As summer draws to a close, our San Francisco Tax Tips newsletter focuses on education. If you have a child in college, or soon to attend college, this month’s issue is jam-packed with information on financial aid and tax incentives for higher education. (To download the August eLetter, click here).
Saving for College: Basics and New Changes
The basics of savings for college remain the same. First, start as early as possible. If your child is a newborn, it’s time to start! If she’s in second grade, it’s time to start, and if he’s a Senior in High School, it’s never too late to start. The college board reports that full-time students at private colleges face a “sticker price” of $44,000, vs. nearly $20,000 for those in state colleges. Even with financial aid, it’s still expensive. The first article thus explains how to calculate the “net costs” of a college education, given financial aid opportunities. Second, there is a BIG change coming to the FAFSA, as the government will now look at “prior prior” years for purposes of calculating the FAFSA. Meaning, if your child is going to go to college in 2017, then it is your 2015 income that will be used for calculating financial aid. (The article explains this confusing change in-depth, and how it impacts planning out possible income and expense variations.) If that’s not confusing enough, the issue explains ‘aid without need,’ or so-called merit aid. Finally, for those who don’t have a kid in college the August issue concludes with the tried-but-true advice of maxing out your employers’ 401K contribution, as well as paying down any debt.
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