Over the past several weeks, the media has consistently covered the controversy surrounding the college admissions scandal. The allegations include cheating on entrance exams, bribing college officials, and fabricating student biographies all in an effort to get students into some of the top colleges in the country.
You might be asking yourself, how could this impact my clients? In this episode of Money Script Monday, Gabriel has a discussion with the nation’s top college planners about the right way to coach parents on navigating the challenging road of planning for college.
This post is intended for financial professional use only.
Gabriel: Welcome back to another episode of Money Script Monday. It's my honor to be here today.
Today we're doing something a little bit different. We're going to be hosting a little interview with two of the top college planners in the country.
On my right-hand side, we have Mr. Ron Caruthers. Ron Caruthers is pretty much the most successful college planner and trainer in the world.
Everyone that's successful that's made over a million dollars in college planning west of the Mississippi, Ron has trained.
And to my left, we have the number one college planner in the country, Brian Safdari. Brian's done more college planning business in one year than all the college planners in the state of Florida.
We're very honored to be here. These are two of my best friends in the whole wide world. It's our privilege.
With that being said, they're going to lend their expertise to us today on some big topics that are happening in the college planning world.
If you've watched the news circuits for any time, we know what's happening. It's pretty crazy out there.
People are paying $500,000 to $1 million to get into USC. These guys on my right and left, they're getting kids into USC for $5,000.
So, we wanted to sit down with them and really get an idea of what's happening. Are you guys having to pay $500,000 to get your students into USC or USD? What's going on out there?
We wanted to take the time and your expertise to find out pros and con of what's happening in the world.
So, let me ask some questions.
What's your take on the college admissions scandal, was it a surprise to you?
Ron: Brian, you're up first.
Brian: All right. Well, it's not a surprise at all, because college is a business.
It's a very successful business. This stuff has been going on behind the scenes. It was a matter of time for it to come out.
I'm not surprised because colleges will take a student for that same seat that costs $25 grand, $30 grand. If they can collect $60 or $70, they'll collect it.
If they can collect $500,000 in this case, they will. I think what's the big issue is that it's become a federal issue.
The reason why it's become so big is because of the tax evasion where the IRS says, "Wait a minute, $25 million that goes into nonprofits and money goes into bribery." It's a tax issue that they haven't collected, which is the big issue.
I've had personally students with a 2.9, 3.0 GPA, their grandma contributes $1.5 million when she passed away to USC and all of a sudden that child gets in to USC that was not supposed to get in.
But, I could never get that out of them that they accepted that student for that. What they called it was, "A holistic approach is how we accept students."
Gabriel: So, you knew it from day one that it's always been happening?
Brian: Yeah. Of course.
Gabriel: Pretty sad. Ron, what's been your experience?
Ron: It's the same thing. I mean, Brian, you live up in LA with the celebrities. I think Kanye is Brian's next-door neighbor or something like that.
Gabriel: Kim cooks for him every once in a while.
Ron: Celebrities and the rich and powerful have done things for years to kinda advance their own causes or their kid's situation.
I think what it really points to is for anybody watching this, it shows the lengths that people will go to, to get their kids into college.
Just what a hot topic it is, both getting them in and the paying for it.
I just say it's something you don't want to neglect in your practice to realize why would Lori Loughlin, Aunt Becky, contribute $500,000 for kids to go.
It goes beyond just the USC. It's bragging rights for the parents. It's so they can look good at parties.
So, really college is as much an emotional issue, maybe 10 times more so than it is a financial. But for normal people, the financial is a huge deal. That's my two cents on it.
Gabriel: It's sad. Basically, the best students in the world are unable to get into school because the rich and wealthy are buying up their places.
Well, this is another reason why it's so important to hire a college planner. So, that way your kids, our kids, will have a feature to progress and make the world a better place.
Our next question, you've both been in this industry for quite some time now. We're really seeing how the college model has changed over the past couple of decades.
What major changes have you seen in the industry, and do you think a four-year degree is still worth it?
Ron: I've been at this almost 27 years. And what I've seen is the student debt has completely spiraled out of control.
If you guys aren't familiar, it's more than credit card debt by almost 50%. So, $1.6 trillion, and that's not even a real number. That's the number you get off of U.S. Debt Clock.
But really, right next to it is credit cards and mortgages. And a lot of people are going into both credit cards and mortgages to pay for college.
As college has gotten more and more expensive, I've just seen parents get more and more desperate every single year for solutions.
For a lot of them it comes down to when their kids were small, they promised them, "If you do good in school, you're going to get to go to a great college."
And the parents have absolutely no plan for how that's supposed to work once the kid actually gets 16 and is getting straight A's and did well on their SATs.
It's a real eye-opening moment when they realize, "We're screwed. We did not plan for this."
