April Jobs Report: The Two-Tiered Recovery

The April jobs report continued the saga of a two-tiered labor market. The economy added 160,000 jobs and the unemployment rate remained at 5 percent. Revisions to the previous two moths amounted to 19,000 fewer jobs than originally reported. But the broad numbers may not paint a true picture of the employment landscape. The biggest complaint is that overall wage growth has been unimpressive. In April, average hourly wages increased by 0.3 percent, nudging up the annual increase to 2.5 percent. Given the impressive number of jobs added, most analysts have been promising that wage growth would soon follow, but annual wage growth has remained between 2 and 2.5 percent for the past few years, below the near-3 percent seen in previous expansions. While 2.5 percent is not a bad number, we have been here before and now need to see consistent readings that are trending higher.

It’s not supposed to work this way. If employers are having a hard time filling positions, and workers are more willing to jump ship, wages should be rising faster. However, according to economist Joel Naroff, “No matter how tight the market may be, companies are still willing to go without new hires and limit pay increases.”

It may be that the labor market is not quite as healthy as the top line measures indicate. In addition to the 2.1 million Americans who have been out of work for more than six months, the number of workers who work part-time but would rather be full-time remains at a still-elevated 6 million. According to research from the Federal Reserve Bank of Chicago, the high numbers of “part-time for economic reasons” is a contributing factor to limiting wage growth.

What appears to be happening is that workers in the high growth fields can demand higher wages, but the vast majority of workers either don’t feel like they have bargaining power or have made a different kind of adjustment: if the boss can’t pay me more, maybe I will work a little less. This could be part of the reason why worker productivity has dropped off. According to the Labor Department, in the recent 2007-2015 period, annual labor productivity has slowed significantly to 1.2 percent, the worst period since the late-1970s to mid-1980s. Naroff says the downshift is understandable because “until workers have reasons to work harder (i.e., greater compensation), they will find ways not to work harder.”

Of course, with corporate earnings set to drop for a third consecutive quarter, companies are unwilling to take the first step to incentivize their workforces. This strange game of chicken is unlikely to continue for too much longer. Unfortunately, there is probably an equal probability that we see a downshift in the economy, which would spur workers to step it up; and an uptick, which would force companies to pay more.

MARKETS:

• DJIA: 17,740 down 0.2% on week, up 1.8% YTD
• S&P 500: 2057 down 0.4% on week, up 0.6% YTD
• NASDAQ: 4736 down 0.8% on week, down 5.4% YTD
• Russell 2000: 1114, down 1.5% on week, down 1.9% YTD
• 10-Year Treasury yield: 1.78% (from 1.83% a week ago)
• June Crude: $44.66, down 2.7% on week
• June Gold: $1,294.00, down fractionally on week
• AAA Nat'l avg. for gallon of reg. gas: $2.21 (from $2.21 wk ago, $2.65 a year ago)

THE WEEK AHEAD:

Mon 5/9:

China CPI/PPI

Tues 5/10:

Walt Disney

6:00 NFIB Small Business Optimism Index

10:00 JOLTS

Weds 5/11:

Macy’s

2:00 Treasury Budget

Thursday 5/12:

Kohl’s, Ralph Lauren, Nordstrom

8:30 Import/Export Prices

Friday 5/13:

JC Penney

8:30 Retail Sales

8:30 PPI

10:00 Consumer Sentiment

#270 Stop Being a Lousy Investor

We are wired to be lousy investors, says guest Dan Egan, the Director of Behavioral Finance and Investments at Betterment. Dan explained that the very cognitive behaviors that distinguish human beings from other forms of life, can lead us astray. Unlike traditional economists, who believe that incentives, along with logical thought processes, will ultimately dominate our decisions, behavioral economists acknowledge that human beings are not always rational and want to help people make better decisions by using their emotions to their advantage.

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Behavioral economists want to make it easier for us to do virtuous things, like saving for retirement and harder to do harmful things, like blowing our paychecks on fleeting, short-term pleasures.And if you ever wondered why it's so hard to stay on your diet, go to the gym or adhere to a financial plan, it is because willpower is actually a deplete-able resource - and making virtuous decisions can actually cause fatigue. The answer is to automate as much as possible. “Doing the right thing should be effortless,” says Egan, which is why Betterment uses behavioral science concepts to help people overcome their very natures.

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

With Economy Stalling, Time to Sell in May and Go Away?

