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College Planning Doesn’t Have to Be Overwhelming

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College Planning Doesn’t Have to Be Overwhelming

The cost of college is enough to make any parent’s stomach flip. Tuition, room, board, fees—it adds up fast. But here’s what most families don’t realize: you don’t have to shoulder it all on your own.

There are multiple funding layers available—from proactive savings tools like 529 college savings plans, to federal and state grants, to aid directly from colleges. The key is knowing what’s out there and having a plan. When you do, the whole process feels less stressful and more doable.

Start With What You Can Control: Saving Smart

Two of the most powerful tools for families are 529 plans and Coverdell Education Savings Accounts (ESAs):

  • 529 Plans: These tax-advantaged accounts let money grow tax-free, and withdrawals for qualified expenses—like tuition, books, or even K-12 tuition—are also tax-free. Many states even give you a tax deduction or credit for contributions.

  • Coverdell ESAs: Similar idea, but with smaller annual contribution limits ($2,000 per child per year). The big plus? They can be used for a broader range of K–12 expenses—not just college.

When used early, these accounts let compounding do the heavy lifting. Even modest contributions can make a big difference down the road—and reduce the need for high-interest loans later.

Don’t Forget About Education Tax Credits

Here’s something most families overlook: the IRS actually offers tax breaks to help with college costs. They’re called education credits, and they can make a big dent in what you owe at tax time.

  • The American Opportunity Tax Credit (AOTC) gives you up to $2,500 per year, per eligible student, for the first four years of college. Even better, part of it is refundable, which means you could get money back even if you don’t owe taxes.

  • The Lifetime Learning Credit (LLC) offers up to $2,000 per year, per tax return. It covers a wider range of schooling, including graduate courses or part-time classes to upskill later in life.

The catch? You can’t claim both credits for the same student in the same year. That’s where planning matters. Choosing the right one can mean thousands of dollars saved.

These credits don’t replace FAFSA or grants—but they stack on top of other aid. And if you’re already using a 529 plan or Coverdell ESA, pairing them with the right credit can maximize your savings.

Translation: if you’re paying tuition out of pocket, don’t leave IRS money on the table.

FAFSA: The Gateway to Financial Aid

FAFSA stands for the Free Application for Federal Student Aid. It’s the form that unlocks access to almost every major type of student aid:

  • Federal Pell Grants (free money you don’t pay back)

  • State-based aid, like Cal Grants in California

  • Work-study programs that allow students to earn money while in school

  • Federal student loans with lower rates and flexible repayment options

This year, FAFSA officially opens on October 1. Filing early matters because some aid programs—especially state grants—are first-come, first-served.

Beyond FAFSA: Other Funding Families Miss
  • Colleges themselves often provide scholarships and grants. Filing FAFSA usually gets you considered automatically.
  • Private scholarships from nonprofits, employers, and community groups go unclaimed every year.
  • Employer tuition assistance programs may be available to students and sometimes even parents.
Myth vs. Fact: FAFSA & College Funding

Myth

Fact

“FAFSA is only for low-income families.”

Filing FAFSA is the key to unlock nearly all aid—even merit-based scholarships.

“We make too much money to qualify.”

Even higher-income families may qualify for work-study or low-interest federal loans.

“Scholarships are just for straight-A students.”

Many scholarships are based on community service, interests, or background—not just grades.

“It’s too late to save if my child is in high school.”

Even a few years of contributions to a 529 can reduce future loan interest significantly.

What If Grad School Is on the Horizon?

If grad school—law, medicine, MBA—is in the picture, the rules change:

  • Federal borrowing caps are tighter under the new One Big, Beautiful Bill Act, so you’ll want to maximize scholarships and assistantships.
  • Fellowships and research assistantships can cover large chunks of tuition.
  • Employer tuition reimbursement can make advanced degrees more affordable.
  • Income-driven repayment plans can help manage debt after graduation—but only if set up correctly.
Your College Funding Action Plan

Step

What to Do

Why It Helps

1

Open a 529 or Coverdell ESA early

Tax-free growth reduces future debt.

2

File FAFSA on October 1

Maximizes eligibility for grants and aid.

3

Apply for school and private scholarships

Free money that often goes unclaimed.

4

Plan for grad school early if relevant

Prevents borrowing surprises later.

5

Work with a pro

Aligns tax strategies, aid, and savings for the best outcome.

You’ve Got This

College costs feel daunting when you don’t see the roadmap. But with the right mix of proactive saving (529s, Coverdells), strategic aid (FAFSA, Pell Grants, school-based programs), and careful borrowing, it’s entirely possible to make higher education affordable.

And the best part? You don’t have to figure it out alone.

Contact us today to build a custom college funding plan that fits your family—calm, clear, and stress-free.

 

 

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