It makes for a good time to enter that family's life, to work with them on affording college, which is a lot of what a good college planner is going to do for them. That's my two cents.
Gabriel: Well said. I've always said that the best part of being in college planning is giving the families hope.
Ron: Hands down it is.
I mean, a colleague said it once where he said, "We get paid very well in money, but we get paid three times as much in the emotional capital of seeing these families with no plan whatsoever, no idea how they're going to get their kid in.”
They don't have half a million dollars to bribe anybody, and maybe they're too pretty for prison like some of these families are going to.
So, instead working with them the right way to get their kids in and to get them money for that, it's really gratifying.
Gabriel: Agreed. Well said.
Brian: Yeah. I think it comes down to... College is not because of the degree itself or the paper that goes on the wall.
It's the experience, it's the connections why you're looking at a college.
Because you can sit at home, get on a computer for like $10 grand, you can get a bachelor's degree. You don't need to spend $150,000, $200,000, $300,000.
If you think about this whole scandal thing that happened, it's always who you know. It's not always who you are.
I hate to say it that way, but it's just life. It's who you hang out with is who you become.
So, I'm not saying to be the scammers there, but what those people realize is that they want the kids to be around the most successful people and they're willing to go to jail for it because they understand the value of the alumni at USC.
Because when you get in, you're a part of them. It's a country club, and when you're around that, it's a law of association.
That association and that alumni, you get to take the backdoor entrance to success.
Unfortunately, two kids can come out at the same degree, one from a Cal State and one from a private school like that with a huge alumni, and unfortunately, they both can have the same degree, and one can even be smarter than the one out of USC, but the one at USC is going to get the recognition.
It's going to get that backdoor entrance to make $50,000, $100,000, $200,000 more a year.
It goes back to why college is so expensive.
The colleges know that the connections they have, even if you're going to spend $100,000, $200,000, your child is going to make more money in their lifetime just because of the connections alone, which is why they can keep raising the price so high and parents are willing to pay for it.
What also goes why you want a college planner, because a college planner, you're buying the connections.
The college planner, if you work with someone that has at least 5 to 10 years experience, they truly have been in this industry because they have a passion and wanting to make a difference in a kid's life.
They're not just in it because there's money. Let's face it.
It used to be the mortgage industry everybody was getting into, and then people dove out of that to go into the financial space and now college planning because they see how expensive college is.
Everybody in the world wants to get into becoming a college planner now. They're going to get in in a year, two years. They're going to be out again just like this Jerry dude that, he got in, he was doing things illegally.
The truth always comes out at the top.
It's funny to see that if you're truly wanting to make a difference in your client's life, you'll be the one that prevails, and you'll be able to be more successful when these people are getting in, and they realize they're not doing it for the right reasons and they'll be out very soon.
A college planner makes a huge difference. You're buying the connections, you're buying the experience.
Gabriel: It's funny you say that, Brian, because I remember being at one of your seminars maybe 12, 13 years ago in LA and you talked about that, about the associations being in a private school versus, you know, regular state schools.
It hit me then. I said, "Wow, I would have hired a college planner back when I was going to school back in the old days, and I could have saved a lot of money and gone to a better school."
Good point, guys. Next question.
What are some of the biggest mistakes you see parents make when they're going through the college admission process with their children?
Knowing the right place, the list of assets that are required for each college is different. Every minor detail counts. It's a tedious process, which is why you should get help from an expert. Wouldn't you guys agree?
Ron: Yes. Well, let me break that down.
The first thing is the admissions process. And your last question was really, is it worth it?
The answer is maybe, likely. Is the gender studies degree that you go $200,000 into debt for worth it? Probably not.
But going somewhat into debt using a good college planner so you don't go as deeply into debt for an engineering degree, or a science degree, or an accounting degree, or a business degree.
Yeah, absolutely. Especially with what Brian talks about, which is the connections.
Back to having the assets and things like that, the financial aid side, I would say 80% of parents when they do this themselves, left to their own devices, one or more mistakes that cost them money.
The colleges love that. They count on that.
They know, "Oh well, parents come in thinking they're not going to get any money anyway." So, then when it becomes a self-fulfilling prophecy, college is like, "Sucks to be you," take out these big loans.
What the parents don't realize is if they understand the definition of an asset, the definition of income, the right way to fill out these forms, and the strategic way to apply, they end up much better off and paying wholesale, not retail for college.
That's my take on that.
Gabriel: Very well said.
Brian: Yeah. I think what I see in this process is there's three pieces. It's finding the right schools and making sure the student gets in and goes into the right field, what Ron just said.
Second thing is maximizing grants and financial aid, regardless of your financial situation. You can actually go to a private school for cheaper than a state school if it's a right fit.
And the third thing is paying for it. It's the funding part.
