What if the way most families plan for college is actually setting them up to fail financially? In this interview, I sit down with Brock Jolly, one of the most respected names in the college planning world, to unpack why 529 plans might not be enough. 529 plan is one of the best tax advantage products out there, but it's not a strategy. And how the strategic use of cash value life insurance can create flexibility, control, and protection through childhood, college, and even retirement. With the 529 plan, when you spend that money, it's gone. With the life insurance, when you spend that money, you have the option to repay yourself. We explore how Brock helps families pay for college, build wealth without sacrificing their savings. Let's dive in. Brock Jolly, you're about to go on stage. About to go on stage. Thank you so much for being in Nashville, Tennessee. We've been friends for many years. You're like the goat when it comes, I mean, this is going to be, I'm going to bring you up and bring you down. You're the goat when it comes to life insurance and college planning. Okay. And so that's pretty lame. but it's still pretty cool. You own it. You're very proud of what you get to do. I've had the opportunity to speak at your event. And you're very much known in our space for being like, if you're going to do college planning, if you're going to help people get to college and do that well, financially, they come to you. And so I just, I want to create the masterclass. Like our community loves learning. And if I could create a masterclass on how to do college planning well? What are the mistakes that people make? What are the things that I can incorporate to make sure that if college is important to me, that I can best be set up to have my family thrive? And then if advisors are watching this, how do they get connected with you? And maybe there's some people that are watching this that need your help. So with the world's longest intro, welcome. Awesome. I'm grateful that you're here. Good to be here. Grateful to be here. So talk to us about how you got into this space, first and foremost. Yeah. So it's interesting. I started in the financial planning industry in the summer of 2000. And so... Some of your listeners may not have even been alive or not dealing with finances then, but that was the dot-com era, right? Literally, how I got into this business was I saw people investing in the stock market and doubling money overnight. I was like, I can do that. And I got in and the dot-com bubble burst and nobody wanted to talk to me. I was like, well, this is interesting, but how do I do it? So I'm making 150, 200 cold calls every single day. begging and pleading people who have no interest in talking to me to talk to me. And the question that I kept getting over and over and over again was, well, Brock, now that all this money is gone, how are we going to pay for our kids' college education? And I didn't know the answer. So what do you do? You go talk to your mentors, people who you respect. And I figured out real quickly, they didn't know the answer either. And I started researching it. And I figured out that a big problem is most people, where's their money? Their money is in their equity in their home, and it's in their retirement plans. Let's say, let's agree for a second, great for retirement. Not so great when you need to send two or three kids to college. You need liquidity, you need cash flow. And the challenge is nobody understands how college financial aid works. There's this perception when they go on college tours, they say, well, this school meets 94% of aid or this school, they give out millions and millions of dollars in scholarships. And the reality, the little secret behind that is that's not for your family. The families that we're working with, the families who we're dealing with, they're not going to get it. You know, or they say, well, my kid's great at basketball. And oftentimes the hard conversation is your kid's the eighth best player on the JV team. They're not getting a college scholarship. And so and by the way, I hope they do get a scholarship. And then we don't even have to use that money. We can use it for something else. So that's the deal. I figured out along the way that college is the number one financial fear of most American families. And so very few advisors are focused on it. So all we're doing at the College Funding Coach is we're using college funding as the door opener, the piece that families have such a sense of urgency around as a way to get in the door and say, okay, because college is so expensive, let's broaden that conversation. And let's talk about all the other stuff and where your cash flow is and what you're doing currently. We're going to solve college. We're going to keep the main thing the main thing, but we're going to look at all the other pieces as well. Yeah. You okay, Fadrilio? Yeah. Okay, so college. Is college a good investment in 2025? You know, I've had this conversation like eight times today out in the main room. Look, I think it beats the heck out of the alternative. I think there are some kids who certainly don't need to go to college, right? Maybe they have a parent who owns a business and they're the natural succession, or they've built a business while they're in high school. It's a no-brainer. Go do that. But I think academically, socially, etc., I think... For so many kids, college is a really important. maturation piece. And so I think you've got to figure out what's right for your kid, your family, et cetera. What I will say is, look, I don't know that you need to spend 80, 90, $100,000 a year for your kid to get