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Real Life Planning Podcast Episode 26: College Planning for Real Estate Investors with Rynda Wilk

Financial Planning

In Episode 26, I speak with college planning coach and CERTIFIED FINANCIAL PLANNER™, Rynda Wilk, CFP®, MBA, on the potential challenges real estate investors face when handling their child’s college financial aid application. Rynda also highlights ways you can help your college-bound child make a college choice that fits them now and fits them as a future adult.

“ One of the most expensive parts of going to school, people don't actually realize, is not always the tuition, it's the housing.” - Rynda Wilk

This week on Real Life Planning Podcast:


How does student loan debt slow getting started in real estate? [00:01:13]


How is rental property treated on financial aid applications? [00:05:48]


What if your rental property is overvalued on the FAFSA? [00:06:19]


What are college planning opportunities for real estate investors? [00:09:03]


What resources do you recommend to estimate real college costs? [00:13:49]

Takeaway Quotes:

“Sometimes the affordable option, even if it's not what you have your heart set on, might be a lot easier for you down the road in years.”- Rynda Wilk

“If you're applying to a fancy, expensive private school, they probably are going to count the equity in your home.” - Cynthia Meyer

“The best advice I have gotten was just to do the shopping, to keep looking and not get fixated on one school.” - Rynda Wilk

Connect with Rynda Wilk:

Connect with Cynthia Meyer:

About the Real Life Planning Podcast

Host Cynthia Meyer welcomes fascinating guests to share real life stories of how they are realizing their financial potential. Each episode explores practical, realistic steps to create results.

If you like this video podcast, consider joining Real Life Planning’s Question of the Week where CERTIFIED FINANCIAL PLANNER™ and rental property business owner Cynthia Meyer answers the most common questions about real estate financial planning direct to your inbox each week. 

Transcript - Real Life Planning Podcast - Episode 25

[00:00:06] Cynthia Meyer: Welcome to the Real Life Planning Video podcast. I'm Cynthia Meyer with Real Life Planning, and this is Episode 26, College Planning for Real Estate Investors. And today we've got the expert in this topic. Her name is Rynda Wilk and she's the founder of 21 Finance. You can find her online at 21Finance.xyz.

We used to work together for many years in employee benefits and financial wellness programs, and she's one of the smartest people I know so thanks for coming on, Rynda. 

[00:00:37] Rynda Wilks: I'm happy to be here. Thanks for inviting me, Cynthia. 

[00:00:39] Cynthia Meyer: So tell us what's important to know about you? 

[00:00:42] Rynda Wilks: I have dedicated the past, let's see, 10 years of my life or so to helping families make better financial decisions. And as part of that journey, I came to realize that getting through college without a ton of debt was one of the hardest that families face these days. And so that's why I've chosen to go down that path and specialize in that area so I can hopefully keep more students out of a detrimental financial situation in the future.

[00:01:13] Cynthia Meyer: I think that's wonderful. I know I personally got out of school with a fair amount of student loans and it took me a long time to pay them off. I didn't finish until I was in my thirties. And, I've noticed that not having a large amount of student debt when you get out of school right, helps you get started faster. It helps you buy a home faster or gives you the freedom to start a business. As someone who works with real estate and entrepreneurs, right? The goal is to start building as soon as possible. Let's talk a little bit about what you do every day.  How people find a school to go to where they're not going to be drowning in debt afterwards?

[00:01:48] Rynda Wilks: The biggest way that you can help yourself is to shop for the right schools or situation. And for any person who's recently gone through the journey of finding the right school for their student, myself included, as well, Cynthia, I think, it is really hard to find information online that fits your situation.

You get a lot of generalities when you Google these topics. But there are some software programs out there that are helpful. The one that I use as College Aid Pro. 

[00:02:22] Cynthia Meyer: That's a good piece of software. Yeah. Yeah. 

[00:02:24] Rynda Wilks: And it's fantastic tool that really gives you- it takes all your personal information, your student's academic information, financial information, and then it can help you see, hey, how much is each institution likely to cost me personally or my student. So that's a huge part of the process of keeping the cost down.

Then there is just a general understanding of how things work which it's a confusing process.

