brad Baldridge: Yeah, I think for some families, it’s still a good route to go. Some colleges are now reinstating the desire for it. A lot of other colleges essentially didn’t. They can go test optional, because in the end, they didn’t care what the score was going to be anyway, because if you could have decent numbers elsewhere, they’d have let you in anyway. There’s a lot of schools where they admit 80% of the students or 90% of the students, where, again, if you show any aptitude at all, whether it’s a good high school transcript or a good test score or good extracurriculars or any one thing, any reason for them to say yes is all they’re looking for. So you don’t need to have a test score, because if you have good grades now, conversely, if you don’t have good grades, maybe you need the test score, right. If you barely squeaked your way out of college or out of high school, maybe you got to prove to the college by giving a decent test score that even though your grades are poor, you did learn again, because a lot of kids can get through high school now and really, literally not know how to read and not know how to do basic math. And when they go to college, their first classes will be what they should have learned in high school. They will take math 98 and English 98, where they learn the basics that anybody that paid attention in high school would not have to take, because, again, that’s where you learn those basics.
Jonathan DeYoe: Right? So the only other, uh, sort of early thing to think about or the prereq kind of thing to think about, your testing, your college visits, every family fills out this FAFSA, and I realize that this year, the FAFSA is changing entirely from last year to this year. And I know that we don’t have all the data on it yet, but can you just kind of walk us through what some of the changes are.
Brad Baldridge: Going to be this time, right? Yeah. So the government’s put through an effort to make the FAFSA simpler. So it’s going from like 100 and some questions to like 36 questions.
Jonathan DeYoe: So first of all, thank you for that. That’s good.
Brad Baldridge: It is. Then it isn’t because the colleges now are going to get a lot less data. So now they’re probably going to ask for another form because if all I get is your name and some of the very basics, you’d be like, okay, well, if I’m going to give you a $20,000 scholarship, I’d like a little more information to make sure I’m giving it to the right families. I think that’s a slippery slope. But again, I could be wrong. I don’t know for sure where it’s going. But again, they’re simplifying it. They’re making it easier to get at least the basics done. They’re being more generous for the Pell grants and some of the other things. So it’s a net benefit, especially for the lower income families, where the pell will now be predictable and all that type of thing. But what it also does is it’s a planning opportunity now where you essentially look at your income and if you’re under a certain line, you automatically get a maximum pell. And if you’re under another line, you automatically get a minimum pell. But it looks back two years. So the first class that are the guinea pigs of this system are the, I guess we’re in the summertime now. So they’re going to be seniors this fall. So the class of 20, high school, class of 2024 is the first class that is going to go through this system and they’re going to do it based on 2022 taxes. So if your 2022 taxes is $50 over that line where you get a maximum pell, that’s pretty unfortunate because had you known, you probably could have done something to get your income down by $50, give something to charity or pay your health care a certain way or whatever, right? I mean, there’s things you can do. So what does that mean for people in the real world? Well, that means you need to do this planning when you have a high school sophomore or freshman, understand what the rules are. And it used to be, it didn’t matter what you did as far as your retirement contributions. Now it can make a big difference because in the past they always added back your retirement contributions. Now they don’t add them back because they eliminated the question that says, how much did you put into retirement? So they don’t know what you put into retirement if it doesn’t show up on your tax return. And for most people, it doesn’t show up on your tax return. Small business owners and self employed, it may show up on your tax return. So they’re at, ah, a disadvantage because for them, it may get added back in because they’ll be able to see it. But for most people, if you put more in your retirement or you pay for health care or HSA or those types of things, it just makes your w two smaller, and they never see your w two s. So whatever you transfer to, your 1040 is what works. So people that understand taxes, there’s things you can do and probably should do, and that’s just the reality of college. They keep adding these new programs and different ways of doing things. So we’re going to help this group with this idea, we’re going to help that group with that idea and so forth and so on. So what it really boils down to now is you got to figure out what groups do I belong to or what groups could I belong to? Because for people like this, they’ve got this program, and for people like that, they’ve got that program, and I’m close to some of these, but if I change things a little bit, I might qualify for this or that. Is it worth it to pursue that?