Should you follow the old Wall Street adage to “Sell in May and Go Away”? You might be tempted to do so, especially with economic growth crawling at a measly 0.5 percent annualized pace in the first quarter, consumer spending decelerating for the past nine months and corporate earnings on track for a third consecutive quarter of declines—the longest streak since the financial crisis. 2016 has been a year of investor anxiety, starting with a swift Jan-Feb 10 percent stock market correction. Now that indexes have clawed their way higher, many are worried that something ominous is brewing for the summer. This week’s employment report could either fan the fear flames or tamp them down. Analysts expect that 200,000 jobs were created in April and the unemployment rate will remain at 5 percent.

If those estimates were to come in on target, they would add to the mostly upbeat data on jobs that we have seen over the past few years. According to Calculated Risk, through March, total employment was 5.3 million above the previous peak and up 14 million from the employment recession low. Last week, although the Federal Reserve did not raise interest rates, it acknowledged that since its previous meeting six weeks prior, “Labor market conditions have improved.”

But the broad numbers may not paint a true picture of the employment landscape. Steve Murphy of Capital Economics notes that there has been a surge of low paying jobs in sectors like retail and leisure, while “at the same time, employment in higher-paid sectors such as manufacturing and mining has fallen back sharply. More generally, there has been a sharp deterioration in the quality of jobs created.”

Career coach Connie Thanasoulis-Cerrachio, co-founder of SixFigureStart® says her on-the-ground-interaction with employers and candidates echoes that sentiment: “We see a tale of two [labor] markets – strong candidates have a great market. Mediocre ones are still have a hard time.” What makes a strong candidate? It helps if those seeking jobs are looking in the hot industries that are hiring, like technology, healthcare, accounting, marketing/data analytics as well as the non-profit world, which Thanasoulis-Cerrachio says is “booming”.

Even if many parts of the economy are growing and employees do eventually see an uptick in their paychecks (Capital Economics expects “to see a marked acceleration in hourly wage growth to around 3 percent by year-end”), the stock market may still stumble, due to valuations, exogenous events across the globe or plain old exhaustion, which brings us back to the original question of selling in May. According to Charles Schwab, “since 1950, nearly all of the S&P 500’s gains have occurred between October and April. The mean return during May through October was 1.3 percent; while for November through April it was 7.1 percent.”

Unfortunately, “Sell in May and Go Away” hasn’t been as reliable over the past dozen years. It didn’t work from 2012-2014, or from 2003-2007, so you may want to stick to the tried and true strategy of investing in a diversified portfolio, targeted to your specific goals. Not as catchy as “Sell in May and Go Away”, but probably a smarter way to manage your money.

MARKETS:

• DJIA: 17,773 down 1.3% on week, up 2% YTD
• S&P 500: 2065 down 1.3% on week, up 1% YTD
• NASDAQ: 4775 down 2.7% on week, down 4.6% YTD
• Russell 2000: 1130, down 1.4% on week, down 0.4% YTD
• 10-Year Treasury yield: 1.83% (from 1.9% a week ago)
• June Crude: $45.92, up 20% on month, up 75% since bottoming out in February at a 13-year low
• June Gold: $1,294.90, highest level in 15 months
• AAA Nat'l avg. for gallon of reg. gas: $2.21 (from $2.13 wk ago, $2.58 a year ago)

THE WEEK AHEAD:

Mon 5/2:

AIG

9:45 PMI Manufacturing Index

10:00 ISM Manufacturing Index

10:00 Construction Spending

Tues 5/3:

CBS, BMY

Motor Vehicle Sales

Weds 5/4:

Tesla, Lending Tree, Priceline

8:15 ADP Private Sector Employment Report

8:30 International Trade

8:30 Productivity and Costs

9:45 PMI Services Index

10:00 Factory Orders

10:00 ISM Non-Manufacturing Index

Thursday 5/5:

Alibaba, Merck, GoPro, Herbalife

Chain Store Sales

Friday 5/6:

8:30 April Employment Report

3:00 Consumer Credit

#269 Behind the Curtain of Hedge Funds

What's behind the curtain at those often-discussed, murky hedge funds? According to our guest Mark Spindel, the managers of these risky investment vehicles for the rich pretty much do what we do: try to figure out what's going on in the world (aka assess the macro economic outlook), weigh the risks that exists and put money to work. In addition to being one of my oldest friends in the world, Spindel is the founder, Managing Member, Chief Executive Officer and Chief Investment Officer for Potomac River Capital, LLC.

