College Planning – Brad Baldridge

Brad Baldridge:
Well, if I want to be x, how can I get there? And is there a path that gets you there without college and you want to take it? Great. I want to be a rock star. Well, you definitely do not have to go to college to study guitar to become a rock star. Matter of fact, you probably shouldn’t based on what we’ve seen. But if you say, I want to be an elementary ed teacher, that’s a tough one to get to without going through college or a nurse or an engineer. And again, engineers at General Electric, 50 years ago, some of them did start by sweeping the floor, and then they got into the drafting department, and then they realized that they were smart guys and they could do the work. They gave them the title of engineer, and then they were an engineer.

Dana Robinson:
Exit Plan is a podcast for business owners and those who want to be business owners. I’m always in search of the lesser known stories of entrepreneurship. In the exit Plan podcast, you’ll hear stories from startup to sale and hear from the professionals who helped business owners achieve their exit. Hosted by me, author and private equity manager Dana Robinson. Along with my co hosts and guests, you’ll hear real stories, tips and tools that will help you plan for the exit you want, whether you are still working at a day job or running a business. Let’s get started with this episode of the Exit Plan podcast. Hey everybody, it’s Dana Robinson coming to you with the Exit Plan podcast. We typically talk about entrepreneurial journeys, and Brad is consultant that helps people tame the high cost of college.

Dana Robinson:
So, Brad, I’m going to forewarn you that I’m going to try and get your own entrepreneurial journey about your business as part of the package here. Because I want to. I’m always interested in the two things from people. One is, how did you get to do what you’re doing? And let’s get a little bit about you building this business that you have, how you got there, because I think people always learn from people that are somewhere ahead of them in their own entrepreneurial journey. But then I want to know all that I can learn from you on behalf of my guests about what they can do to tame the high cost of college. So, Brad, thanks for coming on.

Brad Baldridge:
Thanks for having me.

Dana Robinson:
So, Brad Baldrich is a consultant. Just a little forewarning that if you’re itching in this podcast to hear very specific investment advice, you’re not going to get it. Because, of course, those of us in the investment advising world have all kinds of compliance with things that we either need to say or you need to sign. But in terms of the journey, I’m going to start by just telling Brad something he doesn’t really know. And that is that. A really challenging part of my own entrepreneurial journey was the point at which my daughter was 16 and I started looking at college. And I always thought, you know, I’m going to cash out of one of these things I’m working on and I’m going to have plenty of money. I’m not even going to worry about paying for college.

Dana Robinson:
I’ll just write a check. I’m paying cash. And she turned 16. We went and looked at colleges and I was fortunate enough to be introduced to someone who helped my daughter choose college. And he had an advisor that was very similar to you, Brad, that he introduced me to. And she was a financial advisor, had some, you know, very wise advice about, about choosing college, about paying for college, and also was financial advisor. So when I had your booking agent reach out, I was like, you know what? This is something I needed, whatever it was more than a decade ago. And I’d love to get some advice for whoever is listening to this podcast about thinking through, what do you do when you’re running your business and you’re thinking, oh, I got that college bill to pay for.

Dana Robinson:
I haven’t planned ahead enough. How can I plan ahead if I have time? So I’m excited to learn whatever we can from you today. Brad, let’s just start with this is an interesting little niche business that you’re in. You’ve been in it for a long time. How did you land in this? What was your own journey to get here?

Brad Baldridge:
Yeah, so, I mean, we’ll try and keep it reasonably brief, but I started with an engineering degree.

Dana Robinson:
All right.

Brad Baldridge:
And realized that I didn’t like the nine to five grind. And I got involved in personal finance, and I got involved in rental real estate, and I got involved in all kinds of things. Ultimately got licensed and became a financial advisor. And I left the engineering world behind back in about 95. And then about ten or 15 years into financial advising, I stumbled into college planning. And what I realized with college planning is it was becoming more and more expensive and becoming a much bigger part of financial plans in general.

Dana Robinson:
Yeah.

Brad Baldridge:
Where, you know, most people, you know, I used to have, you know, 20 years ago, people would say, it doesn’t matter what it costs, we’ll figure it out. We’ll just pay for it. People don’t say that anymore, at least if they understand what the prices are. Most people can’t just figure it out potentially. Right. So you have to be a little more careful so that, you know, the quickly rising prices along with all the additional complexity every time they create a program, this is going to help this group of people. This is going to help that group of people. All of a sudden, it gets more and more complex.

Brad Baldridge:
Of which groups do I fit into and how does this all come together? So I started giving some basic presentations on college, and people listened, so I gave more. And then next thing I know, I became a specialist in it. And then from there, I really drilled down, launched a podcast. I’m building some courses now and just really kind of jumped in with both feet. I’m still in the financial advising realm, but now most of the people I’m working with, it’s either we’re going to figure out college and then retire, or maybe we’re going to retire in college at the same time. Or as you mentioned, maybe you’re an entrepreneur and college wasn’t part of the plan originally, or you made some bad assumptions when you started and how do I recover all that type of stuff? So I enjoy college. It’s relatively complex, relatively challenging, and they’re going to add a lot of value. So it’s kind of scratches a number of itches for me.

Dana Robinson:
Yeah. So if somebody’s got a typical financial advisor that’s kind of their person who’s buying and, you know, the public securities kind of a thing, you’re capable of doing that, but you’ve, they probably aren’t going to get the knowledge from that advisor that they’re going to get from you. So you typically end up being kind of like a Perry advisor. Like, kind of, they’ve got their person and you’re like, all right, I’m stepping into an advisory role here. I’m going to advise you around the ways and tools that you can manage the cost of college. Or do you end up with a lot of clients that really come to you and just say, like, I actually don’t have a financial advisor. Let’s just kind of do some overall work on my portfolio and all that?

