One of the most worrying things about starting your own business is knowing where your financial stability and benefits will come from. This is especially true if you are supporting family members other than yourself, including aging parents or children. As your children get older, you will be thinking about college and what you need to do to help them afford it. Or perhaps you’re thinking about going back for an advanced degree yourself to help you expand your business skills and give your own business a boost. What do you need to know to make sure that you’re in the best position when looking at how to pay for college?
For all of the main financial aid applications, your aid package is based on your income from the previous year, not the current year. If you’re filling out a financial aid application in 2016, you will use your tax return numbers from 2015, which could be drastically different from your current status. If this is the case, then you should be willing to talk with the representatives from your school in the financial aid office and explain how your financial status has changed, with documentation to back up your story. If you had a high-paying, high-level job last year but have just quit to start your own business, and it’s not turning a high profit yet, they could revise their initial aid package once you’ve shown them the proper documentation.
It’s also important to remember that while putting money away in a retirement plan will reduce your taxable income, it will not reduce what schools think of as your income when they consider your ability to pay tuition. In their mind, that retirement fund is money that you could be using to pay tuition. Make sure that you go into this process with an open mind and have all the facts about your own finances. Then you’ll be able to make smart decisions about how to pay for a college degree.
This article was written by Gillian Kruse for Small Business Pulse