By Heather Brown

MINNEAPOLIS (WCCO) — Seven in 10 college seniors have some sort of student debt. With the cost of a four-year college averaging between $22,000 and $30,000 a year, loans are the only way for most families to afford it.

So, how can you get the best financial aid package?

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Experts say it’s something parents should start thinking about when their children are babies.

“The best advice for parents that can still plan ahead is start saving early,” said Justin Halverson, a partner with Great Waters Financial.

He recommends putting a small amount away each month in a 529 education account that’s parent-controlled, rather than in the child’s name. When colleges calculate a family’s expected contribution, they consider 20 percent of the child’s assets versus 5.6 percent of the parent’s assets.

“So getting more money out of the kid’s name and into the parent’s name is going to be beneficial,” Halverson said.

He says financial expectations are set due to the prior year’s finances, so parents should position their funds in the child’s junior year or earlier. Given retirement accounts are not part of the expected contribution calculation, parents might want to consider putting some of their savings into IRAs or 401(k)s.

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“As much as you can put in there, it has a double benefit,” he says. “It benefits the parents for their retirement and it also takes that money off the table for valuation.”

Many parents, like Julie Fischer from Osseo, encourage their children to apply for scholarships and grants.

“It’s huge because it’s money they don’t have to pay back,” she said.

As for grandparents helping out, Halverson says they should not give directly to the student, but rather put up to $14,000 a year into a 529 or send as much tuition money directly to the college as they’d like. The only downside, according to Halverson, is that money will be counted as some income for the future years’ calculations.

“Do not give directly to the student and put it in their name,” he said. “There’s gift tax complications and complications that come along with that as well as messing up their applications for federal aid.”

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And, finally, Halverson says file early because some money might first come, first served. He also advises people to file even if they don’t think they’ll need aid because some colleges don’t offer money for kids that don’t apply in their freshman year.

Heather Brown