[00:02:51] Cynthia Meyer: Yes. Yes. Yeah. For those people that have seniors right now your senior may be in the thick of it, right? They're applying to schools and they're, going to be evaluating offers in a couple of months unless they applied early action somewhere. They may want to go to a school that isn't going to give them the best deal, right?

Anybody that's got someone in high school, if they've got a college-bound child, or if they have a child that's looking for some kind of post-secondary education, this is a big topic right now. 

So let's dive in a little bit to how this specifically affects the, real estate investor or somebody that owns properties directly.

If, you don't mind, I'll just ask you some questions and you can tell us how we should be thinking about this in terms of the major financial aid implications. 

How are our homes treated on the FAFSA for financial aid purposes? 

[00:03:43] Rynda Wilks: When you're talking FAFSA, that's strictly the federal form, a lot of schools use it the FAFSA does not include your personal home equity in their calculations. So that's good to know is if you have a lot of equity, it's not going to count against you on the FAFSA. It's also good to know what kind of schools you're looking at because there is also CSS profile, which is a different financial aid form, mostly used for...

[00:04:10] Cynthia Meyer: Private school oriented, right? Yeah. 

[00:04:13] Rynda Wilks: And especially like the elite private schools. Some of the smaller privates don't use it. They do ask for home equity information for your personal residence and the tricky part is it may or may not be used depending on the schools you're looking at. The CSS profile is a whole different ballgame, but if you're looking at mostly in-state schools or state institutions of any state and some privates.

And, mostly going to be worried about the FAFSA. And you don't have to worry about your home residence.

CSS profile- individual by the school. How that some schools Hey, we're not going to count it when we're looking at giving financial aid. Other schools will cap the amount of equity in your primary residence to something like your one annual salary, or they might, it might be a multiple of your annual salary. They can do it any way they want to really. So it's good to know what kind of schools you're looking at. 

[00:05:11] Cynthia Meyer: Yeah. So, the bottom line takeaway here is that If you're applying to a fancy, expensive private school, they probably are going to count the equity in your home.

So, if you come from a state like New Jersey or New York or Connecticut, or Texas for example, where there have been a huge increase in home prices and folks do have a lot of equity in their houses, this could be detrimental to your child receiving financial aid. 

[00:05:36] Rynda Wilks: It could. Yeah. 

[00:05:37] Cynthia Meyer: So what about rental properties? Rental properties are a business, right? So I would expect that in my experience, rental property is just treated like any other business asset. Is that right? 

[00:05:47] Rynda Wilks: That is right. (How is rental property treated on financial aid applications?) It's on the FAFSA. It's about- it's a little over 5% of the value, the equity that you have in a rental property or any kind of investment property would be added to your expected family contribution. 

[00:06:01] Cynthia Meyer: Right? And the tricky thing for real estate investors, of course, is we all know you can't just slice off 5% of your rental property and spend it on college, right? So, what do people do if they have a lot of rentals, for example, but they don't necessarily have the liquidity to pay a large bill?

[00:06:19] Rynda Wilks: One thing that you can do is use that as a factor in an appeals process. If most of your investment, let's say, if you didn't have the rental properties that your expected family contribution would be a lot lower. Then you can use that once you've been accepted at a school and you've been off the package, you can go back to them and say, "Hey I, know you offer me this much. Thank you very much. I'm very interested in your school. However, I just want to point out that my situation on paper maybe doesn't match my actual cash flow situation very well. This is going to be a real hardship of my family if we have to pay this much and I'd like to ask for an additional scholarship or aid package of X amount." Try to see if they'll offer you some more money to attend their school. It's not always going to work. There is no guarantees with that process. It's not unusual at all for schools to come back with them. 

[00:07:22] Cynthia Meyer: Especially in this environment. We both had seniors last year and your son's gone off to college and my daughter decided to take a gap year, but I found, I don't know if this happened to you, but I found during this process that - especially some of the private schools, they were really trying to recruit her in a way that I hadn't seen before with other families in my neighborhood.

So I think attendance at more expensive schools is down a little bit. Is that correct? 

[00:07:48] Rynda Wilks: I hear of attendance being down at a lot of schools even the college down the road.