Brad Baldridge:
Yeah. I mean, so most of the time, college is a piece of the puzzle. But I do have people that come to me with help for college, and then ultimately they also need a financial advisor, and we do, you know, do the rest of it as well. But sometimes the financial advisor is the one that brought me in, and I’m just kind of his specialist because he doesn’t want to learn college. He’s already got a specialty in Google stock options or something like that.

Dana Robinson:
Right.

Brad Baldridge:
But there’s a, you know, someone that has Google stock options and college at the same time. Now he needs both of us. The odds of finding the person that knows both of those things really well is, you know, very unlikely. So we just team up. So I work with advisors in some situations. I replace advisors in other situations. I mean, you know, as in many professions or there’s good advisors and bad advisors, and as I work with families, I can pretty quickly figure that out of, well, your advisor is not giving you quality advice on any area, or they’re not giving you good advice on college or whatever. Or again, a lot of times, people at that juncture, maybe that’s the first time they really need an advisor.

Brad Baldridge:
So they don’t have one yet. They can do it themselves. When life was simple, and then all of a sudden, now they’re. The 20 years into their career and their kids have grown and their income is climbing and they realize they’ve got college problems and tax problems and. Or their entrepreneurship is coming through. So their income. It was easy to do your taxes when you had no income, but now that life is good and all of a sudden you’re saying, oh, my God, taxes really hurt. How do I deal with college on top of that? And are there tax advantages, ways that I can deal with college, you know, etc.

Brad Baldridge:
Etc. So, yeah, so, yeah, so they come in all stripes, but I think the most of the time, it’s some college pieces in there. Yeah, I mean, that’s where I put all my effort as far as marketing and that kind of stuff. So most people that find me find me because of college.

Dana Robinson:
Yeah. I’ll express the fact that over my course of being around advisors and being around people who have money that they advise on, there’s sort of a pattern of, like, the people want to have the one person because they somehow feel like that person will then understand everything about their estate. But to your point, I really think that the future is to those who understand that they need to allocate to advisors independently based on that advisor specialty, because I really don’t think that I’ve ever met an advisor that’s good about everything. I know an advisor that manages hundreds of millions of dollars and only invests in alternatives. So you wouldn’t give that person your portfolio and say, manage my Google stock options or whatever. You say, hey, here’s x amount of my portfolio. I’d like this allocated across your alternative investments. And they’re an advisor that only does that.

Dana Robinson:
So I’m an increasing fan of specialized investment advisors and anyone who wants to say like, just bring more in, makes me wonder why. Why do you just want more? It’s because you just want more base fees on which to say, here’s how I’m going to survive, instead of saying what do you really know about a lot about and how can you give me, you know, an advantage based on that knowledge that you have that I don’t have. And. And the generalist, they leave me suspicious, I guess, of how you can be a generalist in a world where I know that the specialists generally win.

Brad Baldridge:
Right? Absolutely. And I think to be fair, I think you could specialize in a few things, but you can’t specialize in everything. But if you think about a number of professions have already gone there. Whenever you say something like, I need a lawyer who knows about.

Dana Robinson:
Yes, right.

Brad Baldridge:
Not only do they have to be a lawyer, but they have to be a specialist who knows about this particular thing or there’s this weird thing going on. I need a plumber that can help me with. I just don’t need any plumber. I need a plumber that has the specialty in whatever the problem is.

Dana Robinson:
Absolutely.

Brad Baldridge:
Sometimes you can just say, I just need a plumber. Any plumber is going to be able to, you know, fix that faucet, but I need a plumber who, you know, when you have a special project, right. Who understands, you know, I don’t know, disability and Ada rules or whatever. So there’s all kinds of different. But that’s kind of where financial advising has gone now. Where.

Dana Robinson:
Yeah.

Brad Baldridge:
You know, sometimes you need that specialist and they can add a lot of value more quickly because they, they’re up to speed already on some of the core competencies that you need to.

Dana Robinson:
Absolutely. Yeah. So I love that. So talk to me about what you do, Brad. I put a daughter through college, luckily with a lot of great advisors that made it more affordable. She ended up going to Lewis and Clark for all four years. But it took some strategizing with a college planner who helped pick a college that would love her and therefore invite her there with some great economics and then some advising on the economics so that I could manage my share of the economics of what was left. And it was, you know, it was a challenging, anxiety ridden season, the year or two leading up to being obligated to help my daughter and for her being obligated too to this very expensive investment.

Dana Robinson:
So pretend I don’t know anything. I walk in and I got a 1516 year old. I know you want me when my kid is two to start planning, but I haven’t. So I’m an entrepreneur. We’re not going to plan 18 years ahead of time. I walk in, I got a couple of years. Can you help?

Brad Baldridge:
Absolutely. I mean, what we’re talking about is the difference between early stage planning and late stage planning. So early stage planning is I’ve got a four year old, a two year old, or, hey, we’re pregnant, let’s start saving for college. That all works. Late stages. Okay, now we’re kind of there. We’re actually have to visit colleges. We have to fill out financial aid forms.

Brad Baldridge:
You know, we have to figure out if the pot of money that we did save early stage is a big enough pot. How are we going to be fair among these three kids with different interests and different ages and all that, you know, so it gets more complicated. Late stage, and that’s kind of my specialty. I tend to work with late stage, you know, kids in high school. Not that I couldn’t help you set up a savings plan and that type of stuff, but it’s also the how do we pick a school that’s a good fit and all that type of stuff. So that’s, I guess, point number one is there’s that early stage and late stage. Then there’s also advisors that help students figure out what they want to be when they grow up. They’ll help you write essays, they’ll help you get into Harvard.