a college education. I think there's lots of good, if you think a little bit outside the box, there's lots of great paths that can end in the same or a very similar end result without spending a fortune to do so. Okay. So So. next step is you're meeting with the family. Let's say I have a kid. You got a one-year-old. One-year-old. Let's go, man. Let's get to work. But let's say my kids, this would maybe be a great place to start. What's the ideal age to start planning? On the way home from the delivery room. Are you kidding? Really? Why not? Okay. So then talk to me about maybe people in my shoes, but then I would imagine that people coming to you have kids in high school potentially. So I would love to know those two scenarios and just give me like the process of what people need to look out for because you're totally right. The financial aid system, super confusing when it comes to like, there's a lot of things that are very confusing in that space. And so like, where do we begin? If you can give us kind of the framework on how you and your team helps people maximize their money when it comes to college, that'd be great. Yeah. It's like anything in the financial planning industry, the earlier you start, the better, right? And part of the challenge is, you know, you think about it for Many of your consumers who are listening, probably somebody when they started that first job, it was, hey, put as much money as you can into your 401k. You'll thank me later. And so you do that. And then, you know, sort of a stereotypical scenario is, okay, then you get married, you have kids, you move to the suburbs, you buy the Honda Odyssey, etc. And then all of a sudden, it's like, okay, now we've got this 15-year-old. Oh, man, like, how are we going to pay for college? Because you've never set money aside. And guess what? The 401k looks great. The home equity looks great, but you don't have money to be able to pay for college. And so then you're sitting there saying, okay, well, I guess maybe we're going to need to go take out some student loans, which today are at eight or 9% oftentimes. And so it's not a joke that ideally you start on the way home from the delivery room. Nobody does that. And so the sooner you start, the better. It's interesting. When I first started teaching these classes, we originally did it through the adult education programs in a lot of the counties around Washington, D.C., where I live. And I'd get these parents who would say, man, great information. I wish I had known this information when my kids were in elementary school. You ought to go teach at the elementary schools. And we did that. And those parents said, hey, great information, but I've got a fourth grader. I've got plenty of time. I said, go talk to your neighbor who's got the junior or senior and ask them if you've got plenty of time. So. Point number one, the earlier is better. But point number two is even if you're a parent of a junior or senior or even kids in college, there are still things that you can do, right? Because it's what we're looking at as an organization. We're looking at your taxes. We're looking at your cash flow. If you are going to take out student loans, we want to help you figure out how do you best student loans and then whatever you spend on loans, how do you recapture that money so that you're not sitting here like I would much rather a 22-year-old recent college graduate have student loans than a parent at 52 or 62 with the same student loans. And so it's all about how do we figure out a strategy that's right for your family? Right. And what's that look like? What are some of the biggest mistakes people make when it comes to college planning? They're the ones that are actually proactive enough to say they want to do a plan. What are their mistakes? Yeah, I think I'll take it a step further and say, for most people, it's not doing the planning. It's getting there and then saying, okay, well, I'm going to go to the financial aid night at my kid's high school and figure out. And by the way, there's a company that we are affiliated with who they do all of the standardized forms, the FAFSAs, the CSS profiles, all of that. He says that 85% of families do it wrong. 85. 85. So probably not unlike if you're doing your own 1040s and things like that, somehow, some way you're probably missing something. And so I would just say, A, not understanding the process, right? Understanding how it works, how financial aid really works. Understanding how you might be able to position your student in such a way that they might be able to go to a school for a much lower cost than whatever that sticker price is. Things like that. And then just not fully understanding, you know, and this is true of your group here, right? Really understanding the economics behind the tools and products and strategies that are out there. Right? I mean, it's just like you don't necessarily need a 401k to retire. You don't need a 529 plan to go to college. It's not a bad instrument, right? I say a lot of times, look, a 529 plan is one of the best tax-advantaged products out there, but it's not a strategy. Okay. Right? And so understanding that and how it can work and the fact that, you know, look, 529 plans are generally tied to the market. They can go up in value. They can come down in value. I've seen so many families. I mean, recently, 2022 was a terrible year in the market. If you were sending your kid to college in September of 2022, and all of a sudden your 529 plan is worth 30% less than it was in January, you're not real happy about that. So understanding that and understanding the timing. And maybe having some