The Education Loan Analyst Designation
How can you use the CCPS® with Education Loan Analyst designation to attract clients and make more money in your business?
The CCPS® (Certified College Planning Specialist™) designation is THE standard of excellence for college financial planning. Since 2002, the CCPS® (Certified College Planning Specialist™) designation is the ONLY college financial planning accreditation in the financial industry. The Education Loan Analyst (ELA)™ designation was developed to raise the professional standards of our CCPS® (Certified College Planning Specialist™) members in the field of education loans and analysis.
If you’re a successful financial planner or investment advisor you may already have parent and grandparent clients that are about to pay the full cost of their children and grandchildren’s college education. Their assets may be tied up in high yielding investments or their business, and it would be costly and not tax-wise to sell them off.
As a result, they may want to borrow high-cost Parent PLUS loans to pay for college. As a CCPS® (Certified College Planning Specialist™) with the Education Loan Analyst (ELA)™ designation, you know exactly how to help your client using “college financial planning” strategies.
EXAMPLE: A wealthy prospect came in to discuss funding college for his two children. When the advisor looked over the client’s taxes, he discovered the client had paid $25,000 in short-term capital gains tax even though he never made any trades during the year. After further research, it was revealed that the client’s mutual funds were traded inside the fund consistently. When the advisor explained the term “turnover ratio” to the client his $1.15 million was moved to the advisor. The $25,000 per year tax savings could now be used for funding college.
Bankers, Lenders, and Mortgage Professionals
When it comes to paying for college, the question is not whether families will borrow, but how much they will borrow.
Many parents today borrow between $75,000 and $150,000 in PLUS loans for just one child’s education. At current interest rates on PLUS loans, by the time the parents pay off one loan, they’ve paid for two educations.
As a mortgage professional, you can show families a better way to borrow by using strategic equity management to restructure their PLUS loan debt into a low-cost mortgage to create more cash for college expenses.
EXAMPLE: A mortgage lender is trying to help a client figure out the best way to fund two private college educations for her two children. This business client makes a good income, but almost all her money was tied up in her business. Consequently, she had decided to borrow the necessary funds ($220,000) over the next ten years using high-cost education PLUS loans. The average monthly payment to cover these education loans would be around $2,500.
The mortgage advisor then showed the client how to fund these education costs by refinancing her home. Using a conventional mortgage loan to cover these education costs of $220,000, instead of high-cost PLUS loans; the client was able to reduce her average monthly payment (including additional tax savings) by $1,000. This saved the client $1,500 overall ($2,500 -$1,000) per month or $18,000/year in cash flow.
Life Insurance Agents
Life insurance agents have a unique opportunity to help both parents and grandparents of college-bound students who are facing a hidden dilemma. Families with considerable cash and investments will lose any opportunity to qualify for financial aid from any college.
EXAMPLE: A family has two children they need to educate. Both kids are good students and the oldest wants to attend a high-priced private college in a year. This particular college is known to give generous financial aid packages, but the college also assesses investments and home equity, prior to gifting financial aid. Since the client has $200,000 in cash and CD’s and $150,000 in home equity, this could keep the older student from receiving as much as $19.600 in financial aid each year. Without this aid, the student would be forced to look at another school due to cost.
The insurance agent then showed the client how they could avoid this financial aid dilemma by moving all the cash, CD’s and home equity into a Single Premium life insurance policy (MEC). A MEC happens to be the only asset that is not counted in any financial aid formula.
The client initiated a MEC policy and moved in the $200,000. The agent then worked with a knowledgeable mortgage advisor to restructure all the client’s debt into a new mortgage, which saved the client $850/month in monthly payments, even after cashing out the $150,000 in equity.
As a result of these strategies, the college offered the student $14,425 in grants (free money) and $4,500 in 4.6% student loans. The client also had an extra $10,200 ($850 x 12 months) in cash from the mortgage refinance to cover college costs.
CPAs, Enrolled Agents, and Tax Professionals
If you’re a CPA, enrolled agent, or tax advisor; taxes are your client’s biggest problem, especially your high-income business clients. Every time they write a check for college they must first pay the IRS at least $0.35 on the dollar for the money they earn. There are hundreds of tax strategies available to you that your business clients can use to dramatically reduce the net cost of their children’s education, and save a boatload of taxes too.
EXAMPLE: The financial aid formula is weighted much higher for income (47%) than it is assets (5.6%). One tax advisor used this knowledge to help a business client restructure his corporation, reduce the amount of income he took as a paycheck and borrowed the balance back from the retained earnings of his company. This technique helped the client get $14,000 in grant money offered by the college, which reduced his son’s $42,000 private college cost.
Regardless of the state of the economy, most families will pay big, or borrow big, for their children’s education.
The question is, will they use their money in the most efficient manner? Now you can show these families a “better way” to pay for college when you become a CCPS® (Certified College Planning Specialist™) with Education Loan Analyst (ELA)™ designation
The ELA™ designation course is a self-study module, which contains approximately 45 pages of materials and can be reviewed online or downloaded. Final certification testing is completed online. Some of the topics covered in each module are:
- Chapter 1: Introduction
- Chapter 2: Education Loans and Financial Aid
- Chapter 3: Types of Federal Education Loans
- Chapter 4: Federal Direct Loan Repayment Plans
- Chapter 5: Consolidating Education Loans
- Chapter 6: Postponing Education Loans
- Chapter 7: Discharging Education Loans
- Chapter 8: Federal Education Loan Servicers
- Chapter 9: Private Education Loans
- Chapter 10: Other Loans for Education
- Chapter 11: Tax Ramifications of Education Loans