Brad Baldridge:
They’ll help you, you know, choose the right coursework in high school. They’ll do a lot of things that help the student. I don’t help students hardly at all. I coach parents, and I coach a parent on how to help their student, or I coach a parent on how to hire that advisor that will help their student. But I don’t do test prep. I don’t do. I don’t read essays. I can’t add value there.

Brad Baldridge:
I don’t get involved in that stuff. There are lots of people that do that, but I work with parents on how does the finances work. So another thing that kind of mentioned that we need to kind of separate, you alluded to it in that you found a school that gave a good basket of aid, that helped bring the cost down. And that’s one part of the college planning process. There’s kind of two steps to it. One is you find a school at a good price, and more specifically, a school at a good net price. As an example, Stanford is about up 90,000 per year. That’s all in tuition, room and board, books, fees, beer and pizza, the whole cost.

Brad Baldridge:
And that 90,000 is not what everybody pays. Certainly the uber wealthy pay that. But if you show any sort of need at all. So if you’re going to get aid, and they actually put out a press release that said if your income is 150,000 or less, then they’re going to help you pay. If it’s under 100,000, they will cover tuition and room and board. Your cost will essentially be zero. If you’re between 100 and 150, you may have to pay some towards room and board. So what that essentially means is Stanford would be your low cost option, most likely because that’s going to be lower than even your local state schools.

Brad Baldridge:
A lot of people say things like, I can’t afford to go to Stanford, and that’s blatantly false for anybody with relatively low income. Now, if your income is a million, they’re going to say, you don’t need any money, and therefore we’re going to charge you full price. And, you know, that’s an entrepreneurial challenge, right? Of, we lived on nothing then our ship came in two years before college started. And now all of a sudden we, you know, we didn’t have the opportunity to save for college for 20 years. We have the opportunity to save for college one year or two years. And they’re saying, you know, based on our $400,000 of income that we’ve had for three years, I should be able to afford to pay 90,000 a year times two kids, times four years. You know, you know, they think I have a half million dollars laying around somewhere, and we don’t because, you know, we just finally made it happen. So I think that is a challenge with entrepreneurs, but that’s kind of the lay of the land.

Brad Baldridge:
The good thing about the entrepreneurs is you, you know, the old joke of the accountant of what was my income last year? What do you want it to be?

Dana Robinson:
I’ll tell you a real story. My daughter got into an east coast school where they were pretty sophisticated about entrepreneurs because they probably have lots of entrepreneurial families putting their kids through school and in their financial aid evaluation, same similar policy to Stanford, except that they took out any losses in your businesses or in real estate. Absolutely, which I can understand in real estate are phantom. But their policy was because losses could be carried forward and moved around. As we know, there are plenty of very wealthy people that have been in real estate that have a couple of bad years, cover a decade of losses or of gains by offsetting that against some catastrophic year which was disappointing because in the non real estate part of entrepreneurship, when you’ve taken some losses, they’re usually real. He really lost the money. So when somebody school says, we don’t credit you with your losses, then that takes you out of the financial aid program entirely. In those schools and other schools that we applied to were like, no, we’ll just take what’s on your tax returns.

Dana Robinson:
And so it wasn’t a great year the year before my daughter went to school, and that might have helped a little bit, but most of her financial aid offer was because they liked her. Right. It was really a, we know you fit. We’ve got all these different scholarships we put into a basket and we say, here you have these. And then, you know, whatever out of a $50,000 a year package, four or 5000 was need based. And a credit to me not having good income the year or two before she went to college and that each year went up because my income continued to go up. So my, how much I had to pay went up as well, which was fair and all of that. Yeah.

Dana Robinson:
So, you know, there’s a true story, but is this kind of thing you see as well in your work?

Brad Baldridge:
Oh, absolutely right. I had, I mean, just this year I had a graduating senior who’s, you know, in that family. Dad was involved in real estate and it was just the opposite of what you mentioned. He received a large real estate holding that had no cash associated with it, but it generated a hundred thousand dollars of income onto his tax return.

Dana Robinson:
Yes.

Brad Baldridge:
Which messed up his financial aid. And he literally said, I had, you know, I had to borrow money in order to pay the taxes on that hundred thousand because there was no cash in the, in the process. And, you know, longer term he believes that, you know, get that money back and then some. But in the short term, it messed up his income for financial aid and it hurt because he had to cut a check for a large tax bill and there was no cash associated with that either. So it was a bad time. You know, just, again, just bad timing. So a lot of times, if, you know, for entrepreneurs especially, I think freshman year in high school is when you want to start really thinking about it so you can get the timing to be better. If you can, if you have control over it, a lot of times you don’t.

Brad Baldridge:
Sometimes it could be, well, should I realize this loss, you know, during my freshman year of high school or my sophomore year of high school or should I not realize it at all? Well, it depends. And it depends on what schools you’re looking at and what your income is, but there is potentially the right answer. It just, you really got to work it out and figure it out.

Dana Robinson:
Yeah, let’s just chase the one that you mentioned, because it is one of those things that sometimes we do have some say. So I’ve been involved with a lot of businesses where I’m a partner in a partnership tax structure that’s an S corp or a regular LLC partnership. And that partnership may have to give me a k one with positive amount of money and not distribute any money because they’re carrying the cash flow into the business for growth. And they just warn the partners, hey, no distributions this year or minimal tax distributions this year, but you’re going to get a big k one. Sorry, when that happens, if there’s any way to influence the timing of that, you’re saying that could actually be pretty important because a lot of schools will impute to you the k one as income, even if it wasn’t distributed income.

