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Saving Money for College in the 11th Hour

For high-income earners who have not started saving for college and have high school sophomores or juniors, here are some tailored strategies to consider:

Aggressive 529 Plan Contributions

Given your income level, consider making large initial contributions. The IRS allows for “superfunding” a 529 plan, where you can contribute up to five years’ worth of the annual gift tax exclusion amount ($85,000 per beneficiary if single, $170,000 if married) without incurring gift taxes.

Taxable Investment Accounts

Consider opening a taxable brokerage account and investing in a diversified portfolio with a higher risk tolerance since you have a shorter time frame.

Focus on tax-efficient investments, such as index funds or exchange-traded funds (ETFs), to minimize taxable distributions.

Scholarships and Merit Aid

Send your student to the school’s guidance office for free help finding scholarships. Even if it is too early to apply, it is helpful to know what is out there.

Hire a professional scholarship consultant or college planner who specializes in securing scholarships and merit-based aid for high-income families.

Focus on scholarships that consider factors other than financial need, such as academic excellence, sports, arts, or community service.

Cash Flow Strategies

Reallocate portions of your current income toward college expenses. This might mean temporarily cutting back on other discretionary expenses.

If you receive bonuses or other windfalls, earmark those specifically for college expenses.

As a parent, guiding your child toward a financially feasible option — some combination of in-state tuition, online learning for core classes, and AP classes in high school — can provide ways to shorten the college financial burden.

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