Strategies To Cut College Costs- Education Tax Incentive

The following is a reference guide of education cost-cutting strategies for families of all income levels. These strategies were created by some of the top minds in educational funding and can provide families with financial opportunities to help fund tuition costs. They include:

• Asset Strategies
• Income Strategies
• Award Letter Strategies
• Appeal Strategies
• Education Tax Incentive Strategies
• Academic and Admission Strategies
• Other Strategies

• Parents’ Adjusted Gross Income (AGI) that is too high to claim the Hope Credit (HC) or Lifetime Credit (LLC), should forfeit the exemption in favor of the student claiming both (if  student is providing over half of own support).
• If a college does not have a set payment ordering system for tax-free grants and scholarships, the parent can arrange the payments to non-tuition and fee expenses to be eligible for the HC or LLC (causing part of the scholarship to be taxable).
• Avoid Education IRA (EIRA) withdrawals during the years when parents are eligible for HC or LLC.  However, if EIRA withdrawals are elected as taxable, parents can claim HC or LLC.
• With two students in college simultaneously, parents can forfeit one exemption in favor of one student claiming LLC, and parents claiming LLC for the other student. 
• Consider a deductible home equity loan when eligible for student loan interest deduction.

*Please be advised that most families will need to consult their CPA or financial advisor to implement these strategies!