Brad Baldridge:
Absolutely. I mean, if the k one is right. So financial aid and the financial aid process is not as sophisticated as taxes. Right. I mean, the way the process works, there’s not a bunch of lawyers fighting about it. There’s not case law based on, you know, so and so sued the IR’s about this, and they won. Therefore, now we get to do it this way instead of that way. None of that happens around financial aid in the end.

Brad Baldridge:
Most of the time it’s the college says this is way we feel and this is the way we’re going to do it. And if you don’t like it, go somewhere else. Now, that, and that certainly is true for like a Stanford, when we talk about, you know, if your income is below this, and you mentioned they’re going to add this back in or they’re not going to add this back in or whatever, that’s completely the college’s decision. So colleges that do see a lot of entrepreneurs and wealthy and wonky tax returns and, you know, people where they know they’re paying good money to get the tax return to be whatever they want it to be, if you go to that type of school where they see that a lot, they’re going to have perhaps more sophisticated people that will watch out for that kind of stuff, whereas your run of the middle state school is just going to say, what was your income on your taxes? And they’ll transfer it over and they’ll plug and chuggest and they won’t have any, you know, any concerns. And that’s all true with the college’s money. Now, when you talk about federal money, the Pell Grant, the student loans, and that type of stuff, all the colleges have to follow the federal rules. So now, again, another different, different game, different process. But, you know, if you can get your AGI below what I call the magic number as an example, with these new rules, you automatically get a maximum pell grant, and they don’t look at your assets at all.

Brad Baldridge:
So again, the entrepreneur that can say, well, let’s put my bonuses here and here instead of there and there, and then I’ll get under the magic number. Okay, well, let’s do that because it will work. Now, again, will it pay for college? No, but it might give you another 7300 Pell grant that you didn’t have otherwise.

Dana Robinson:
Dana Robinson here. Quick plug for my book, the King’s Flyswatter. You can see it here behind me. If you’re watching this, I’ve got it in my hand, and it’s a beautiful hardcover book, printed to make it giftable, something that you can share with a family member buy as a gift. So this latest book, it’s a fable about a person who has a really crappy job. Let’s just start there. This is a book that most people can relate to because we’ve all had crappy jobs. This is the story of Ubar, a servant in the court of a babylonian king who masters his boring, monotonous job and then learns to listen to the king, hearing him rule the kingdom while quietly swatting flies behind a cane.

Dana Robinson:
Eventually, Ubar becomes the wisest and most successful man in the kingdom. The story is fun, and it’s easy to read, but it’s not mythology. It’s my story. And as I shared the idea with colleagues and friends, I learned that it was their story. And guess what? It’s your story if you’re at a job of any kind, one that you love, one that you hate, one that’s just enough to get by. This little book gives fresh perspective on how to leverage that job to get you something greater than a paycheck. The lessons in this parable are entrepreneurial lessons, but not what you might think from the current entrepreneurial zeitgeist. If you or someone you know are looking for a real pathway to entrepreneurship, here’s the secret.

Dana Robinson:
Your job is the way out of your job. It’s counterintuitive, but once you see how it works, you can’t unsee it. Learn the way of the fly swatter from the parable of Ubar and from the stories I share from my 30 year business journey. You can get a free copy of the king’s fly Swatter by going to danarobinson.com. right? Yeah. So do you have to know in most colleges policies in order to navigate your clients? I mean, if you have thousands of colleges across the US and you’re helping someone, sort of like your tax planning, financial planning and college planning sort of all interwoven, seems like you have to have a lot of data or a lot of just innate knowledge.

Brad Baldridge:
I guess the short answer is yes. The longer answer is there’s, you can group the colleges. So, like most state schools, they don’t have their own budgets to give away. Right. When you said, I went to this particular private school and they gave us this basket of scholarships.

Dana Robinson:
Yeah.

Brad Baldridge:
Kind of at their discretion because they liked you. Well, a state school can like you or not like you, but they don’t have any money. They can’t choose to give you a good price or not. That’s the bad news. The good news is their overall price is already low to begin with. A typical in state, state school, you know, average is 28,000 all in. The average private school averages 60,000 all in. And of course, Stanford.

Brad Baldridge:
And the most expensive are, you know, 90. And I was looking at some numbers. I think a couple of them have crossed 100 starting this coming school year or getting very close anyway, so. But again, people don’t necessarily pay that number. It’s, you know, it’s kind of the sticker in the window when you go buy a cardinal. Do we pay sticker? Well, sometimes you pay more. During COVID shortages, we paid more, but most of us remember a time when the sticker number was, you know, we never paid that we would get something much better.

Dana Robinson:
Right.

Brad Baldridge:
And it’s kind of the same with college of, there’s the numbers that they publish, there’s the numbers that people actually pay, and then there’s some variability of, you know, so I got my website, we’ve got the cost of colleges by income, by state. So you can look up all of Wisconsin’s colleges and see their costs, but not just their cost, but their net cost after aid, based on income of 25,000, you know, 110,000, a couple different brackets, you can say. So, you know, on average, a state school is going to be pretty close to full price if your income is 110,000 plus.

Dana Robinson:
Got it.

Brad Baldridge:
But a private school, you’re still getting discounts at 110,000, probably so. And that’s the real right. If you think about the college process when someone could say, well, your school is not as good as my local state school that I just got accepted to, why would I pay double? And the answer is, most people wouldn’t. And colleges know that, so they have to be more competitive than that. Now, there’s that rare case where someone will pay double, but they’re doing it because they get something, whether it’s name brand school or whatever it might be a place on the soccer team. And again, for people that can afford to pay. But a lot of schools aren’t pursuing that demographic where they have to be fair, they have to be reasonable. And if you look at the average cost at a lot of public schools, private school is net cost.

