Now, it's time to start preparing for their next stage in life: college. I came across a book at the library called Paying for College without Going Broke by Kalman A. Chany and Geoff Martz. It's from The Princeton Review.
There were a lot of helpful suggestions in the book; and I'm happy I read it. I wish I would have read it when they were much younger, though so I could have had a much better college-savings plan in place for both of them.
At any rate, these were some of the things I found most useful for our situation:
What parents can do:
- During the years you are saving for college you should not neglect your other goals, particularly in two important areas: owning your own home...and planning for your retirement.
- While the colleges assess your assets and income, they generally don't assess retirement provisions such as IRAs, 401(k) plans, Keoghs, tax-deferred annuities, etc. Any money you have managed to contribute to a retirement provision will be off-limits to the FAO's at most schools.
- If you have any interest in running a business on the side, this may be the ideal moment to start setting it up. Most businesses show losses during their first few years of operation.
- Colleges now use the tax year two years before college begins (from January 1 of the student's sophomore year of high school to December 31 of the student's junior year in high school) as their basis for deciding what you can afford to pay during freshman year and for the remaining years as well. Thus it would be helpful to remove as much income as possible from this calendar year. (Note: this is the year that we currently are in.)
- During the base year, you may want to pay down your credit card balances...and make the maximum contributions possible to a retirement provision.
- Contact the Minnesota Higher Education Services Office at www.ohe.state.mn.us to get information about state financial aid and any information about affording and paying for a college education. There's a helpful page on the website about paying for college.
- Create a form to track deadlines. The column headlines should be:
====>Which standardized need analysis forms (FAFSA, PROFILE) are required? When are they due at the processor?
====>Is there an individual aid form required? If so, when?
====>Are income tax returns required? When? What year(s)?
====>Any other forms required? (Business/farm supplement). When are they due?
====>Name of contact FAO at college and phone number.
- Study like crazy. Because colleges give preferential packaging to good students, every tenth of a point she adds to her grade point average may save her thousands of dollars in loans she won't have to pay back later.
- Coaching can raise a student's SAT score by over 100 points. Every ten points your child raises her score may save your family thousands of dollars.
- Use The Princeton Review's 11 Practice Tests for the SAT and PSAT if a SAT review course isn't in your area or is too expensive.
- Earn credits on the CLEP exams.
Filling out the FAFSA form:
- Use the most up-to-date version of the form. Don't fill out last year's form. Fill out the form for the year that you want to receive aid.
*Part of Financially Savvy Saturdays on brokeGIRLrich and Femme Frugality*