TTHC 31 – Grant Baldwin, Major Decisions, Career Choices

Welcome! We’re talking with Grant Baldwin, who is a speaker, author and entrepreneur and his expertise is in helping students choose a major or career path. We hope to benefit from his insights on helping high school and college students take the next step in their own life plan.

Later, I’ll be outlining the 5 Main Tax Breaks families can take advantage of when it comes to college. The money you can save through these breaks can then help you pay more toward col-lege.

Follow up on this information with a tax expert to see how your family’s situation can possibly reap the benefits of some or all of these tax advantages.

“So, what do you want to do with the rest of your life?”

This is a question most parents ask and possibly dread the answer from their student, but it’s what Grant Baldwin specializes in.

For the past eight years, he’s visited high schools and colleges across the country presenting to students and points out that up until college, students have been told what to do and how to do it. So when graduation approaches the decision to think for themselves about their goals and plans, it can be difficult to take that next step. His website also offers resources, a podcast and blog aimed at helping students get the information they need to make the right decision in picking majors, schools and careers.

Things up to this point have been taken care of, so planning for their future brings on a host of responsibilities that are new to them. While it’s exciting to realize your life is in your hands, the weight of being the person to make it happen can seem abrupt and catch students off guard.

Parents: No helicopters allowed

Parents are wired to care and protect their children, but handing them some responsibility early and often can equip them for taking care of themselves when the time comes to head to college and away from home.

Call it tough love, but Grant says that even missing a deadline with college may not be the worst thing if it teaches kids that it’s really up to them (not mom and dad) to take care of business. Students need to own their college experience, by themselves.

Parents mean well, but “helicoptering” in to answer questions and fill out forms for them can end up hobbling their student from learning responsibility.

This doesn’t mean that parents can’t be a part of the process, however. Help them understand the process of applications, deadlines and the like, but realize that this is ultimately your child’s to do.

My junior is undecided: Is it time to panic?

It’s OK to be undecided – it’s currently the #1 college major, according to Grant.

Whether your student has no clue, or seems to be interested in EVERYthing, Grant says its the pressure to know what specific major they want, and what career they want that is common. The myth is thinking that they must stay in a profession after college, when the reality is that most people change careers over their lifetime.

So often being undecided is another way of students saying they don’t want to get it wrong, when realistically, they can change their mind along the way as they go through school because it’s normal. In fact, Grant counsels students that the more specific they get in a niche major, the more likely it’s going to limit that student.

Study wide v. narrow, in other words, to allow yourself the freedom to choose after graduation.

Isn’t ‘undecided’ a red flag to wait on college?

Grant feels it’s better not to go to to college if you are completely undecided or pick a ma-jor you don’t truly feel is a fit. After four years, you’re left with $50,000 in debt and no better idea of what you want to do.

College can also be a way for students to avoid other alternatives like the military or entering the workforce to buy time and not make a decision.

He even says that while a college degree will get your foot in the door at a company, hav-ing a degree isn’t necessarily a factor. Ultimately, employers look at experience.

It’s better to take a year or two off from college that to attend just for the sake of going or to please mom and dad.

How parents can help students make a decision, no matter what that decision is

Truthfully, you can’t make people do anything, but most parents also don’t want to have their son or daughter living at home when they’re 25 years old. So how can they gently force the issue?

For parents, it’s not the answer they want, but really it’s the old adage of “You can lead a horse to water, but you can’t make him drink.” At their age, it’s more likely that being among their peers who are making plans for after high school that can spur a student’s interest to consider their own future.

Reality Check is also a book Grant has written to highlight various questions teens face. Made up of 50 short chapters, he says students like its format as they can pick those questions that they identify with. “Life 101” topics like resumes, credit cards, budgeting, majors, college appli-cations, and a host of others are featured.

After college: is the struggle the same?

Grant speaks at colleges as well, and much of the same “now what?” angst exists when it comes to life after college.

Initially, the goal is to be able to make a living – food on the table and a roof over your head. Too often students try and hold out for a dream job at the expense of paying rent.

As the cost of making drastic changes rises as you get older, Grant recommends to his young adults to enter the world after college with the following questions in mind:

• What are you passionate about?
• What are you good at?
• What do you enjoy doing?
• How can you get paid for doing it?

Then he recommends looking for people out there already doing what you’re interested in. His podcast, “How did you get into that?” features just such people who are in unique careers.

I’d add that there are careers that don’t exist yet (like the cell phone industry 20 years ago) for students entering college that will emerge when they graduate, so the possibilities in answering these questions are indeed intriguing.

