Any advice for parents on paying for college?
Plenty! For the past 33 years, I've been helping families send their kids to the college of their choice for less than they ever imagined! I'm also the author of, "How To Pay For College Without Going Broke." Here are just a few tidbits of advice:
1. Make sure ALL students have <$100 in their name. In the financial aid formulas students have NO APA (Asset Protection Allowance), and lose 20 cents/yr in financial aid for every dollar they have. Siblings under age 19 are sometimes included, so that's why they all need to be broke.
2. Parents do have an APA, and in a 2 parent family, with the older parent 50, the APA is $46,600. A single parent age 45 only has $14,200! Assets include: cash, checking, savings, savings bonds, Prepaid Tuition Plans, 529 Savings Plans, stocks, bonds, mutual funds & real estate other than the home. Any assets over the APA will cost the family 5.64%/yr in lost financial aid. There are legal asset repositioning strategies, but too numerous to mention here.
3. For those families who own a small business, put your kids on the payroll! Students have a $6,000 Income Protection Allowance, and the tax consequence will be infinitesimal, but the business could save $1,000's!
4. Consider a PLUS (Parent Loan for Undergraduate Students) as a way to pay your EFC and any unmet need. Payments are deferred until 6 mths after graduation, the interest cost is 7.9%, and if they qualify parents can take the Student Loan Interest deduction of up to $2,500. Check with your tax preparer.