[00:07:55] Cynthia Meyer: Really? Oh, okay. 

[00:07:57] Rynda Wilks: I'm not sure what that's all about because the year after - let's say 2021, applications were up. That year I think a lot of people had decided not to go during Covid because they weren't going to be able to go on campus and stuff. The next year, that kind of dynamic was at play, but I'm not sure why the applications are down now. 

[00:08:18] Cynthia Meyer: Yeah. Yeah. It'll be interesting to see what the research shows on that. Certainly in my daughter's class, there were a larger number of kids than usual that decided to defer for a year. Still, most kids went straight on to college, but did she and several of her friends decided to take a gap year and work.

They just felt like they had missed out on that experience of all those things that you do growing up in high school and they wanted to take a little more time to do that before they went to school. 

So one of the things that we've talked about and did a blog post about earlier in the year is ways that you can think about real estate as a real estate investor. Ways that you can think about setting up housing for your students. Talk to us a little bit about that. 

[00:09:02] Rynda Wilks: Yeah, so  one of the most expensive parts of going to school, people don't actually realize, is not always the tuition it's the housing. And the mail packages. If you are a real estate investor, and this is something that you do anyway, you're interested in, one way to think about saving money on college is to purchase a condo or some near campus housing for your student to live in, maybe have some to help pay the rent, then your cost at that location. Then do what you want to with it when they're done with school if it's a good time for you to sell and get your money back. Fine. If you want to hang on to it, if it's a good...

[00:09:43] Cynthia Meyer: Keep renting it as student housing. Yeah.  

[00:09:46] Rynda Wilks: You're not just sinking rent money into the housing at school. 

[00:09:49] Cynthia Meyer: Yeah, so that's a student house hacking. I really like that idea. I met several years ago someone who at the time was working for my financial planner network, the XY Planning Network, and he had bought a house hack for himself when he was going to university. It just turned out so well that just kept buying student housing. So at a relatively young age, had more doors than I did at the time. So it was pretty impressive. 

[00:10:18] Rynda Wilks: Yeah. And I will say my son is in school up in Erie, Pennsylvania. The housing in general, there is at least where he's at, is very inexpensive. Some of his teammates on his water polo team are renting a home and they all pay $400 a piece. I know how much the houses- the similar houses cost in that area, so that's a pretty good deal for the whoever owns that house.

[00:10:41] Cynthia Meyer: Sounds like an opportunity for you and your husband.

One of the things that we often see as financial planners is that people often don't think about college planning topics until their child is applying to schools. But when should somebody be thinking about college planning? When's the optimum time to do it? 

[00:11:00] Rynda Wilks: You want to start in the beginning of high school, the latest. Obviously start saving much, much earlier than that. I think a lot of people do or try to, but also it's a time of life when your expenses, in general, are growing and so it's not always easy for every family to put away however much every month or something like that. It's good to start thinking about it freshman year and one important year that you want to really be aware of is the second semester of sophomore year. That's the look back year for your income on your financial aid forms. So that's the one...

[00:11:37] Cynthia Meyer: Uh huh. 

[00:11:38] Rynda Wilks: ... asking for your tax information. So if you can avoid anything that would temporarily raise your income such as doing a Roth conversion or something like that...

[00:11:51] Cynthia Meyer: That you selling your property and not doing a 1031 exchange. Taking a big bonus. Yeah. 

[00:11:58] Rynda Wilks: Yes. Anything like that in that year avoid..

 Afterwards, let's just say if you are in a position where you really need to do something like- that's another appeals item. Let's say you really need to sell a property and for whatever your personal reasons, you're not going to do a 1031, that's something you can throw in as an appeal item.

" Hey, this was just a one-off thing. This is not normal." 

[00:12:21] Cynthia Meyer: I find it in this busy age, we all have a tsunami of information that's coming at us all the time. People often think that's too much time, or that's too much effort. But I would invite them to think about this planning could pay off for you with tens of thousands of dollars in potential return.

It's definitely worth the hours that you would spend on working on a college planning strategy because it really, it could we're talking about what, five figures or maybe even six, depending on if you do it right. So it's worth it, right? It's not just like forgetting to send in the $5 rebate when you buy your contact lenses or something.