things that are tied to the market, some things that aren't tied to the market. So you can control the outcome and make decisions from a position of strength. You know the strategy of volatility buffer in retirement? Do you do volatility buffer when it comes to finding? Exact same concept. Okay. Here's the difference. If you think about, and I'll use 2008 as an example for some people, that's probably fresh in their mind. For some people, it was forever ago. But the idea is, in 2008, for me and for a lot of our clients, it was great. Because the S&P 500 was down 37%, right? Guess what? We're buying low. We're putting money into the market low. For the guy or the couple who retired in 2006, and now they're pulling money out of the market in 2008, it's terrible, right? You're locking in those losses. And so the idea here is, and what I would say is, look, if you were going to retire and the market was way down, or you just retired and the market was way down, you can always keep working a little bit longer. You might be able to go back to work, things like that. But with college, it's a little bit different. When your kid turns 18, generally speaking, they're going to school. I mean, there's gap years and great programs that are out there. I'm not ignoring that. But generally speaking, when you're 18, 19 years old, you're going off to college regardless of what's going on in the market and the economy. And the colleges know that. Yeah. And you college. tuition has gone up exponentially more over the last 25 years than anything else in the economy. Right? I mean, the real numbers are CPI is about 90% since January of 25, or sorry, January of 2000 through now. College tuition has gone up 190% in that same time period. So- If you're a high income earner or own a successful business, you're already creating real value in the world. The real question is, are you keeping that money, protecting it, and growing it the way that actually supports your long-term goals at better wealth we help people like you better keep protect and grow their wealth through various tax strategies estate planning especially design life insurance retirement planning and even a fractional family office service if you're interested in one or more of the areas we can serve and want to learn more the next step is to book a free clarity call with us click the link in the description or tag comment below to get started back to the video There's a lot of places we could go, but let's talk about the 529 plan because a lot of times when people think college planning, what that means is they're just funding a 529 plan for their kids. What is your thoughts on 529 plans, the pros and cons? Yeah. I mean, look, 529 plan, as I said before, great tool, not necessarily a strategy. A lot of it depends on your state, whether you've got a state tax advantage for contributing money to a 529 plan and if that's tied to a specific plan. So you can go on our website. We've got a totally free tool. It's under our website is www.thecollegefundingcoach.org. You can go onto that site and there's a section that says get help. There's a calculator that looks at 529 plans and you can compare 529 plans. You can look at your state versus another state. And just to be clear, 529 plans can be income tax-free. but not federally tax-free when you fund them? Well, it depends on your state, right? Yeah, talk to me about the difference. So federally, 529 plans, you can put away a maximum of $19,000 in 2025 is the gift tax limit. So you can put away $19,000. There is a special rule with 529 plans that allows you to put five years worth of contributions. So do that math. If you've got $95,000 burning a hole in your pocket, you can put it into a 529 plan. It all grows federally tax-deferred. distributions are tax-free as long as they're used for education. And I used to have to say higher education. You can now use up to $10,000 per child per year for private, elementary, middle, or high school. What about homeschoolers? Homeschool generally, no. But there are some programs that are available where they do like co-op programs and stuff. Where as long as that is an accredited program through a college or university, it may be. There's another great program that we're... You know, we do some work with called the 529 Advantage, and it's all about ways that you can use the 529 plans for things like homeschooling programs, dual enrollment, summer camps, different things where you're actually getting college credit for some of these things. Yeah, like Outward Bound is a program where you can use a 529 plan because you can get college credit for it. So there's all kinds of things, you know, and one of the downsides really used to be if you ended up with money left over in the 529 plan. Because now you, on the distribution, you were paying tax on the gain plus a 10% penalty. Okay. There's lots of ways to use it. You can also pass money from one sibling to another, right? Different ways. You can pass it to cousins. You can pass it to parents. You can pass it down to grandchildren. So there's some flexibility. And the newest rule is that you can actually transfer up to $35,000 during a beneficiary's lifetime from the 529 plan to a Roth IRA. Interesting. So they're making it more multi-dimensional. A little bit more flexibility with it. So look, I would tell you, and then the other thing is understanding your state's tax advantage. So like I live in Virginia. In Virginia, you get a $4,000 per child, per plan, per year tax deduction at the state level. So I've got two kids. I can put in $4,000. My wife can put in $4,000, multiply that by two kids. We can deduct $16,000 on our Virginia state income taxes. Okay. That's not true of every state. Yeah. Right. I was just talking to somebody who lives in Florida. Florida doesn't have state income tax. So therefore there's no tax advantage to the, at the state level for the 529 plan in Florida. Yeah. And, and to be fair, there's no income tax in general. Life's good in Florida. Those of you Floridians make some love in the comments. Okay. So now let's compare 529 plans versus life insurance. Sure. Because you're, you're a fan of life insurance. I am. but it sounds like you're not an anti-fan of 529 plans. And I've heard a lot of life insurance peoples, they very much downplay the 529 plan to elevate life insurance. First question is, do you have 529 plans with your kids? I do. Okay. But then you also have life insurance. I do. Okay. So talk to me about the difference and pros and cons to using life insurance and where life insurance is better than a 529 plan and maybe where it's not better than a 529 plan. Well, I would make an argument, better or worse, like, you know, the— An argument against cash value of life insurance is to say, well, gosh, Brock, the S&P 500 could do better. And my argument is the S&P 500 likely will do better. It's not necessarily about that. It's about the timing. And when you unwind it, right, there's a big difference between the accumulation of wealth and the distribution of wealth. And so the idea here is I love the idea of doing both. And now the idea is, okay, if the market's doing great. That 529 plan is what you're going to use all day long. If the market's not doing great, now you've got an asset that generally is not tied to the market from which you can take a distribution, same tax rules. It's all coming out tax-free. With the life insurance, you have no limits to what you can put in generally. I mean, up to whatever an insurance company will allow you to purchase. You don't have to justify what it's being used for. With the 529 plan, you can be audited. where they could say, okay, was that money used for tuition, room and board, books, computers, supplies, et cetera, the things that are allowable expenses. With life insurance, they don't ask the question. It can be used for anything. So a lot of times, like I just talked about a week and a half ago with a family whose daughter goes to school in the UK. And they called us because they wanted to take a distribution for her plane trip home this spring, coming home from college. I said, well, you can't you can't do the plane trip on, on the, from the five 29 plan, but good news. You've got cash value life insurance. If you want to, you could pull the money out of there. So it's a nice backstop. And then the idea too, I use the sort of the storyline to eat the chicken or to eat the eggs. And the idea there is with the five 29 plan, when you, when you spend that money, when you send that off to the college or university, it's gone. You're never getting it. The college has it. They're putting it into their endowment. They're building buildings. They're endowing professorships. They're putting scholarships for other kids. You're never seeing that money again. With the life insurance, when you spend that money, you have the option to repay yourself. Generally, you're not required to, but you have that option. So now it's, okay, the eggs, right? Sorry, the chicken. You've eaten the chicken with the 529. With the life insurance, it's going to keep laying eggs, right? You're going to have those dividends that keep coming in. You've got the option of if you repay yourself. Because really for so many families, it's when we think about college, college is really as much about retirement as it is launching your kids off into the world. It's, hey, if I'm going to, we're sitting here in Nashville, so I'll use Vanderbilt as the example, right? Vanderbilt's $100,000 a year now, right? And it's like, okay. Good news, right now you've only got one kid, right? But what if you have two or three or four? And now all of a sudden it's like, man, we're talking a million bucks. And by the way, a one-year-old, Caleb, by the time that a one-year-old becomes an 18-year-old, might be more than $100,000, right? So the point is, with cash value life insurance, I can use it for college, I can use it for retirement, I can use it for a vacation if I want to. Lots of flexibility with how I use it. And so do you find that a lot of your clients are using both products mixed together to- A lot of times, yeah. Because the idea is by owning both, I would argue that it's not one or the other. It's owning both really enhances your overall rate of return because now you can make- It gives you optionality. Yeah. You make a decision from a position of strength. And if you have money in a 529 plan, do you have to disclose that as an asset when you go to college? Correct. Yeah. That's another thing too. You do. Okay. But in a life insurance policy, you don't? Correct. At most schools. So I'll dive in on that real quickly. So there are what are called accessible and non-assessable assets. And so every single college and university in America uses the FAFSA, the Free Application for Federal Student Aid. They want to know income assets of the parents and the student. There are 179 schools that use a form called the CSS profile. That just dives a little bit deeper. They may ask about... what the FAFSA considers to be non-assessable assets. So they could ask about life insurance, annuities, equity in your primary residence, retirement plans that the FAFSA does not ask about. So you got to understand how to navigate that. It really depends where your kids are going