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Prior to launching the firm a decade a ago, Mark spent nearly ten years at the World Bank where he was Deputy Treasurer and Chief Investment Officer of the International Finance Corporation managing $15 billion in fixed income reserves and was also a member of the Board of Trustees of the World Bank’s $14 billion pension fund where he oversaw strategic asset allocation across investment classes including equities, bonds and alternative investments (hedge funds, private equity and real estate).

Mark described where he thinks the economy stands right now: we are in a slow growth world, where the U.S. looks better than most of the alternatives. He says that being an investor in the post-crisis era is harder than it used to be--primarily because central banks are taking such unusual steps to spur their economies and it is hard to know what the impact of unwinding the policies will be. His recommendation for any investor? Own a large US stock index fund along with a bond fund that invests in inflation protected bonds or "TIPS".

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

Estate Planning Lessons from Prince

Following Prince’s death last week, his sister has filed documents that say he did not have a will. He’s not alone…according to recent survey, just a little over half of American have a will or living trust document. That's a shame because dying without a will ("intestate") can create a complicated mess that can take years to sort out. What estate planning lessons can we learn from Prince? First and foremost: don’t let your fear of dealing with the estate process stop you from taking control and reducing the potential for future controversy. At the very least, you should write down a basic outline of what you would want to happen to your assets in the event of your death. Although I much prefer hiring an estate attorney to do it the right way and in accordance with state laws, having something basic in place is better than nothing.

To tackle the issue and to encourage family conversations about estate planning, here are some of the basic documents that you will need.

Prior to death:

Legal Documents

• Will
• Letter of Instruction
• Power of Attorney
• Health Care Proxy
• Trusts -- These are not necessary, but many people have either revocable (changeable) or irrevocable (not-changeable), depending on family and tax situations. For 2016, the first $5.45 million of an estate is exempt from federal estate taxes, so theoretically a husband and wife would have no federal estate tax if their estate is less than $10.9 million. If an estate is above the threshold, a revocable trust may be suitable to consider.
• "DNR" or "Do Not Resuscitate" order (this may need to be completed upon each new entry to hospital or nursing home)

Accounts

• List of all bank accounts
• List of all user names and passwords
• List of automatic pay accounts with name and contact information of each payee
• List of safe-deposit boxes
• 401 (k) accounts
• IRA's, Roth IRAs
• Pension documents
• Annuity contracts
• Brokerage account information (name, contact phone number and e-mail address)
• Detailed list of savings bonds (and copies of actual bonds)
• Life insurance policies (private and through employer)
• Long Term Care insurance policies

Other Documents

• Housing, land and cemetery deeds
• Mortgage accounts
• Proof of loans made
• Vehicle title
• Partnership and corporate operating agreements
• Previous three year's tax returns
• Marriage license
• Divorce papers
• Military discharge information
• List of contact information (contacts on accounts, names, current addresses and Social Security numbers of all people named in the legal documents, as well as the contact information for the estate attorney and CPA who will be handling the estate.)

After completing all of this hard work, you need to inform your executor/executrix as to where everything is stored.

After death, things get complicated, because you have to shift between grieving and doing. I learned not to go too fast with my mother, so that she did not feel overwhelmed. It’s helpful to remember that everyone in the family grieves in different ways, which is why patience and compassion are often your most valuable commodities during the process.

Get organized. I found solace in a spreadsheet, which helped me keep track of the estate settlement progression, but you can use any system that works for you. Just remember that there are usually many moving parts and you may not be at the top of your game for remembering everything that needs to get done. A visit to your favorite stationery store will help you keep records of everything stored neatly in one location.

Request plenty of death certificates. Some institutions want originals, not copies, and it’s easier to make the request from the funeral home, not after the fact from the city or state.

Keep track of all bills that are attributable to the estate. These include funeral and memorial arrangements, death notices and other ancillary expenses. The estate can reimburse individuals for these costs.

Contact the estate attorney. When you are ready, schedule time to meet with the estate attorney. He or she will likely tell you to gather documents and to ascertain a date of death valuation for all accounts to which the deceased held title. If there is a surviving spouse, you should itemize what is in both the living and deceased spouse’s names.