Jonathan DeYoe: Is there any hope for a, ah, parent that’s filling out the FAFSA, uh, to understand this?
Brad Baldridge: Three.
Jonathan DeYoe: So, I’m a financial advisor. I’ve done this for 25 years. I would not have known that I needed to think about this two years ago for my son. No one could have known because the rule just changed.
Brad Baldridge: Right.
Jonathan DeYoe: But even without the rule change, I don’t really know how all these pieces fit together. There’s no education advisors get, there’s no expertise in this unless the advisor seeks out the ability to offer this kind of extra support. And you sought it out, and so are you up to speed on all the changes as they come down? Are you reading regulations? Are you commenting? Do Congress people call you and say, hey, what do your families think about this?
Brad Baldridge: Not at that level, no. Again, uh, and this stuff isn’t secret. It’s a government programs, but somebody’s got to wade through the stuff. There’s a few experts out there and certainly all the financial aid offices. So I’d go to the trainings that a college financial aid office would go to to learn what’s going on with these changes, and I do have a newsletter and a podcast and all these changes I’m putting out there, so that’s not a secret. And then getting back to your original question of is there any hope? Well, I have a course, and, um, the course is going to be updated with all these changes. So for people that want to spend the. Put the time and effort in, you can learn it. It’s not rocket science per se, but it does take some time. So I think that’s the reality for most families. I could change my own oil. I just don’t want to. I could do my own taxes. I just don’t want to. Or, uh, I’m kind of weird that way. I enjoy doing my own taxes. I buy the software every year and I play with it, and then I learn how it works, and I optimize it and figure out what to do with my retirement plan each year and figure out if I should be in a roth or not. So there’s those closet financial planners or closet people that enjoy the stuff. And more power to you. You can sign up for my course, learn what you need to learn. And again, your son as an example, your life’s a little more complex. You’re talking about private schools all over the country compared to, well, my son’s just going to go to the local tech school, and he’s going to sign up for automotive repair, and in 18 months, he’s going to graduate with a certificate and go to work. That’s a low cost option. There’s no dorm. It’s just a simpler process than again, I’m, uh, shopping around, looking at state schools and private schools within state and out of state. And maybe you’ve got twins. So there’s the basics, and then there’s all the things that make life more complicated. Another great example is if you get an inheritance while college is going on, some inheritance comes tax free. Some of it comes with an income tax tied to it. If you inherit an IRA or an annuity, be, be careful what you do with that, because that changes your taxes. And for a lot of families, they would have no idea that, oh, well, I inherited an annuity. I told them to cut me the check and send it to me, and then I had to put it on my taxes, and then that went on my fafsA, and then that blew me out of the water.
Jonathan DeYoe: Yes.
Brad Baldridge: Whoops. I had another option. I just didn’t bother to figure out, uh, which one was better.
Jonathan DeYoe: All these things fit together.
Brad Baldridge: Exactly. If you have got an athlete, life gets more complicated. If you have a musician where they’re going to do auditions and scholarships are based on current skill level, so musicians and performing artists of various sorts, it’s a different process. If your family owns a business and that type of thing, you have control over some of your statistics, more so than if you’re not a business owner. And you can set up tuition reimbursement plans and you can hire the kids in the business, and there’s things you can do.
Jonathan DeYoe: Give us a quick thumbnail sketch of the time commitment for the course, and we’ll put a link in the notes.
Brad Baldridge: Right. The time for the course would probably be 10 hours ish. Again, it’s going to save you time totally if you’re going to do it yourself, for sure, because it’ll teach you what you need to know and help you again if you don’t. Here’s some questions to ask, and if you answer no to these three questions, then don’t worry about this whole idea. Right. Do you have an athlete? No. Okay, well, then don’t learn about athletic stuff. That’s simple. But will you qualify for need based aid? I don’t know. Well, here’s how you figure that out. And once you have this answer, if the answer is no, need based aid is not something I need to worry about. Well, then don’t worry about it. What is your plan around scholarships? You could spend hours and hours and hours learning about scholarships only to realize that most of them are a waste of time for your situation.
