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Save For College In 5 Years Or Less
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If the college clock is ticking and you're just starting to save, you will need a few more college savings tips. Most parents have saved about $5,000 for their child’s college costs. This will be enough to pay for a small portion of most college tuitions but leaves behind, the remainder of the tuition, room and board, books and supplies, transportation, and personal expenses. I know those years have passed by so quickly but the college tuition bill will be due soon so we will need to employ some college savings strategies to help you pay for college. Let’s look at a few.

Continue Saving. Always set aside money from windfalls, salary increases and monetary gifts. Every penny saved will add to a reduction of your out-of-pocket college costs.

Divorced Parents. When parents are divorced or separated, the custodial parent, the one with whom the student lives most of the time, fills out the FAFSA. (It doesn't matter who contributes more or who claims the student as a dependent on their tax returns.) The income and assets of the noncustodial parent usually aren't considered unless you are applying to a CSS Profile school. If the custodial parent has remarried, the new spouse's earnings and property must be included on the form. Ideas to consider: • Have the student live with the lower income parent. • Delay remarriage if you're the custodial parent and if you can until the last FAFSA has been filed (in the student's junior year of college).

Grandparents and 529 Plans. Special rules allow a grandparent to make a one-time contribution of up to $60,000 per student to a 529 college savings plan without gift tax implications. The grandparent retains control of the 529 money until it is disbursed, and the account typically is not considered at all in financial aid calculations.

Give Money After College Graduation. Some grandparents or relatives agree to pay a student’s tuition directly to the college because they can do so without gift tax consequences. The problem is that such large payment can reduce the student's financial aid package dollar-for-dollar. A more sensible way would be to wait until the student is out of school and then gift the money to pay down any student or parent loans.

Independent Status. Given the cost of college most parents would love to kick their kids out of college so that they become independent. Typically, schools don't consider students independent unless they are at least 24, married, in graduate school, ward of the courts, veterans or have dependents of their own. Even if the student is entirely self-supporting and isn't claimed on anyone's tax return as a dependent, the parents' income and assets may still be considered.

Given some of the strategies above, most families are not confident in making decisions about saving for college and employ the help of an expert. If you need help in making these decisions it is beneficial to you to seek the help of a college planning professional.

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