Brad Baldridge:
They’re, you know, within five or ten or 15,000, because that’s the reality, right? Is although we say we’re more expensive, we give a good financial package. I think you said something along lines of 20 or $30,000 of scholarships. Well, guess what? If you take a $60,000 school and you get 35,000 of scholarships and you’re down to 25, that’s about where the state school probably is going to be. And for a lot of. For the right kids at that school, that’s the reality that a public school or private school may be competitive with the public schools, but there’s still a relatively high net cost to pay. And that’s the second half of it, is you can start with a state school and get almost nothing off, and your net cost is 25,000 or 30,000, or you can start with a $90,000 school, get lots of scholarships, and it brings it down to 30,000. Either way, you still have to pay 30,000. So that’s the next step, right, is how do we pay that efficiently? Okay.

Brad Baldridge:
And that can be loans, that can be your college savings and investing, that can be your, again, your ship just came in, so you’ve got your flush with cash and you’re gonna write the check, all those types of things. But now we can do, you know, when I say efficiently, now we’re talking about, you know, tax planning and, you know, maximizing your tax breaks and maybe hiring the kids in the business. In Wisconsin, we, they just changed the rules on some of our college savings where now business owners can take a tax, estate tax credit for contributing for their employees.

Dana Robinson:
Ah, okay. Yeah, I was going to ask about this as an entrepreneur. The. The kid works for the company. Can the company pay for the kid’s school or some of it, and then write that off as educational expense to the business. I know you’re not, you know, you’re not, you’re not from it, from a anecdotal standpoint, not a specific advice standpoint.

Brad Baldridge:
Right. Yeah. So, yes, so there’s a couple different ways that, you know, kind of unpacking that. So you start with was you certainly a lot of times it makes sense to hire the kids into the business. I mean, I pay my kids to build computers, to mow the lawn, to do my laminating, to do a lot of busy work, to do yard work, to do all kinds of different things that they’re capable of doing. And I pay them a fair wage. I mean, I don’t pay dollar 250 an hour to empty wastebaskets, but I do pay 20 or 22 or whatever I think going fair rate is these days. And that, you know, that low number has climbed a lot because, you know, McDonald’s is paying $20 an hour now.

Brad Baldridge:
So. Yeah, you know, any, so any whatever, right. So you pay as much as you reasonably can and that can give you some tax savings potentially because the kids tax rates generally are much lower than mom and dad’s. And then from there you can also set up a tuition reimbursement plan. You can and then do some more things there. Now there’s some kind of catch 22s in that process because there’s what’s called attribution rules where some of the tests to figure out if it’s fair or not include not just the business owners but the business owners children are also part of that mix. So in order to get them off the list, they have to be 21, a couple different sometimes or, you know, so again, it’s not automatic, but yes, there’s ways to do that now with what’s going on here in Wisconsin, we can actually contribute to 529s for our employees. So my kids are now set up their own five hundred and twenty nine s.

Brad Baldridge:
And we’re going to put some money into there, you know, again, because the businesses can do that. So there’s, you know, and again, and entrepreneurs can say, well, let’s figure out what our salary should be this year or what our taxes should look like this year, and then maybe we accelerate some deductions this year or maybe we decelerate some income this year. The caution there is it’s got to be a, you know, 510, 15 year plan, not a what are we going to do this year? Because if you say, well, I’m going to make it really low this year, but it’s going to blow up next year. Well, that, you know, again, you. A lot of times you do this year over year, right. This is what we’re doing for freshman year. We’re going to do it all over again for sophomore year, and then the next year, it’s going to be junior year for my oldest, and freshman year for my next, and then the year after that, I’m going to have a sophomore and a senior, and then the year after, you know, so you got to kind of lay that out and say, well, I don’t want to, you know, save $1,000 this year and pay 10,000 next year. That doesn’t make sense, but.

Brad Baldridge:
And again, so there’s lots to do. The, as I’m. You’re catching on here, it can get relatively complex and you want to lay out a good plan, and it’s gonna take time and effort, but for a lot of families, it’s well worth it. You know, sometimes it’s five or $10,000 you save. Sometimes it’s 50 or 100.

Dana Robinson:
Yeah.

Brad Baldridge:
And you don’t know for sure until you start really working it out. Right. So people will say things like, well, should I do this? It’s like, well, it is one strategy of 50 or 100 that might apply to you.

Dana Robinson:
Right? Yeah. I mean, my advisor who was in your position, she basically said, I’ve never had a client who didn’t save more, you know, than they spent on me. And probably by about, you know, the lowest was about three times that she could think of. Anecdotally was like, probably the worst was someone spent x dollars and only saved three times that amount on, you know, on their program for their kids with my advice. And so it was very compelling to then, you know, hire her with confidence that on the low end, I’d save more than I spent. And maybe there’s a possibility of making some, you know, much bigger savings. And she really did. She.

Dana Robinson:
I think she contributed to the overall selection and sort of, like, thinking about where to apply as well. And some of that was also a little bit of the advice you’ve given at the beginning of kind of the journey for you is helping people understand that they shouldn’t limit themselves with their perception of what’s cheap. So kind of the, I call it poverty mentality, the sort of, I was raised without a lot, and everything was about saving money. So you just assume that state college is cheaper. You assume that a lot of things are true that really aren’t. When you have someone come along and say, actually, not necessarily. So you open up the options to both the college goer and the parents when you sort of pull them away from the idea that they need to only apply where they think they can afford or where they think it’s cheapest.

