If you do take out a qualified higher education loan, up to $2,500 of the interest paid is tax deductible. (Certain restrictions may apply. ) You also may be eligible for the American Opportunity Tax Credit and the Lifetime Learning Credit. The American Opportunity Tax Credit is worth up to $2,500 a year for each student's years of eligible post-secondary education expenses. The Lifetime Learning Credit is available for up to $2,000 of qualifying expenses paid for each year of education. Both of these credits are phased out at higher income levels, however.
While it's best to get an early start, it is never too late to plan for the cost of your child's education. For assistance, call your professional financial advisor. He or she can help you plan today for your child's education tomorrow.