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Sunday, April 4, 2010

College Planning: It's Not Too Late

In May of 2005, at Eckerd College in St. Petersburg, Florida, college graduates threw up their caps to celebrate the achievement of a lifetime. Two of those caps belonged to twins, Carol Malone and Linda Clem. But there was something different about these two. The difference was age, experience, and wisdom.
The twins are 54-years old, and they just received the first college degrees of their lives. The moral to this story? It's never too late to do anything you put your mind to.

It's a common myth that if your child is about to head to college or is already in college, then you've reached a point when the only thing left to do is take out a few large loans and get ready to bear the burden of tuition.

According to top college funding planners, that is simply not the case.

What people don't often realize is that with the proper financial planning, you can save significant amounts of money even while your child is still in college. The following are a few basic tips to save money in the late-stages of college planning.

Financial Aid

Always apply for financial aid as early as possible. The standard FAFSA forms are the first and most important to fill out. Getting into the mix early-on ensures that you have a better chance at being awarded the "first come-first served" financial aid packages. By being prompt, you increase your chances at better awards and loans, which reduces the amount of out of pocket costs passed on to you.

Make sure you go over the financial aid forms and regulations with a financial professional. Anyone who has tried to navigate through the forms or the various pages of rules and guidelines can tell you that it's more than a little complicated. Having someone help you through the process doesn't just ease the burden financially; it also takes away a lot of stress and anxiety.

Your FAFSA forms typically take a few weeks to process, which is one more reason to plan ahead. Once your financial need is determined, the schools you've applied to will offer you a financial aid package. The package can include various ways to pay for college, including loans, grants and any scholarships they have awarded your child.

A little research can go a long way in saving you money for college. If your child is applying to schools, make sure you study which schools give more gift aid and scholarship money out compared with those who don't. Also, make sure your child applies to at least two schools where he or she is in the top 25% of the applicants. This can be found by doing some basic research on the G.P.A.'s of previous freshman classes.

A common pitfall to filling out financial aid forms is relying heavily on high school counselors. Counselors are often loaded up with numerous students, sometimes even hundreds, and often cannot provide the personal attention that each individual student needs. That's why a trusted college planner is best.

Gifting and Shifting

There are numerous legal and ethical ways to shift your assets to allow your child to have more money for college. You can shift assets to your child, or gift them certain assets which they sell and keep the profit. It allows them to hold ontomoney for college without suffering the same tax burden as you, the parents would.

Children who file their taxes independently are in a lower income tax bracket which can work to your advantage. The money you save in taxes adds up quickly and can be used as one more way to pay for college.


Do you have a small business or rental property that you own? If so, you can use that property to your advantage by employing your child. Your child will not only learn the value and responsibility of work, they will also receive a wage. As asmall business , you can offer a specialized Employer Education Assistance program. This allows you to give up to $5,250 a year, tax-free to employees who are attending college. It's just one more way to save money while your kids reach for their dreams. In the process, your kids will be learning valuable life lessons.

Many of us work hard so that our children may have a better future. Education does not always define success, but often success could not be achieved without it. No matter what stage in life you're at, it's never too late to save for college. With some simple strategy and some help from your financial advisor, you can find ways to reduce college costs and increase the ways to pay for it.

Carol Malone and Linda Clem, 54-year old twins, proved that there's no better time than the present, so what are you waiting for?
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