Those are the three big pieces. So, a very successful family, a good family, for us that I see, is they're serious about their kids' college education, and they're serious about their money.
Those are the two main things. And the serious families and the parents that are serious about their education, their kids' education, and their own money, it's a no brainer for them.
Those are the families that we want to help anyways because they're planners, they believe in this stuff.
Those three pillars that I talk about, a lot of people dive into it, and they talk about, "Oh, well, you should move money here and there," but they don't really understand where the student is going.
If you only handle one piece and you go, "Oh, I'm going to get into the right school," well that's great. But if you don't get financial aid, that child can't go.
Or if you can do all the financial aid strategies and get money, but if the child can't get in, we have a problem.
That's why it's really important that those three pillars have to come in to be able to see that success from a student and a parent.
Gabriel: Helps the whole family out.
Why should parents consider hiring a college planner today?
If people are going to be paying $500,000, is there really a need to pay $2,000, $3,000, $5,000 for a college planner in today's society? Is it worth it?
Ron: Well, you should get a return on investment. So, one of the things a colleague said once was we sell dollars at a discount.
We help families save $10,000, $15,000, $20,000, $40,000 a year and get them in.
It's just like you would get a specialist for anything, for a health condition, for anything. But what's great about it is it opens the door to that family's financial life from an advisor standpoint, so they can talk to the family about other things.
Gabriel: It gives them an equal playing field. If they can't compete with those people, they're going to pay $500,000 to $1 million.
Brian: Well, college problem is actually almost a retirement problem.
Gabriel: Well said.
Brian: There's, you know, the three pillars. Now doing this for 14 years now. Thanks for Ron to point me into that direction.
When I started with Ron back in 2006, was the three things that parents now tell me it's the biggest investments in their life and it doesn't change, is funding our kid's college education because it's six figures.
It's not a walk in the park where we can just pull out a credit card and pay it overnight.
Paying off our house and being debt free is number two, and not running out of money for retirement is number three.
Some families culturally they have weddings is a must, and part of their financial plan. And a wedding could be pretty expensive.
But the top three are those three things.
If you fail to fund your child's college education and you pay full price, that extra $100,000, $200,000 you're paying because you're not paying it as a wholesale like Ron talked about, that $100,000 is lost opportunity.
That's a wealth transfer. And that $100,000 is not just a $100,000 loss.
It's $100,000, plus interest, plus opportunity costs that could have gone to make that money go towards paying off your house, which is pillar number two, or number three, towards your retirement.
Anything we can save on the college side just makes the other two just so much easier, which is the ultimate reason why you want a college planner.
A financial planner by themselves, they're just thinking about rate of return and risk and, "Where can I put the client's money," and they're just thinking, just investment-driven.
When you're thinking about a college planner, it's more of a holistic approach. They're looking at every angle.
Gabriel: True financial planning.
Brian: So, it's a true financial planner.
If you're an advisor, you're actually doing your clients a disservice by just focusing on the investments when you truly know that college funding is going to be a big obstacle in their lives.
You're just saying, "Oh, it's okay, we're just going to let the money grow, and whatever you make, we're going to use that to college."
You don't know what you don't know, is you're going to pay 30%, 40% more on college because the assets are in the wrong place.
Because you were just thinking about maybe your own pocketbook because you just wanted to care about the investment, but not really look at how can you truly make a difference in the family's life.
When you can really do that, that's when you deserve the client's investments.
To get the investments, I think you should be able to do all these other things that they're losing sleep at night that's more important before you touch their investments.
It's like putting the cart before the horse.
When you're a college planner, you truly deserve to get highly and appropriately compensated for the work that you do.
I've been blessed to make the income we make, and the lifestyle, and all the toys that I have, but I don't feel guilty anymore because I'm making a huge impact in the family's life.
It doesn't make me feel bad like it used to when parents come back to me and go, "You did things that my advisor did not do nor didn't know what to do."
That's what makes me feel well, knowing I'm making a difference.
Gabriel: Truly making people have the American dream. You're turning dreams into reality.
You can't put a price tag on that. It's pretty awesome.
Well, I wanted to thank you both for coming today. I know this is a special thing we did on Money Script Monday.
If you have cases, if you have clients that are college bound, give us a call at 888-LIFEPRO, (888) 543-3776.
These are the two top college planners in the country and that we have the opportunity to work with them and they have graciously asked for the opportunity to work with you.
If you have cases, give us a call, and we're going to partner up with these guys, they close cases 90% or better.
If you have a case, they're going to close it for you, and we're going to work together as a team.
Thank you for attending today's episode of Money Script Monday.
More importantly, thank my good friend, Mr. Brian Safdari and the godfather, Ron Caruthers. Thanks again. Happy selling.