Brad Baldridge:
Right. Absolutely. I mean, I’ve worked with families where, again, they’re looking at two very high priced schools and they’re making it a huge commitment of hundreds of thousands of dollars. You know, and on the other end of the spectrum, there’s people that are, you know, struggling to actually just make college of any sort work out. And, you know, is college worth it? That’s another big question that comes along and it’s like, well, most answers to all these questions are, it’s, it’s not a one size fits all.

Dana Robinson:
Right?

Brad Baldridge:
Right. Is college worth it? Well, it’s certainly worth it for many, but it’s certainly, and it’s definitely not worth it for some. And that’s, you know, so how do you determine the right question? Is it worth it for me or worse than worth it for my kids? Right. I mean, there’s, you could argue with someone like Bill Gates, right? Bill Gates didn’t need his college education. He went on to be a gazillionaire without a college education. Okay, well, if you’re as smart as Bill Gates, you probably don’t need a college education, right. But you have to remember that he was coding. You know, if you ever read his story, right.

Brad Baldridge:
Got involved in. He was coding in the middle of the night as a high school kidde.

Dana Robinson:
Right.

Brad Baldridge:
For fun. Because that’s when you could get on a computer.

Dana Robinson:
Yes.

Brad Baldridge:
You know, if you have that kind of kid, you know, there’s lots of paths to success, right. You know, I think. And if you’ve got the kid that’s at the bottom, that’s, you know, maybe it’s going to be the school of hard knocks is what they’re going to need to do. And if you have a kid that’s somewhere in the middle, well, then that’s where, you know, picking the right path could make a difference. And in the end, all you can do is the best you can do, and you’ll never know for sure because again, you won’t get to look back and say, this is the path I chose. This is the path I could have had. But how would that would have turned out? Well, we’ll never know.

Dana Robinson:
Right.

Brad Baldridge:
But, you know, so one of the worst things I think that politicians ever did was a college for everyone, right? That cheapens it in some ways that lessons it and, you know, and it makes it, it doesn’t applies that, you know, there’s lots of successful paths that don’t include college and.

Dana Robinson:
Yeah, yeah, 100%. Let’s pause right there. Let’s, let’s pause. Brad?

Brad Baldridge:
Yep.

Dana Robinson:
Listeners, if you, if your kid is not college bound, it’s not the end of the world. If you, you’re listening to this, you don’t have a degree and you’re thinking colleges is, you know, super important, it’s, it’s nothing. You don’t have to go to college to be a success. As in business, there are plenty of journeys in life where college is not necessary. I know tons of people that have made lots of money and had great lives that didn’t go get a degree. So this idea that we’ve ingrained that somehow, I don’t remember, probably in the seventies or eighties, kind of became the mantra, all you need to do, kids, is go to college and everything will work out is wrong. It’s not everybody’s journey. And as parents, we need to embrace that.

Dana Robinson:
It’s okay if our kids choose not to go to college and there’s lots of pathways to success that’s going to get them the life that you really want for them, which isn’t to make you proud of them for getting a degree. It’s to empower them to have agency and over the life that they want to live.

Brad Baldridge:
Right.

Dana Robinson:
Thanks for coming to my Ted talk, Brad. But since, you know, like, I got a bunch of degrees and, you know, talk about college a lot and got my daughter through college, but the. You’re a college consultant. I just want to make it eminently clear that I embrace and try to get people to embrace. That’s unnecessary.

Brad Baldridge:
Right, right. Well, and again, unnecessary. I wouldn’t go that far either because I think what it really means, what you really need to explore is, well, if I want to be x, how can I get there? And is there a path that gets you there without college and you want to take it? Great. I want to be a rock star. Well, you definitely do not have to go to college to study guitar to become a rock star. Matter of fact, you probably shouldn’t based on what we’ve seen. Right? Yes. But if you say, I want to be an elementary ed teacher, that’s a tough one to get to without going through college or a nurse or a.

Brad Baldridge:
Right. Or an engineer or again, right. Engineers. At General Electric 50 years ago, some of them did start by sweeping the floor and then they got into the drafting department and then they, they realized that they were smart guys, and they could do the work. And they, they gave them the title of engineer, and then they were an engineer. They didn’t have a degree. They just did the engineering work well enough that they earned the title. And then, you know, that was that.

Brad Baldridge:
Does that work that way today? Probably not. It would be really tough. But most engineers now are going to have a degree. Not to say it’s impossible, but, and again, but there’s a lot of, you know, what degree do you need to sell MRI machines? What degree do you need to become an entrepreneur or get involved in landscaping or build the houses? Or maybe you need them, maybe you don’t. But I think that, you know, looking at the bigger picture and working through, you know, what’s right for each student individually. And again, for those of us, that sounds like you only have one student, but if you have two or three or four kids, there’s a good chance they’re drastically different. And what worked for one is not going to work for the next. And, you know, having some flexibility in how you deal with things.

Brad Baldridge:
You know, one kid potty trained really well, one kid didn’t, you know, one kid loves school, one school, one kid hates it. You know, that that’s a reality that a lot of families have to deal with. So you may have to come up with different solutions for different students.

Dana Robinson:
How much of what you do, if any, relates to kind of triangulating the scholarships related to how smart or sports or some specialty of sorts that made someone attractive as a student? Do you have to get a clear read on that? Or is that another consultant’s job or sort of up to the parents and the counselors to navigate them through? And you’re kind of focused on the economics, right?

Brad Baldridge:
No, scholarships are definitely something I work on because there’s kind of tiers of scholarships. There’s a scholarships from the private schools that we’ve mentioned. Right. If you go here, well, I mean, there’s a lot of private schools out there that, you know, if you have a GPA of 2.0 and you took the test, you know, your test scores don’t matter and you get this scholarship, a substantial scholarship, because there’s colleges out there that are targeted to the b and C student who will get scholarships at their school.