Contact the CPA. Even if there are no estate taxes due, in most cases, it will be necessary to file an estate tax return. If you prepare your own taxes, it may make sense to hire a pro to help walk you through the process.

A well-planned estate is a wonderful legacy you can leave your heirs--instead of untangling a messy estate, they can follow concrete steps, which allows them to take care of business while mourning their loved one.

Snails’ Pace Growth to Keep Fed on Sidelines

There are now dueling economic growth forecasts by regional Fed banks. The Atlanta Fed’s GDPNow model forecast for Q1 GDP growth is 0.3 percent and the Federal Reserve Bank of New York’s recently unveiled Nowcast model anticipates that GDP will expand by 0.8 percent. Forgive us if we are not that interested in the half of a percentage point differential, because either way, we are talking about snail’s pace, sub-one percent growth.

In the seven years since the end of the recession (the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) said the recession ended in June 2009), the expansion has been sluggish, averaging between 1.5 and 2.5 percent. While so-so growth is typical of recoveries that follow cataclysmic, near-death experiences like the financial crisis and the 18-month Great Recession, the reality is that progress has felt like one step forward, one step back.

It appears that Q1 will be one of the “one step back” periods--we will see when the government releases its first estimate of growth for January-March this week. The good news is that the report is already history and the current quarter could see a step forward. Analysts at Capital Economics “anticipate a rebound in the second-quarter and expect annual GDP growth will be slightly above 2 percent for 2016 as a whole, which would be broadly in line with the trend during this recovery.”

Although economic conditions are looking up, the data have not be strong enough to encourage the Fed to raise interest rates at its upcoming policy meeting this week. The central bankers will likely tell us about the improvement in financial conditions, stabilization of oil prices and diminishing fears over China’s economic outlook and its ripple effects on emerging market currencies, but none of that will prompt action. The big question, according to Capital Economics, “is whether the improvement in financial conditions and the slightly better global outlook persuades the FOMC to drop the language in the statement that ‘global economic and financial developments continue to pose risks’?” If the Fed opts to change its language, it could be preparing markets for a June increase, something investors are not yet anticipating.

MARKETS: Although earnings have fallen over the past year, results have not been as bad as feared and large stocks have been able to edge up. Both the Dow and S&P 500 are 2 percent or less below their 52-week intra-day highs.

• DJIA: 18,003 up 0.5% on week, up 3.3% YTD
• S&P 500: 2091 up 0.6% on week, up 2.3% YTD
• NASDAQ: 4906 down 0.7% on week, down 2% YTD
• Russell 2000: 1146, up 1.4% on week, up 1% YTD
• 10-Year Treasury yield: 1.9% (from 1.75% a week ago)
• June Crude: $43.73, up 4.8% on week (up 67% from Feb lows)
• June Gold: $1,230, down 0.4% on week
• AAA Nat'l avg. for gallon of reg. gas: $2.13 (from $2.11 wk ago, $2.49 a year ago)

THE WEEK AHEAD:

Mon 4/25:

Haliburton

10:00 New Home Sales

Tues 4/26:

3M, Apple, Chipotle, Twitter

FOMC Policy Meeting Begins

8:30 Durable Goods Orders

9:00 S&P Case Shiller Home Price Index

10:00 Consumer Confidence

Weds 4/27:

Boeing, Facebook

10:0O Pending Home Sales Index

2:00 pm FOMC Meeting Announcement

Thursday 4/28:

LinkedIn, Amazon, UPS, Ford, MasterCard, Conoco Phillips

8:30 Q1 GDP – 1^st estimate

Friday 4/29:

Chevron, Exxon Mobil

8:30 Personal Income and Spending

8:30 Employment Cost Index

9:45 Chicago PMI

10:00 Consumer Sentiment

#268 Father of 401k Wants a Simpler Retirement Plan

When Ted Benna, aka The Father of the 401(k), examined Section 401(k) of the tax code after it became effective in 1980, he realized that there could be a way for workers to save more money for retirement on a tax-deferred basis. The extra benefit that he saw was that employers could add a match, which would be a perfect way to incentivize all employees to forego some of their weekly pay and divert it towards retirement. The largest companies started the trend, but soon smaller companies, which previously had not offered any retirement savings vehicles, also got into the act. You know what happened after that--deferred savings plans replaced most pension plans and retirement savings became just one more thing that Americans had to do on their own.