This has a pretty big bang for the buck. 

[00:13:06] Rynda Wilks: Yeah. And on that note, back to schools that require the CSS profile talking about earlier and how they can view home equity differently. You might be looking at two schools that are both phenomenal. They both fit your student, but one of them might look much more favorably at your home equity than the other and they might start with the same sticker price. Say they're both 80,000 a year. 

[00:13:31] Cynthia Meyer: Which is just ridiculous when you think about it.

[00:13:33] Rynda Wilks: It's common. 

[00:13:34] Cynthia Meyer: Yeah. 

[00:13:35] Rynda Wilks: That's a starting point. One of them might actually be tens of thousands of dollars year less expensive.

So if you know that upfront- "Hey, I should apply to that school in addition to the other schools."

If you go to the website, mycap.collegeaidpro.com, you can enter information and get three school specific reports for free; not paying anything actually. They will give you like a good idea, like what those three schools would cost you, most likely. No one can say for sure what kind of aid package you're going to get. They've got it pretty dialed in to where it's a really good, it's a really good estimate to use when you're doing your research.

[00:14:22] Cynthia Meyer: All right. That's super helpful. We'll put that in the show notes. So, Rynda, just taking a step back here, since you've started your business coaching families who are going through the college planning process, what are you most curious about right now? What are you trying to learn?

[00:14:37] Rynda Wilks: I am trying to learn how I can best help families who have already - before they come to me said, "You know what, we really want our student to go to this school."

[00:14:51] Cynthia Meyer: Oh, a legacy or some kind of prestigious goal. 

[00:14:55] Rynda Wilks: Because those are the families that have the hardest time. If that school doesn't happen to be one that's affordable for them, it's a really hard emotional journey to back away from that. Then see, hey, what else is there out there that's similar? And so, I want to be able to help them do that. And see what the future would be like for them down the path that they really want to go down versus maybe a more affordable option.

Sometimes the affordable option, even if it's not what you have your heart set on, might be a lot easier for you down the road in years. 

[00:15:34] Cynthia Meyer: What are some other resources that people could read or listen to learn more about college planning strategies? 

[00:15:42] Rynda Wilks: Yeah, so I have blogs and articles on my website, 21finance.xyz and I try to really get specific about the topics that I choose to write about so that you can take some solid action steps when you're done. There are a lot of good sites out there, especially if your student is applying for a school that requires a CSS profile. The website it has is an excellent resource for that. And College Aid Pro also offers a lot of really good information on their website. There are some great Facebook groups, as well. Especially if you're wanting to send your student to an in-state school. I know in our area we had a Facebook group just dedicated to Central Florida schools. There was an expert on that was moderating and leading that group and it's fantastic because she literally would answer the most specific of questions about applying for and getting into those schools. So, you might have something in your area. 

[00:16:48] Cynthia Meyer: Oh, that's a great suggestion. What is the best piece of advice that you've ever received? 

[00:16:53] Rynda Wilks: The best advice I have gotten was just to do the shopping, to keep looking and not get fixated on one school. I used that. I was able to work with my son and help him do that, as well. It really worked out well for him and for us. 

[00:17:11] Cynthia Meyer: That's wonderful. So where can we find you online, Rynda?

[00:17:15] Rynda Wilks: The easiest place to find me is on my website, 21finance.xyz. I am also on Facebook at Rynda Wilk, 

[00:17:24] Cynthia Meyer: oh, wonderful. Thank you very much for having this conversation today. We've got more broken down in a blog post which we'll also link to in the show notes and you know where to find her if you've got a question for her. 

So if you enjoyed this conversation, please go ahead and subscribe to the Real Life Planning Channel and get notice of future episodes and send us an email at podcast@reallifeplanning.com if you've got an suggestion or a topic.

Thanks, Rynda. 

[00:17:51] Rynda Wilks: Thank you, Cynthia.

If you like this video podcast, consider joining Real Life Planning’s Question of the Week where CERTIFIED FINANCIAL PLANNER™ and rental property business owner Cynthia Meyer answer the most common questions about real estate financial planning direct to your inbox each week. https://mailchi.mp/reallifeplanning/question-of-the-week.

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