Dana Robinson:
Wow. Okay.

Brad Baldridge:
They may not be the college you want to send your kid to, but again, there’s good fits for that rock star student, and there’s good fits for the strong student, and there’s good fit for the average student, and there’s good fits for the weak student. Now, obviously, when you get to the weak student, then will they complete and what are they learning enough that it’s worth it. That’s a, you know, that’s a completely different question, but it, you know, that’s out there, and that’s the challenge of, there’s, you know, if you can get an automatic scholarship at certain schools, well, then you probably want to put those schools on the list. Yes, but in addition to that, a lot of colleges, there’s three levels. Right. There’s the just apply will give you a merit scholarship if you qualify. If you fill out financial aid, we’ll give you a need based aid if you qualify. But we also have the do something more scholarships down here where if you do extra essays or that type of thing, you might qualify for a scholarship.

Brad Baldridge:
And a lot of times those scholarships are a full tuition scholarship or full tuition and room and board scholarship. So those might be the big prizes. So you take a kid that can get accepted to Notre Dame, he might get a good package at Marquette, but he might get a full ride at a school you’ve never heard of because he could be that presidential scholar, right, where he can just barely get accepted to Notre Dame or Stanford or something. But he’s a really strong kid, you know, he’s fantastic. It’s just, you got to be fantastic to get into Stanford right there. Right. And what is. And when what Stanford’s stance.

Brad Baldridge:
Well, everybody’s here is fantastic. So we don’t give any meridiate at all because everybody’s a rock star. And how do we pick from among the rock stars to give that full ride to instead, they made the decision. Everything we do is need based. So if you’re the brain surgeon that makes 3 million a year, you’re paying full price at Stanford.

Dana Robinson:
Yeah.

Brad Baldridge:
End of story. And I’ll have parents come to me at the end of the process and say, well, my kid was so smart, and Stanford didn’t give him any scholarships and Harvard didn’t give him any scholarships, but this school over here and that school over there gave him 50,000 off. It’s like, well, okay, you knew that going in or should have known that going in because. Yeah, you know, and that’s, again, that’s the process. Either parents need to kind of learn the lay of the land and understand all this, or again, a typical entrepreneur can probably make hay some other way and then, you know, bring someone like me in, and it’s a win win. Right, right. Because, you know, learning all about college is a. Is a process that once you have that knowledge, and I always joke with like my clients that have, you know, four or five kids is like, by the end of this process you’ll be a college expert.

Brad Baldridge:
You just don’t have any kids left to apply it to.

Dana Robinson:
Right.

Brad Baldridge:
You know, so, and it’s, it’s always that way. Right. The first kid is always the hardest and you learn, you know, they’re the experimental child and you, what you learn there, you know, and you get better and better as you move down the pecking order of the children. But for a lot of families and you want to get out of the gate with a good start.

Dana Robinson:
What about people who are thinking about themselves? So a listener’s 22 and didn’t go to college and thinking, how do I make this affordable? I don’t have family help. Do you end up consulting any sort of young adults or even, I guess, quarter life crisis, go back to school or go to school kind of situations and do you have any, you know, are there other economic reasons to get a consultant like you and, and help kind of walk through the process when it’s, when it’s them and their money, I guess.

Brad Baldridge:
Right? Yeah. No, so generally I don’t help those situations. But I mean, what I do know is once you turn 24, once you have an undergraduate degree, your first undergraduate degree, if you’re a ward of the state, don’t have parents are in prison, there’s different, all these different things where you can be considered what’s called an independent student and then you don’t report mom and dad’s income and assets and then you’re much more likely to qualify for maximum aid and there’s just not as many levers to pull. So, you know, it doesn’t, I can’t help them very much. I don’t understand it very well. And, but I think parents need to understand that that’s what happens when your kids graduate, right. Is they are off your books when they go to grad school. They don’t report mom and dad because they have a degree now and everything is based on their own finances.

Brad Baldridge:
And now the parents don’t get credit for that kid that’s in grad school where sometimes at some schools you get a multi student discount where if you have three in school you might have pay less. Yeah, but the kid that’s in grad school, he’s not a student anymore, even if you’re supporting them potentially. And again, some schools might give you credit if you do support them, but they might want that documented. But generally speaking, when they’re in grad school or they’re turned 24, they’re on their own. They’re doing their own thing. Mom and dad don’t have to be part of the process at all. They’re not filling out forms or anything. And that’s, you know, again, sometimes that’s where some students need to go is mom and dad can afford to send me to college.

Brad Baldridge:
They just choosing not to for whatever reason, we’ve had a falling out. So they just have to wait till they’re 24 so that they don’t have to report mom and dad or work really hard with the colleges and convince them that, you know, they are independent, even though, you know, that was abused. Right. It wasn’t. Parents were essentially saying, well, if I just kick them out, then they don’t have to, then they don’t have to report.

Dana Robinson:
I heard that right.

Brad Baldridge:
Then everybody’s going to kick their kid out so they don’t have to pay. So that can’t work unless it’s a formal process. And some attorneys got themselves in trouble in Chicago where they were literally emancipating students, the official legal process for the purpose of getting them some additional college money. So I don’t think that’s a, you know, a strategy that most people really want to explore.

Dana Robinson:
Right, right. But if some, once someone hits 24, if they’re looking for opportunity to get education, they can still go to your website, use your resources. But essentially at that point, paying somebody for economic advice around that is probably not as is important because they’re not at a disadvantage for having some high income that’s going to keep them from getting all of the aid packages that they qualify for on their own.