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The first iteration of the 401(k) was pretty simple--just a couple of investment choices. Benna said that as plans introduced lots of investment choices, they became more confusing. Unfortunately, that opened the door for the financial services industry to pile on fees and also to make itself indispensable in the process. Benna believes that with the DOL's new fiduciary rule, participants should hopefully see a return to simpler plans with far more reasonable fees.

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World, except when he picks Rod Stewart (#NeverAgain). Here's how to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

Banks’ Living Wills Pronounced Dead on Arrival

Last week, U.S. regulators essentially pronounced the so-called Living Wills of five of the eight largest financial institutions (Bank of America, Bank of New York Mellon, JP Morgan Chase, State Street, and Wells Fargo), dead on arrival. The other three (Goldman Sachs, Morgan Stanley and Citigroup) fared better, because their plans escaped being termed “not credible”. (While Goldman’s plan was green-lighted by the Fed, the FDIC found problems and with Morgan Stanley, it was the other way around. Citigroup won provisional approval from both regulators, but must address “shortcomings” in its plans.) Considering that not one bank got a full-blown thumbs up as to how it would wind itself down amid a bankruptcy, without taking down the system, without the assistance of taxpayers or without addressing shortcomings, they are still too big to fail. However, this does not mean that the banks are in the same precarious state that they were in 2008-2009; rather their “break the glass” emergency plans are not yet strong enough to convince both the Fed and the FDIC that they would be able to unwind themselves without destabilizing the system.

Background: Before the financial crisis regulators had not properly monitored or constrained risk-taking at the nation’s largest firms. When the crisis hit, the government “did not have the tools to break apart or wind down a failing financial firm without putting the American taxpayer and the entire financial system at risk.”

To prevent that from happening in the future, a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act required that large banks (total consolidated assets of $50B or more) submit plans to both the Federal Reserve and the Federal Deposit Insurance Corporation as to how they would navigate a bankruptcy without taking down the entire financial system and with no taxpayer bailout. The goal was “If a firm fails in the future it will be Wall Street – not the taxpayers – that pays the price.”

These plans are known as “living wills”—and just like an end of life directive on which the name is based, they must contemplate what would occur under the worst circumstances. Each bank is required to describe its strategy for rapid and orderly resolution in the event of material financial distress or failure of the company.

What happens next? Although the annual filing deadline is July 1, 2017 the institutions must resubmit updated plans by this October. If any of them fail, they could face higher capital, leverage or liquidity requirements; or potentially might have to exit certain businesses entirely. Meanwhile, financial company shareholders did not seem especially worried about the living will issue: amid weak earnings releases from J.P. Morgan, Bank of America and Wells Fargo, bank stocks gained 7 percent on the week. 

MARKETS:

• DJIA: 17,897 up 1.8% on week, up 2.7% YTD
• S&P 500: 2080 up 1.6% on week, up 1.8% YTD
• NASDAQ: 4938 up 1.8% on week, down 3.1% YTD
• Russell 2000: 1131, up 3% on week, down 0.4% YTD
• 10-Year Treasury yield: 1.75% (from 1.872% a week ago)
• May Crude: $40.40, up 1.6% on week
• June Gold: $1,234.60, down 0.8% on week
• AAA Nat'l avg. for gallon of reg. gas: $2.11 (from $2.04 wk ago, $2.41 a year ago)

THE WEEK AHEAD: The world’s major oil producers will meet in Doha on Sunday. Analysts expect the announcement of a deal that would freeze OPEC and Russian oil output at current high levels. However, it would not likely reduce excess supply without a pick-up in demand or supply cuts by non-OPEC producers.

Mon 4/18:

Morgan Stanley, Netflix, Pepsi, IBM

10:00 Housing Market Index

Tues 4/19:

Goldman Sachs, Intel, Johnson & Johnson, Yahoo

8:30 Housing Starts

Weds 4/20:

Abbott Labs, AMEX, Coca-Cola, Mattel, Yum! Brands

10:00 Existing Home Sales

Thursday 4/21:

Alphabet, Microsoft, Starbucks, Verizon, Visa

8:30 Philly Fed Business Outlook Survey

8:30 Chicago Fed National Activity Index

8:30 FHFA Home Price Index

Friday 4/22:

American Airlines, General Electric, Caterpillar, McDonald’s, Schlumberger

#267 How to Sell Your House

It's spring real estate season and if you're preparing to sell your house, don't miss this episode! Our guest Denise Rothberg, a realtor at Julie B. Fee/Sotheby's International Reality in New York discusses how to transform the emotional process of selling a home into a business transaction.

