For the 2016-2017 school year, the College Board put the average cost of tuition, fees, room and board at nonprofit 4-year institutions at $45,370. Again, that's the average. The cost of sending a child to certain colleges can be north of $60,000 a year. That’s enough to make even high-income earning households feel the pinch.
The good news is that parents with teenagers and preteens have an opportunity to save tens of thousands of net college costs after taking advantage of grant aid and tax benefits. Parents should begin preparing for filing the Free Application for Federal Student Aid (FAFSA) application while their child is a high school sophomore.
One prime goal of FAFSA planning is the reduction of reported income by optimizing income tax reporting to create the best possible base line for financial aid. The tax year straddled by a student's sophomore and junior year of high school would set the family's income base for the child's aid eligibility upon entering college.
Of course, parents can start planning for college expenses as soon as the day their child is born. By utilizing optimum strategies and investment vehicles such as 529 plans or Coverdell Education Savings accounts, families can offset the need for acquiring student loans during the child’s college years.
FAFSA filing begins on Oct. 1st and it’s a good idea to apply as soon as possible because some colleges offer aid on a first-come-first-served basis.