College Planning Secrets with Expert Paul Compeau, CFP®

College planning remains one of the most overlooked threats to a comfortable retirement, especially for grandparents who want to help fund their grandchildren’s education without compromising their own financial stability. In our recent Retirement for Life podcast episode, we explored this crucial topic with Paul Compeau, a CFP and founder of Bridgewise College Planning, who has helped over 500 families save an average of $40,000 on college expenses.

The landscape of higher education financing has changed dramatically over the years, with college costs continually rising while the perceived value of degrees faces increasing scrutiny. Despite this shifting dynamic, a college degree still holds significant value in today’s job market. As Christian points out in the podcast, a degree demonstrates not just subject matter knowledge but also a candidate’s ability to persist toward a long-term goal—a quality highly valued by employers who have difficulty fully assessing a person’s capabilities during brief interview processes.

One of the most significant revelations from our conversation with Paul Compeau was that many families incorrectly assume they won’t qualify for financial aid due to their income level. In reality, even families earning $300,000 annually may qualify for substantial assistance at certain institutions. The key lies in understanding how different schools structure their aid programs and how to properly position assets and income when applying. This often requires beginning the planning process as early as a student’s freshman or sophomore year of high school to optimize financial aid opportunities for their first year of college.

The traditional 529 college savings plan, while commonly recommended, isn’t always the optimal vehicle for every family situation. Compeau revealed that how you save for college can significantly impact financial aid eligibility, with an additional $10,000 in certain types of savings potentially increasing college costs by $500 to $2,500 through reduced financial aid. For grandparents looking to contribute to their grandchildren’s education, 529 plans can be beneficial for generation-skipping transfers, allowing them to fund five years’ worth of annual gifting at once. However, if the account owner passes away before the beneficiary attends college, these assets may negatively impact financial aid calculations.

Alternative savings vehicles discussed included custodial accounts (UTMAs/UGMAs), though these count as student assets at a higher rate (20%) in financial aid formulas. For families who might qualify for need-based aid, other options like IRAs, Roth IRAs, and certain types of cash-value life insurance policies might prove more advantageous as they remain outside financial aid calculations. Some families even consider strategically managing home equity, particularly when applying to schools that don’t factor home equity into their aid formulas.

Perhaps the most crucial insight for families approaching the college years is the importance of school selection. As Compeau explained, finding an institution that represents the perfect “campus fit, curriculum fit, and cost fit” is essential for ensuring students graduate on time. The statistics are sobering: the average student now takes 5.8 years to complete a four-year bachelor’s degree, representing a potential $250,000 wealth swing when considering both additional tuition costs and delayed career earnings.

For those just beginning the college planning journey, Compeau recommends starting as early as possible—ideally when you first learn you’re expecting a child. However, many families find themselves in “late-stage college planning situations” with limited savings and only a few years before their first tuition payment comes due. In these cases, working with qualified financial professionals becomes especially important to analyze overall financial situations, potentially restructure debt obligations, and identify strategies to free up monthly cash flow that can be directed toward education expenses.

The podcast served as a valuable reminder that college planning doesn’t exist in isolation but must be integrated into a comprehensive financial strategy that considers retirement needs, tax implications, and overall family goals. Whether you’re a parent with young children or a grandparent hoping to contribute to educational legacies, understanding these complex dynamics can make the difference between struggling with overwhelming college debt and creating a sustainable plan for educational success.

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