So don’t pick a new career every week, but realize that the world is changing and that it’s ok to change with it.

We’ve got the major, now about the college…

There are a lot of factors to consider when choosing a school

• Location – near or far from home?
• Size – Big or small school, or something in between? (personal attention v. opportunities of a big campus?)
• Cost – price doesn’t equate to quality, but that said realize what schools what fall outside of your budget, and understand what scholarships are available. It’s OK to say “I can’t afford it.” It’s far worse to say “I have $70,000 in debt and I have no idea how I’ll be able to pay it off.”

The student’s role

If the student bears no responsibility in selection of college, there’s no investment of interest in where they go or how much it costs.

To illustrate the point, if a student has saved up $2,000 for a car and they want to buy a $10,000 car, they simply can’t pay for it, or they need to figure out how they will take responsibility for that $8,000 difference.

With my clients, parents act as gatekeepers. Students can only borrow $5500, but mom and dad’s credit has no limit. Therefore, parents feel the pressure in knowing that a certain col-lege either can or can’t happen.

The short answer for Grant is simple: Say NO if you cannot afford it. If you have not had prac-tice in doing so up until this point in your child’s life, it may be a difficult answer, but it’s the right answer. It’s not a bad thing, it’s setting boundaries.

I’ll recommend that parents write a contract with their student to outline what they expect in return for footing an often large portion of the college bill. This helps cement what a sacrifice.

Grant’s 3 Quick Tips

• Scholarships – start now; assemble your resume of awards, activities
• Scholarships – start small; there are a lot of $500 scholarships that are left off the table that you have better odds to receive, and they can add up
• Understand the numbers game of scholarships. If it takes you 10 hours to fill out 10 schol-arships and you receive “only” $500, that’s still $50 per hour, which is a heck of a lot more they can get working at a fast food restaurant

BRAD RECOMMENDS – 5 Main Tax Breaks Associated with College

Some people doing their own taxes may miss out on tax breaks and deductions simply by over-looking a checkbox on their form in the software they’re using, so let’s take a look at the follow-ing to make sure your family is taking advantage of the dollars that are available.

1. Tax Credits
   American Opportunity Credit
   • Available to families making up to $80 – $90,000 (single) and $160-$180,000 for married or dual income; this is adjusted gross income, or AGI during years you are paying qualified edu-cation expenses.
   • $2,500 credit (not a deduction) so it directly impacts your tax bill or credit
   • If you don’t qualify for this credit you may be eligible for

   Lifetime Learning Credit
   Tuition and Fees deduction

   If you are eligible for all three, the best option is to take the American Opportunity Credit as it represents the best savings.

2. College Savings Plans
   • 529 Plans – more popular, more flexible; if you are using this plan in the same state you pay income taxes, there may be additional tax savings available on your state return.
   • Coverdell – also offers benefits as it allows you to invest money tax free
3. Education Savings Bonds Tax Credits
   There is no Education Savings Bonds per se, it’s just a government savings bond that you choose to spend for education. Years ago people spent money on these bonds because they understood you can get a tax break on the growth of these bonds.
   • The challenge is in making sure you qualify under some of the rules in order to get the tax credit.
   • If you already have these bonds they’re paying 3-5 percent interest and it may make sense to keep them for college expenses
   • You can also roll them into your college savings plans tax free
   • The purchaser of the bond needs to be at least 24 years old when the bond is purchased, and there are low income requirements on these rules as well
   • You also have to show qualified education expenses
4. Student Loan Interest deduction
   • If you have student loans, you can deduct the interest on them
   • NOTE: This isn’t a good reason to take out larger loans
5. Tuition Reimbusement Plans
   • Companies may offer repayment on expenses for education
   • Not always available to the typical family, as it needs to be the employee receiving the education.
   • However, if you own a small business, this may be an opportunity to set up such a plan, hire your kids into the business and pay tuition assistance through the business

   There are more areas to explore, and I encourage you to sit down with a CPA or accountant to learn more. The IRS also has Publication 970: Tax Benefits for Education

LINKS AND RESOURCES

Grant’s Website
Read more: How to Go to College for Free and Reality Check
The “How Did You Get Into That?” podcast
Visit and Learn How to Find and Do the Work You Love

More information on 529 and Coverdell college savings plans

Learn more about tax advantages for college tuition like the American Opportunity Credit, Lifetime Learning Credit, or for every option, check out the IRS’s Publication 970

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