How to Help Pay for a Child's College Education
College tuition becomes more costly each year. You or other family members, may be forced to take out second mortgages on your home or apply for costly loans that can add up to tens of thousands of dollars while your child is in school. And, depending on your income and whether your child is living at home or not, he may not qualify for the Pell Grant, which is free money. There are some programs that are free or that you may only have to pay a minimal amount of taxes on, available to help you pay for your child's tuition.
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Instructions
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Check out online resources that provide information on scholarship and grants. Go to the Fast Web site and register, or have your child register. Use this site and others to get information of scholarships, alternate funding and internships.
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You may want to consider skipping a personal exemption on your income taxes that can be diverted for use to help pay school and living costs for your child.
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Open a 529 savings plan. This is an actual educational savings plan that does not have a cap on it. You should open a 529 savings plan even if your young adult child is already in college.
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Talk to your bank's financial officer about opening a money market fund or bond fund. She will not only be able to advise you on which ones will give you the best return for your money, but inform you if you can withdraw money from some funds and pay little or no taxes on the money if you prove that it is being used for college tuition, books and living expenses.
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Find out if you can claim a partial tax credit for savings and loans if you spent the money on your child's tuition and fees.
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Keep receipts for the cost of your college student's housing, tuition, books and any other college fees to help you justify your expenditures and help you at tax time. This way, everyone is protected and able to take advantage of all the available options for helping cover college expenses.
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Tips & Warnings
Open a 529 savings plan now if you do not have one, or and even if your child is currently enrolled in college. If not, you will have the account ready when your child does start college. The same applies to talking to your bank about a money market fund or bond fund.
Without receipts and other documents to back up your child's college costs, you may not be able to get any tax advantages.
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