to school. But the point is at the overwhelming majority of schools, they do not ask about cash value inside of life insurance and annuities. What other hacks do you have when it comes to college planning or just products that would help with the- the college plan. Well, there's, I don't know if they're hacks, but they're secrets, right? I mean, look, we've been doing this. I started what became the college funding coach in 2002. And so at this point, we've been doing it for 23 years. I will tell you, we figured out a lot of things not to do, sometimes the hard way, right? But we've kind of honed in on really being able to help families navigate this. And what I'm quick to say is we're not the ones who are going to help you figure out where your kids should go to school. I know enough about that and I can have those conversations. Our team can have those conversations, but it's really about, okay, if these are the schools that your kids are considering, how do we build a plan around that? That's going to allow you to pay for college at whatever level that means for your family and still retire one day, right? Because those are big, you know, you think about it, like everybody says, well, buying a house is the biggest financial commitment that you ever make. And maybe that's true, but guess what? You've got 30 years or more to pay for that house, right? You could refinance the house. You might move away from the house. Yeah. Like the point is you've got, you've got flexibility college, not really, right? You've got to pay for it. You kind of got to pay for it over four years, or you take out student loans that are not necessarily at the most competitive rates. So it's really just, we really try to customize strategies for that family. What are some of the secrets though? Well, so like, I'll give you an example. We just worked with a family two months ago and he had an existing advisor. I would say probably 70, 80% of the families that come to us have some existing relationship. And I would say, we're not looking to replace it. It's just most advisors don't know this stuff. And so I had an existing advisor and he said, look, I've got about $3.5 million. My current advisor says I can pay for college and I can use the cash flow. And long story short, we said, you probably can. But what if there's a better way? Would you want to know about it? Yes. So guess what? We crunch the numbers, right? We do what we do. And we crunch the numbers and we put the strategy together that we actually showed him. It's kind of a time value of money thing, right? We said, keep your money invested. We're going to take out student loans to pay for college. But when your first kid graduates, we're going to pay off that student loan. When your second kid graduates, we're going to pay off that student loan. Long story short, it generated just using some pretty basic assumptions, right? And very conservative assumptions. It generated an additional $1.2 million for this family at retirement by taking out student loans and letting the asset continue to grow and then having the money to be able to repay it on the back end. Can you use 529 plans to pay off student loans? Up to $10,000 during a student's lifetime. So not much. Not much. But you know what you can use, Caleb? Life insurance. Life insurance. Man, I was going to do like a real hack in real time. Like what if you could comp on the 529 plan? But I wonder if they'll change that. with student loans being such an issue. Maybe. I mean, it's a huge issue, right? Like one of our goals at the College Funding Coach is really to do our best to eradicate student loan debt. I mean, it is, you can't discharge it because of bankruptcy. I mean, the only real way out is death. That's not a real good option. Not endorsed by me, by the way. Yeah. So it's like, okay, so how do we create a strategy to repay the student loan or just have a better solution long-term, I think is really the key. Brock, I really appreciate you doing this podcast. if you're watching and you are an advisor or a financial professional, and you're like, I would love to figure out either how to do this myself or collaborate with someone like, like Brock in your practice, there'll be a link down below for you. And then if you're someone that is like, I need help when it comes to college planning or, or have someone take a look at my college plan or lack of plan, we'll also have a link down for you. Any final words as we wrap this up? just, I mean, it's sort of become my mission. I mean, I got into it and we realized early on that. that challenge of money in the 401k, money in the home equity was not unique to Washington, D.C. And so for the last 23 years, we've built this organization. We've got a nationwide network of advisors now who are using these type of strategies, who are helping families navigate it and come up with customized strategies. So to your point, if you're an advisor who might be looking to say, hey, how do I get in front of parents who are struggling with this? And my gosh, there is a sense of urgency because college is so expensive because parents want to launch their kids off into the world. So I found it to just be a really rewarding opportunity to have a real impact. And then number two, to your point of, if you're a parent watching this saying, gosh, I would love to figure out how to navigate this more efficiently, more effectively, Caleb will put a link at the bottom, but we do a lot of joint work and happy to have conversations around your specific situation and kind of bring it from that 30,000 foot overview a little closer to ground level. So thanks for having me.
.png)