Student Debt: Paying for College Without Financial Ruin
For parents saving for a college education and adults trying to pay their own way, student debt can be a nightmare. Luckily, there are more ways to pay for an education than just student loans. The team at Broussard Poché, LLP has a few tips for future and current college students.
Saving for the Future
If your child is about to start high school or has already started, then college campus tours are just around the corner. It’s time to get serious about the finances of sending your star student off to university life.
Look at Your Savings
A few years before you need to start paying tuition is a good time to take a look at the state of your savings. Now is also the time to make sure your investments aren’t too risky. Consider shifting your investments to safer bets as college approaches.
Your child may be eligible for federal student loans, grants, and/or work-study. But in order to take advantage of those programs, you must apply using the federal government’s aid application, FAFSA. Get a jump on what you need to know by filling out the government’s FAFSA4caster tool at fafsa.ed.gov.
Picking the right college can make a large financial difference. Have your child come up with a list of colleges that are a good match for their abilities, talents, and future. Make sure your student understands how important test scores and grades can be when looking at scholarship opportunities. Make them an active part in researching campuses and financial aid.
Starting Classes Soon
If college is on a closer horizon, then saving up extra money may not be an option. Here are a few ways to avoid massive debt. There are a few types of financial aid to be aware of:
- Loans: The drawback of student loans is that you’ll need to repay them at a later date.
- Grants: This type of aid does not need to be repaid and are usually available to undergrads.
- Work-study: The federal work-study program helps find jobs for undergraduate and graduate students and they can use the hours worked to subsidize college costs.
- Military aid: If you are a veteran, contact your local veteran’s office about the options available to you.
Education Tax Credits
There are several other tax incentives that can help make college more affordable:
- American Opportunity Credit: This credit is typically worth up to $2,500 and can be used towards tuition and related expenses for the first four years of undergraduate education. You must meet financial guidelines to take advantage of the credit and those guidelines can be in flux from year to year. Talk with your tax professional to see if you qualify.
- Lifetime Learning credit: This credit is generally worth up to $2,000 towards tuition and fees. The American Opportunity credit and Lifetime Learning credit can’t be claimed in the same year–it’s one or the other.
Just remember, there are options out there, you just need a little planning to take advantage of them. Contact the financial professionals at Broussard Poché, LLP for more information. We are happy to help walk you through the option that will create a brighter future for you and your family.