September is College Savings Month, time to think about how to pay for college.

This is no small issue. Funding a college education can be a significant concern, according to a recent Fidelity study (tinyurl.com/2cc8v5np), which surveyed high school students and their parents, along with recent college graduates and their parents.

Cost can be the most important factor in choosing schools for some (4 out of 10) high school students surveyed. So can student loans. One out of 4 high school students and 1 out of 5 recent graduates said their most important financial priority was “living debt free.”

Given that backdrop, parents and students need to understand this very important point. There are two ways to look at the cost of college: the “sticker price” and the “net price,” which is the actual cost to students after the impact of aid (including merit and need-based scholarships).

Let’s start with sticker price. The College Board’s “Trends in College Pricing and Student Aid” (tinyurl.com/3wcwmnhr) reported average published charges for tuition and fees (2020-2021) for public four-year in-state schools to be $10,560 for full-time students.

If you add room and board, you’re talking big bucks. Room and board was estimated at $11,620 for public schools in and out of state.

But, there is a lot more to this equation than meets the eye. Parents need to know that these are sticker prices, referred to by colleges as “cost of attendance (COA).” COAs usually include tuition and fees (for things like the use of the library and athletic facilities); room and board; books and supplies; and transportation and personal expenses.

Now let’s talk about net price. What’s not reflected in COAs? “Need-based aid, merit aid, and scholarships,” according to CollegeData.com, an online college adviser service.

In reality, the majority of students enrolled in colleges don’t pay sticker price, according to the College Board. During the 2019-2020 school year, undergraduate and graduate students received a total of $242 billion in student aid in the form of grants from all sources, Federal Work-Study (FWS), federal loans, and federal tax credits and deductions.

Looking at tuition and fees alone, a first-time student at a four-year, public, in-state school (sticker price: $10,560) can pay a net price of $3,230, according to the College Board. A private, nonprofit, four-year school with a sticker price of $37,650 could cost $15,990 (net price).

What accounts for the differences between prices? Undergraduate students in 2019-2020 “received an average of $14,940 per FTE [full-time equivalent] student in financial aid: $9,850 in grants, $4,090 in federal loans, $920 in education tax credits and deductions; and $80 in Federal Work-Study.”

It’s wise for high school students to keep costs at the forefront. Let me offer another piece of advice: Before making a cost decision, make a career decision and work backward. Find the best college choices based on what happens when you graduate. That is, will the experience lead to a career? Prepare a short list of colleges. Figure out the net price. Then, do a cost-benefit analysis, choosing the best education for the best price.

Check out the U.S. Department of Education website (ed.gov) for student loans and grants and get familiar with Fidelity’s tools such as the College Savings Calculator (tinyurl.com/2ea5zf2h).

College Savings Month is not the only savings-oriented occasion in September. Sept. 10 (“401(k) Day”) marked the opening of the annual competition for the title of “401(k) Champion®,” earned through an essay contest for 401(k) participants. This is a financial literacy event that I created along with my firm, Jackson, Grant Investments Advisers, Inc., to shine a light on 401(k) participants who make good 401(k) decisions. Apply at 401kchampion.com soon, well before the deadline of Oct. 1.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

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Do you know anyone who doesn’t participate in his or her 401(k) plan at work? Perhaps it’s a family member or friend, or someone who just started working after college?

If you’re not sure, the perfect opportunity to bring up the subject is now, in celebration of National 401(k) Day, Sept. 10.

Why would you pursue this dialogue?

Simple: You can make a difference.

It’s not that hard to motivate someone to start on a path toward financial security. Sharing some key information can create enough of an incentive for one to take action.

Here is my challenge to you: Use 401(k) Day to start a conversation. Though COVID-19 is still lurking, there is no better time than now ask two very simple questions:

1) Do you have access to a 401(k) at work?

2) If you are not participating, what’s the reason?

In my experience, the reason could be based on misinformation.

1) Could people not realize that Social Security retirement benefits don’t cover all costs? (Social Security is a safety net, not intended to fully cover one’s living expenses in retirement.)

2) Could someone be holding off because he or she can’t afford to contribute? (In many cases, tax savings on pre-tax contributions and refiguring your W-4 withholding can solve that problem.)

3) Could one fail to understand that time is the single most important driver behind creating a retirement nest egg? (Starting to save and invest for retirement as early as possible maximizes the math of compounding. More on this in a moment.)

4) Could someone fail to realize that they are missing out on employer matching contributions that other employees are receiving? (Many 401(k) plans offer matching or profit-sharing contributions. According to FINRA, the Financial Industry Regulatory Authority, the most common employer match is dollar-for-dollar up to 3% of salary. You’ll want to make sure you are contributing enough to trigger the full company 401(k) match; the match is a tax-free bonus you need to claim.)

