Late stage college funding
What is the Money Date? A weekly time to check in. 3 things we review and update: 1. Spending 2. Earning 3. Savings
So, your kids are ready to go to college and you need to figure out how to pay for it. If you haven’t been saving for a long time, you need late-stage college funding. But you either make too much money and don’t qualify for need-based financial aid. In 2018, the average four-year public school cost $24,000 and four-year private school is $32,000 per year.
Where do you stand for need-based aid? It’s different if you trying to fund a private school. Just because you didn’t get the aid in the first year, doesn’t mean you will not in subsequent years if you have multiple kids enrolled in college at the same time.
Let’s look at some options you might have:
Student Loans
Perkins & Subsidized Stafford Student Loans. These loans have lower rates. You can always help your student pay it off.
Other Loans
Home equity and private loans
Tax aid
Tax aid is an often-overlooked aspect of college planning. For example, the American Opportunity Tax Credit can provide up to $10,000 toward the cost of college. If you can’t take the credit yourself, find out if your child qualifies. But your tax planning should go beyond the AOTC.
Consider the tax benefits of shifting appreciated assets, such as stocks, to your child. Your child can potentially sell the assets in his or her name and pay taxes at a lower rate. Make sure that the additional income won’t impact need-based aid eligibility and that it properly navigates the “kiddie tax.”
When executing your college plan, it’s crucial to know in advance how your tax strategies will impact your financial aid. Doing so will ensure that you’re optimizing your tax dollars and financial aid awards.
