More strategies to save you money

In addition to taking advantage of various education savings plans, you may be able to save money on college education by using these strategies, if they apply to you:

• Forego your child’s dependency exemption. If your student has taxable income, it may be advan-tageous to let go of the dependency exemption and let your student take advantage of the tax savings.

If you have a moderate to high income, the student will likely be able to take advantage of the tax benefits that could be subject to phase-out/limitation rules for their parents.

• Start a Roth IRA for your child. Do it as soon as the child is eligible. You can contribute up to $3,000 per year or up to the amount of your child’s earned income, whichever is less. The assets in a Roth IRA grow income-tax deferred and are federally income tax free.

• Buy a house for your college student and friends to live in. You will likely be paying for housing expenses anyway, and if the market in the area is relatively solid, you may be able to turn a profit if you collect a reasonable amount of rent from the other students.

Also, if your child is willing to manage the property, you can pay a management fee and also give him/ her a share of the profits when you sell. This would provide an incentive to keep the place in good repair.