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7 Life Events Dramatically Impacting Your College Costs

Many families fail to realize strategically planning now can save thousands on the cost of college instead of waiting on the colleges to tell you the cost in the spring of the senior year. Also surprising is the way in which life events impact the news the financial aid office will deliver.

1)      Divorce/Separation/Remarriage: Division or addition of assets and income, multiple houses or households, custodial agreements, tax returns, re-employment and hundreds of other changes that result in divorce or separation or remarriage.   Parents will often make assumptions that wind up costing tens of thousands of dollars in lost aid opportunity.  And, it doesn’t have to be remarriage! Cohabitation affects the cost of attendance (COA) as well.

2)      Twins, Triplets and years where more than 1 student will be attending college simultaneously:  For many parents, college funding is a year to year struggle without a plan.  While overlapping years of students in college may sound painful, understanding opportunities that may exist in future years with overlapping students could significantly change college selection and reduce out of pocket expenses.

3)      Inheritance, Bonus, Stock Options, Proceeds from the sale of real estate:  Any significant change of assets preceding or during the college years could have a dramatic impact on aid eligibility. Timing, when you have control over such, can be crucial, but you first need to understand how it impacts.

4)      Job Loss:  Unfortunately, there’s nowhere on the FAFSA form to express a significant reduction in income projected from one year to the next.  When job loss occurs, there is a specific sequence of events that must be followed.  If any suspicion regardless of probability exists of an impending change of employment status, preemptive planning is key to survival during the college funding years.

5)      Consideration of adding Part Time Employment:  While every extra dollars seems beneficial on the surface, digging a little deeper may reveal an unrealized truth:  there is a tipping point where extra income may result in greater expenses that could offset any advantage. That tipping point is highly individualized for each family.

6)      Grandparent or relatives’ 529 plans:  While a parent owned 529 may reduce financial aid eligibility by roughly 6%, funding from a grandparent or other relative may reduce aid dollar-for-dollar if the use is not timed properly.

7)      Disability.  Perhaps one of the easiest and least expensive events to plan for, the occurrence of a disability causing loss of income is rarely something that can be accurately predicted. Planning is crucial as the absence of anticipated income will always create havoc with a college funding plan.

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