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As you start the process of listing your home, you need to choose the right realtor, who has experience with your neighborhood and price range. During the realtor interview process (you should talk to three agents), determine who has leapt into the digital age with a variety of ways to reach potential buyers.

Once you have your realtor, Denise says setting the right price is essential. The first three weeks of a home’s entrance on the market are the most critical for creating interest and attracting buyers. She also said that buyers often dismiss a listing that is “old and stale”, which means that the longer the home stays on the market, chances are the selling price will be lower, both in absolute dollars and as a percentage of list price. The corollary to overpricing is not recognizing when you need to reduce the price. Generally speaking, if there hasn’t been a bite for three to four weeks, it’s probably time for a price cut.

Additionally, first impressions matter, so identify the important home improvements that must occur before the open house. If you haven’t done so in a while, you will probably have to paint the house, replace the broken windows, clean or replace old carpets, cut the lawn, plant the flowers and tend to the garden. Even the small stuff counts, so make sure all light bulbs in the house are working, remove all clutter from closets and surface areas, fix leaky faucets, re-caulk the showers and tubs. If all of this prep sounds like too much work, you can hire someone to “stage” your home, which takes the process to a more professional level. Some sellers, especially those with older homes are choosing to schedule a pre-inspection for their own benefit. While this increases the costs associated with the sale, it may identify a potential problem earlier in the process.

If you are fortunate enough to get a bid, lean on your realtor to skillfully and calmly handle the negotiations. Your reactive or emotional responses can impede the process or worse, kill a deal.

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Mark is back in the US and makes another appearance on the show. Here's how to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

Should you go into Student Debt to Pay for College?

With the cost of tuition, fees, room and board at public four-year colleges running around $20,000 -- and up to $70,000 for some elite private schools, how can families foot the steep education bill without getting crushed by student debt? Now that college acceptances are in, it's time to figure out how to pay for that coveted degree. Before you agree to the financial award offered, know that if your family finances have changed since you completed your FAFSA forms, due to a job loss, high medical expenses or caring for an elderly parent, you can appeal to get a better package. You will need to gather supporting documentation and be a bit of a squeaky wheel, but it is well worth the time and energy.

If the prospective student has received a better package from an equally ranked school, it is worth inquiring as to whether a match is available. In this case, financial aid officials say that it is better for the student to make the appeal directly, rather than have the parents call.

You should also know that the financial offers are only good for the first year of borrowing--families have to apply annually for aid. That means that your award could drop in the subsequent three years, which is why you should ask the college how much its costs could change. You can research whether a reduction is likely by using the Education Department’s College Navigator,  which highlights what percentage of first-year students at each school, earns scholarships compared with the entire undergraduate student body.

The biggest problem that families have is that there is no uniform standard for how colleges detail true net cost of earning a degree. That puts the onus on families to parse through the likely four-year total cost of attendance (tuition, fees, room, board, books, travel), the amount of financial aid available and the money that will be accessed through loans and work-study.

Once you have nailed down the costs, then it’s time to decide whether or not you will borrow money to finance the degree. Students should explore federal loan options before private ones, because most private loans have variable interest rates that can rise substantially in the future and only federal loans are eligible for different kinds of loan repayment options.

Colleges also often include federal parent PLUS loans in the aid package, but those come with a hefty loan origination fee of nearly 4.3 percent. Parents should check out the private sector too and remember that parental borrowers have to start making monthly payments immediately. Finally, education experts suggest that students only borrow a total of what they can earn in their first full year of employment and parents should be careful not to blow up their own retirement plans to finance education.

Because so many parents are trying to juggle competing financial goals, many grandparents have gotten into the act. While a grandparent’s assets are not included when colleges determine eligibility for financial aid, if a 529 plan is established in the grandparent’s name for the benefit of the grandchild, it can negatively impact the student’s financial aid award.

The reason is that when money is withdrawn to make a payment on behalf of the beneficiary of the plan, students must disclose those amounts as income, which can reduce a student’s aid eligibility significantly. In order not to diminish the ability to receive aid, grandparents should consider gifting the money to the parents, who can then deposit the gift into their own 529 accounts. Experts note that it makes sense to wait until after the aid has been determined before making the gift.