For many high school seniors and their families, this time of year is busy with college applications sent and replies being eagerly awaited.
It also marks FAFSA season as families are filling them out in hopes of getting financial aid. With that in mind, I want to cover some ways you can reduce your child’s need for student loans and helpful tax deductions and credits that can help your family.
It’s a team effort so I’ll be addressing what you can do as a parent and what your child can handle on their own. With all hands on deck, this can be a productive transition for all.
Save Money on College Expenses
While there are plenty of stories about those burdened by student loans, that doesn’t have to be the case for your family. Maximize your financial aid by taking advantage of programs out there designed to help, such as submitting a FAFSA and completing scholarship applications, having your child picking up college credits cheaply with CLEP and AP exams, and staying in-state with their college selections.
Don’t Procrastinate with FAFSA
While you still have plenty of time to submit your FAFSA to meet the federal guideline (June 30, 2014), sending in your child’s FAFSA sooner will help boost their financial aid because states have their own deadlines.
Rhode Island, for instance, has March 1, 2014 as their deadline. Other states such as North Carolina and Washington will award grants to qualifying students until funds are depleted so the earlier you submit, the more likely they’ll get the financial aid they need.
Searching for Scholarships
Whether or not you receive federal or state financial aid, you can lower or eliminate your higher education costs by applying for as many scholarships as you can handle. The wonderful news with the web is that there are plenty of sites like FastWeb that can help you quickly search for scholarships.
The challenge with the ease of finding these scholarships is that you’ll be competing with other proactive students, so make sure you pay careful attention to the guidelines given. If the panel has to sort through hundreds (or thousands) of applicants, those who forget or break a rule will most likely be thrown out. It’s a waste of time for both sides.
If you have a specific college in mind, go ahead and see if there are any scholarships and grants you qualify for. Don’t just be satisfied with looking online. Talk to the department head or a leading faculty member about what you are truly searching for.
Once your child is enrolled as a student, there are still ways your family can save money for college and that includes education tax credits.
These tax credits offer tremendous benefits because they reduce the amount of taxes you pay and help pay for your education costs. Two of the biggest education credits families take are the American Opportunity Tax Credit and the Lifetime Learning Credit.
American Opportunity Credit
This credit covers qualified expenses like tuition, enrollment fees, and course materials for the first four years of post-secondary education. The maximum credit you can take is $2,500 per student ( 100% of the first $2000 of qualifying expenses and an addition 25% of the next $2,000).
Lifetime Learning Credit
For students who are not pursuing a degree or certification, the Lifetime Learning Credit may be available to them for qualifying expenses. The maximum you can claim is 20% of your expenses (up to $10,000) for a total of $2,000.
They must attend a school that is eligible to receive federal financial aid and the credit covers educational expenses such as tuition and books. They can qualify even if they only attend one course in the year, making it a great option for those looking to brush up their career skills without enrolling as a full time student.
I just want to mention that you can only claim one of these credits in a given year. TurboTax will choose the education tax credit you’re eligible for so you get the biggest tax refund you deserve.
Thoughts on Covering College Expenses
I definitely feel like this a great opportunity to help one another. For parents with children already in college, what tips do you have on minimizing the financial burden? What have you done to save money for college?