5 Types of Colleges
In-state schools – Colleges that the state offers that are partially funded by state funds and can be low cost schools.
Look into reciprocity. Visit our website tamingthehighcostofcollege.com and listen to podcast episode #6 for tips on reciprocity.
Check your region for the reciprocity rules that may apply.
Southern Regional Educational Board Academic Common Market
Midwest Student Exchange
Western Undergraduate Exchange
New England Regional Student Program
Out-of-state – state schools – some out-of-state state schools may offer the state price for tuition based on the student’s academic record to attract them to their school.
Elite privates – School where tuition is over $60,000, for example the ivy league schools like Georgetown, Harvard, NYU, etc.
Some of these schools only offer need-based financial aid
Private college—student is a strong candidate and good fit
Have merit and need based programs
Private college – student is not a strong candidate …. average or below average candidate
May receive a “token” award $2,000-$10,000…..a typical discount
Typically, if your student is academically in the top 25% of the applicant pool, they will receive merit aid scholarships.
American Opportunity Credit:
Was the Hope Credit that was good for 2 years. The credit expanded to 4 years of education and then became the American Opportunity Credit.
A “credit” helps reduce the amount of tax you pay
AOC is applied after taxes have been calculated so if you owe no tax, you could still receive a refund.
1) Must be paying qualifying education expenses which includes:
- tuition
- room and board
- books
- fees related to college educations
2) Need to attend an accredited university
Maximum credit you could receive back is $2,500.
100% of first $2,000 paid and 25% of dollars paid up to $4,000
Income must be under $160,000 (for joint) to qualify for full credit
Single individuals, income must be under $80,000
If modified adjusted gross income = $160,000-$180,000, credit phases out.
Ways to reduce your income to qualify for maximum credit:
Retirement contributions
- Participate in 401k or 403b
- Contributions to Simple or SEP IRA
Postpone a bonus or a pay increase
Business Owner Strategies:
Hiring your kids in the business
Shift income off of your tax return and shift to your child’s tax bracket
For federal financial aid, keep student income under $6000 and for the CSS profile, keep it under $2300.
What can the students do in the business?
Perform a service and pay them a fair wage
Keep records for the students as you would for other employees
Document when they work, and what they do, and what you pay them.
Could hire a payroll service.
Student can work “off site” while at college and still work in the business.
There are advantages and disadvantages to these strategies so be sure to work with your tax professional on your situation.
Brad Recommends
www.meritaid.com
Tracks scholarships and sorts the scholarships based on colleges you are interested in.
Includes the name, scholarship amount and details of the scholarship!