Jonathan DeYoe: I’m curious because there are people that we work with as advisors that we start doing this when they’re pregnant or when they’re one or two years old and their savings program is robust, they’ve got plenty of money. College is going to be covered. Do you ever then see people get lazy in the second part of the planning and like, okay, now you’re in. Let’s look at these scholarships. And they’re just like, we have the money. We’re, uh, tired. Let’s not look at these scholarships. I think I see that all the time.
Brad Baldridge: For sure. And I think most financial advisors actually kind of ferment that a little bit where they say, okay, well, you want to go to Harvard, it’s crazy expensive. Save 2000 a month, and you’ll have this big pile of money when we get there. And then you write the check. It’s not an efficient way to do it because you realize if your kids are rocket scientists and can get into Harvard, they could go to some of these other schools and get large merit scholarships so you don’t have to pay 85,000 for Harvard. You could pay 45,000 for case western or 35,000 for Loyola. Or you could get a free ride at this little school that nobody’s heard of because you would be the presidential scholar. There’s three of them every year that don’t pay anything. And you’re the type of kid that wins that. For some kids, being the top dog at a medium school might appeal to them. Other kids, it’s like, well, I’m going to go where all my peers are smarter than me because that’ll drive me to work hard, and there’s no right or wrong again. But most people don’t even think about this stuff because they run out of time.
Jonathan DeYoe: So, uh, there’s something I do on every one of the episodes, and we try to make it really simple. So I want to pretend for a second that you’ve got parents of a five year old come to you, and they’re just starting this whole college planning process. What is the first thing that you recommend that those parents do that will reduce their future students issues around college? Entrance and college and paying for college?
Brad Baldridge: Tell them if education is important to them. M then they ought to walk the walk and not just talk the talk, because I can’t tell you how often I’ll meet a parent of a 17 year old. They earn $200,000 a year, let’s say, and they can’t afford to save any money for college. Haven’t been able to afford any money for college. They’re walking into it and saying, I don’t know how we’re going to cover this. And then the next person I talk to earns $100,000, and they’ve got a little bit saved for college. And they say, that guy, if I told them about the guy that was just here, that earns twice as much and can’t afford to save for college, they’re going to say, if they had an extra $100,000, it’d be so easy. But the reality is most people learn how to spend everything they earn before they learn how to save it. And college is a great example of it will haunt you if you don’t factor it in. Ah, because people will buy the bigger house, and they’ll sign the kids up for more sports that are more expensive, and they’ll, uh, take bigger, fancier family vacations. And then when they get to college, they’ll be like, oh, maybe we could have done something different.
Jonathan DeYoe: Have you heard the comment from a parent who says, oh, yeah, we’re going to take this big six week vacation for education for the kids, and they’re not saving for college. Have you heard that?
Brad Baldridge: I’ve heard that, yeah. Right. Another great one is, well, we’re spending a lot of money on this private high school, and one of the things it’s going to do is it’s going to save money on college. And that is a fallacy.
Jonathan DeYoe: Yeah, I’ve lived that fallacy completely. Like, absolutely the case.
Brad Baldridge: What happens is the private high schools track all the scholarships their kids get at all the various colleges, and they add it all up and they say $6 million in scholarships this year. The public schools might also have 6 million in scholarships, but nobody there has the time to add it all up so they don’t bother. So the top kids at the private school are getting the similar scholarships as the top kids at the public and private. I don’t want to just said there, but the top kids at the public schools and the top kids at the private schools that look very similar are getting similar scholarships. The private school didn’t magically generate a bunch of scholarships. Now, some families say, but that school kicked my kids butt and they did a lot more than they would have done at the laxadaisical public school. And that’s true. But don’t try and tell me that it’s going to save you money in the long run by paying the tuition. All it’s going to do is have you pay more tuition in your lifetime.
Jonathan DeYoe: Yeah, it’s actually more years of college type tuition. Like private high school is kind of.
Brad Baldridge: Crazy, but there’s nothing wrong with it. But just don’t believe that.
Jonathan DeYoe: Right?
Brad Baldridge: Because I spent $75,000 on high school, I’m going to get $75,000 less on college. That’s probably not true.
