Stage 2: Two Years Before College

College financial aid formulas use what's called "base year" income as well as assets you own as of the date you complete the forms. You'll get more financial aid if you can make your base year income look as small as possible.

Before December 31 of your child's junior year in high school, do the following:

• Sell appreciated assets and take your capital gains.
• Cash in Series EE U.S. Savings Bonds to pay for college expenses.
• Take your employee bonus now rather than in January if possible.
• Invest as much as you can afford in your tax-sheltered retirement plans.
• Defer bonuses and pay increases until after January 1 of your child's junior year of high school. Take as many tax deductions as possible. If you own a business, it's a good year to take losses. Your after-tax income this year will determine how much aid you are likely to qualify for.
• Pay off your credit card debts. This debt doesn't exist as far as financial aid officers (FAOs) are concerned. When is an asset not an asset? When you have $10,000 in savings but $8,000 in debts, and you're trying to qualify for financial aid. What number do you think the financial officer is going to use in adding up your worth? The amount that's in your savings account, of course! If you pay off your debts, you just might qualify for more aid.

Page « Previous 1 2 3 4 Next »