Brad Baldridge:
Right, exactly. And the education landscape, there are a lot of colleges out there that have a very substantial continuing ed, adult learner. I mean, and some specialize in it. That’s all they do or most of what they do. Some colleges do a little of both. But it’s, the colleges there can help you. I mean, they’ve got financial aid offices and that kind of stuff. And the advice that they’re giving is, again, relatively simplistic because, again, that your income is x, it’s pretty simple.

Brad Baldridge:
And a lot of times once you become a student, your income is zero or nearly, maybe you’re working part time, but it’s not substantial and therefore there’s not as much planning to be done. It’s, you know, it’s a much more streamlined process than dealing with mom and dad that are saving for college with multiple kids and have a strong income and could pay if they wanted to, but don’t really, you know, they don’t want to pay more than they need to kind of situation.

Dana Robinson:
Well, I’ve talked, I’ve wandered you through all of my curiosities, and as I get toward the end of podcasts, I always want to be sure I didn’t miss something by not even asking the right question. Given what we’ve talked about. You have any other kind of key ideas that you tend to think about as things people don’t know, they don’t know around your expertise, right?

Brad Baldridge:
Well, yeah. The one that comes to mind that flashed through my brain that we never circled back around to is another way to think about college planning is there’s things that everybody’s going to do right. You’re going to visit colleges, you’re going to fill out financial aid forms. The student needs to figure out what they want to be when they grow up. They have to take the college testing, or they have to choose to go test optional and figure out which one’s best for them. You know, all that stuff. But then there’s reasons where things get more complex and there’s extra work to do. Divorced and blended families have extra opportunities and things to learn.

Brad Baldridge:
Entrepreneurs and self employed and business owners and rental property owners and real estate people all have, you know, special circumstances where they may have a little more control over their income. They can set up two tuition reimbursement plans. There’s more they can do. So they have to learn about that and decide if it’s a good strategy for them. If you’ve got a student athlete that might qualify for scholarships and, or they’ll just use their sport, you know, they’ll play football at a, you know, a relatively underqualified football player can go to Harvard if they, you know, because Harvard has rules that say, this is, you got to be this strong of a student. But here’s 20 kids on the football team that get to be below that line. And here’s ten kids. You got to be below an even lower line because we want to feel the team that at least can play ball a little bit.

Brad Baldridge:
So they’ve got rules. So sometimes the sports will get you into a particular college. Sometimes it’ll help pay for it. Sometimes you get a formal scholarship. Sometimes they’ll just give you a lot of need based and merit aid because they want you as a student, but they can’t give you a true scholarship. So there’s different avenues around sports. Again, the high academic achiever makes things more challenging because you now you have a lot more options of, we could get scholarships like this at these types of schools and scholarships like that at those types of schools. So we’ve got more things to consider.

Brad Baldridge:
Inheritance is another big one that I’m starting to focus in on of kind of the sudden money changes the game. Plus when you inherit Iras, you’ve got embedded tax problems and so forth and so on there. So there’s a couple different areas, like I said, where it just gets an extra layer of complex. Twins and triplets. I have, I’ve done a lot of twins, triplets and quads because it gets a little more overwhelming in that situation.

Dana Robinson:
Yeah, yeah. That’s four, two, three and four times the, the problem of paying these costs that just keep going up.

Brad Baldridge:
Right, exactly. So, so when you know, again and, you know, boils down to just do it, I mean, that’s the other side of it is it’s going to be a process. You’re not going to sit down on one Sunday afternoon and knock it out. You’re going to sit down on a Sunday afternoon and say, well, these are some of the things I need to start working on. And when you do those, work on those things, you’re going to learn, oh, here’s some other things I should work on then you’re going to work with a student and do some visits and you’re going to, you know, it’s going to be a process that could take two or three years.

Dana Robinson:
When’s the optimum time to hire somebody like you, Brad?

Brad Baldridge:
Oh, freshman, sophomore year. For, if you’ve got complicated, you know, all that stuff I mentioned just makes your life complicated. If that any of those things fit you, then you want a good two year Runway, maybe three. And a lot of times the students not ready. I mean, you’re not visiting college’s freshman year of high school potentially. But parents might need to figure out, well, how do we, where do we stand with need based aid? Or what are we going to do with this inheritance so that we don’t regret it two years from now when we start filling out forms? Right. You know, entrepreneurs. Well, I get to take a bonus soon.

Brad Baldridge:
Should I take it this year? Next year?

Dana Robinson:
Right.

Brad Baldridge:
You know, so if you got that kind of stuff where you can do some of that broad planning, you don’t need to visit schools necessarily. But then as things move on, then you start, you know, narrowing it, I guess. So to make it very. I’ve never ever had anyone tell me they started too early.

Dana Robinson:
Okay.

Brad Baldridge:
A whole lot of people tell me they’ve started too late.

Dana Robinson:
Good. Look, that that’s a perfect way to put a pin in the podcast because now we need to tell people how to find you. And that was a great way to finish it. A commercial that was genuine and the real deal. Your website is www.tamingthehighcostofcollege.com Brad Baldridge other places, ways for people to connect with you besides the website, everything is there.

Brad Baldridge:
So we’ve got phone number there, we’ve got podcast and free resources and contact us and send us an email and you know, so everything is just all in that spot.

Dana Robinson:
Love it. Good. Well, everybody who’s listening, don’t forget the way to reach me is hello@danarobinson.com. thanks for coming on the exit Plan podcast, Brad.

Brad Baldridge:
Thanks for having me.

Dana Robinson:
Thanks for joining me on this episode of the Exit Plan podcast. I’d love to hear from you. Feel free to hit me up with questions or comments by emailing me at hello@danarobinson.com or leave comments and questions by calling 858-252-7785 call 858-252-7785 and leave a message.