Jonathan DeYoe: And I just want to put this in there. It’s right for that. The huge, massive, and I’m in Berkeley, California, there’s a massive public high school. Not right for both my kids. It’s right for some kids and not right for other kids. And that’s one of the issues.
Brad Baldridge: Right?
Jonathan DeYoe: For sure.
Brad Baldridge: And that’s my path, too. My oldest went to look at the private high school and he wanted to do it. My next one, who’s 18 months behind and only one year in school behind, looked at how hard his brother was working. He said, I want nothing to do with that. Why would I leave my friends and go there and do homework all the time? I’ll stay right where I’m at and that was the right path for him.
Jonathan DeYoe: Yeah. Every kid. Every kid’s different. So just before we wrap up, I want to kind of come back to the personal side. If you could know one truth about any single life or question about your future, what question would you ask if you knew you were going to get the right answer or get the true answer?
Brad Baldridge: Wow. Yeah. All kinds of decisions. I’m in the process right now of expanding my business. Am I doing it the right way? And, uh, thinking about buying a building. So that immediately came to mind. But it’s like, well, would I waste it on that?
Jonathan DeYoe: Exactly.
Brad Baldridge: I feel like I’d get a wish. How do you optimize your wish, so to speak? So I don’t know what I would.
Jonathan DeYoe: You’re such an engineer. How do I optimize this?
Brad Baldridge: You’re such an engineer.
Jonathan DeYoe: I need a spreadsheet for this.
Brad Baldridge: I love it. Yeah, go. You’re exactly right. There’s got to be a better question. Higher value to me. I just don’t know what it is. Off the top of my head. I don’t think about it.
Jonathan DeYoe: Well, I don’t know. So when you come up with the answer, ping me a note, and I’ll put it in the notes. You don’t get a pass, but we’ll give you some time.
Brad Baldridge: Yeah. And like I said, if I had to, off the top of my head right now, it would be, again, is what I’m doing building out the stuff the right path? Will people use it and appreciate it, or should I be focusing in something different? Right. But that’s, again, kind of a short term thing. I’ll build it, and I’ll find out pretty quickly that it’s either right or wrong, and then I’ll build it again.
Jonathan DeYoe: I think that, uh, you answered that question earlier a little bit when you said I started doing this thing, and I liked doing it. I was good at it. I liked it and I was good at it. I think if your heart’s in it, man, you’re doing the right thing. Second quick thing here, sort of, uh, just before we app, is there anything people don’t know about you that you really want them to exist?
Brad Baldridge: I mean, I think that’s the biggest challenge. Know, what do you put in Google to find someone that’s going to help you figure out how to plan and pay for college? My pipes are spraying all over the basement. What do I do? Well, I call a plumber. I know who fixes those problems, who fixes my college problems again, because we’re a new profession. People don’t automatically assume that don’t know what to search for, don’t know how to find us, don’t even know that they should find us because they know they have the problem, but they’ve never heard of anyone that solves these problems. So they don’t even try.
Jonathan DeYoe: So Brad, what do they search for? What is that they should search for?
Brad Baldridge: To find? Search? I think they just stumble through it because that’s the way they did it when they were young, 1020 years ago. Everybody just did the best they could. And today, 90% of the people are still doing the best they can. 10% have realized that, oh, I can hire someone to help me or take a course or study online information or read a couple of books or there’s lots of ways to get the information. But again, I think a big chunk of the population doesn’t even know that there’s something out there. You want to keep something a secret, put it in a book.
Jonathan DeYoe: This isn’t necessarily for your services specifically, but we went through this process and we trusted our private high school to lead us in the right path and do the right thing and support us in the process. And I got to tell you, they weren’t awesome. If I had it to do over again, I would have gone to somebody privately and gotten their support. So it was one on one with my son and they could have walked through it. It would have saved enormous headaches in my household. Battles like we’re talking verbal, screaming, yelling, battles about the essay writing and the application process. And it would have saved us a lot of hassle to work with somebody else that went through the process with us. So I recommend it. Brad, thanks for coming on. We’ll put all this stuff in the notes and then we’ll be live, probably, I think said mid July.
Brad Baldridge: All right, sounds great. Thanks for having me.
Jonathan DeYoe: All right, thanks, Brad.