A 401(k) participant, a teacher who figured all of this out, offered this perspective:

“I’ve been told by the younger teachers that they can’t afford to contribute, and I always reply that they can’t NOT afford to! They are throwing money away if they don’t start with at least the (amount) needed to maximize the employer match. I wish someone had had this talk with me when I was much younger.”

This 401(k) participant was one of last year’s winners of the annual 401(k) Champion® Award (sponsored by yours truly). In case your circle of friends and relatives includes 401(k) fans, you can nominate them for the 2021 title of 401(k) Champion® here: 401kchampion.com. Nominations are now open, as of 401(k) Day.

Before leaving this subject, here are a few resources from FINRA.

On the topic of compounding, read about starting early (“The Time Is Now” at tinyurl.com/2aabdrvp). Importantly, this resource also includes a 401(k) case study.

To assess future needs, use FINRA’s “Retirement Calculator” at tinyurl.com/3e3wxvxs.

Another resource is FINRA’s 401(k) “Save the Max Calculator” at tinyurl.com/23brve6r. You can use it to determine how much you should save per paycheck to reach the yearly maximum amount allowed for an employee’s elective deferral.

Also look at the IRS site that provides information on limits on 401(k) contributions at tinyurl.com/38x2eb3b.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

Hate homework? How about 20 minutes of homework to check the background of the financial professional you want to hire? Here’s how.

Start with BrokerCheck (brokercheck.finra.org), a free tool from FINRA (the Financial Industry Regulatory Authority). As you can guess from the name, FINRA regulates the brokerage industry.

On BrokerCheck, select the “individual” tab. Enter the person’s name. If too many results come up (there are 29 pages of John Smiths), you can narrow the search by inserting the name of the firm he or she works for.

When the search result is displayed, the top part of the page will include the person’s name, CRD number, the firm he or she works for and the firm’s CRD number. The CRD (Central Registration Depository) number is a unique identifier issued by FINRA.

If you see a light-blue circle with the letter “B,” that indicates a person is a “broker,” someone who works for a broker-dealer. A dark-blue circle with an “IA” indicates the person works for an investment adviser. If both circles appear, it means the person works for a “dual registrant,” a firm registered as both a broker-dealer and an investment adviser.

These terms define the rules the individual must live by when dealing with customers. (Two different sets of laws apply -- the subject of a future column.)

Next, you’ll find four boxes. There are sections on “Years of Experience,” “Licenses” and “Examinations,” all of which provide important background details about the person when you click on each individual box.

From my perspective, perhaps the most important box is “Disclosures.” If the box is gold, that means there have been “customer complaints or arbitrations, regulatory actions, employment terminations, bankruptcy filings and certain civil or criminal proceedings that they were a part of,” according to the BrokerCheck site.

Clicking on the gold box will give you more details about the disclosures, including the date, type and disposition of each issue. For additional information, select the “Detailed Report” link above the company name on the right side of the page.

You also can find out information about the firm that employs the broker by selecting the “Firm” tab at the top. This time, you can enter the company’s name or its CRD number, both found at the top right of the individual’s report.

The results screen looks like the individual’s screen, although only the first colored box, the one for disclosures, is identical. Again, that box is likely the one you will be most interested in.

For a firm, the “Disclosures” category shows a total number, with a breakdown by type (regulatory event, civil event, arbitration). Again, the “Detailed Report” link is available for additional information on each disclosure.

There is one other important piece of information to review: At the top of the page, by the firm’s main address, is a blue button titled “Relationship Summary.” Selecting that will take you to the firm’s CRS (Customer or Client Relationship Summary), a key disclosure document required in 2020 by the U.S. Securities and Exchange Commission.

I am a supporter of the CRS -- if only more people were aware of it. The CRS is a two-page (four pages for dual registrants) document that allows someone to quickly compare and contrast firms. That includes a discussion of conflicts that are a part of the way the firm does business, which gives you a sense of the culture of the firm. Clearly, the CRS is worth your time when you are looking for a financial professional or reviewing your current one.

Yes, this involves doing 20 minutes of homework on your part. But it’s your money at stake, and if someone is giving you recommendations about investments, isn’t it a good idea to know who you are dealing with, and the company behind him or her? BrokerCheck and the CRS provide a good starting point.

On another note, as I mentioned in a previous column, I’m considering starting a “regular reader” email list to get your views on different topics through short surveys. If you are interested, write to me at readers@juliejason.com.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION