What is base year? Often times, parents don’t know this term in regard to educational financial aid. But the term base year is very important to receiving the most college grant money possible, especially in regard to government college grants.
The base year is the tax year that is looked at by colleges and the deciders at the FAFSA (Free Application for Federal Student Aid). The base year is from the student’s junior year in high school, starting from January 1st to the student’s senior year in high school, ending December 31st.
Why is the base year so important?
It literally sets the standard for financial aid for all four years. If upper middle class (UMC) parents can lower income and assets on paper during this base year and the student receives a great financial aid package as a result then parents just set the standard for all four years. This is why the base year is weighed so heavily and is so important.
(Please note: If there is a drastic increase in income and assets on the next year’s taxes then the student could risk losing this financial aid.)
For the best college financial planning, parents must concentrate on that base year. Here are some questions parents should ask themselves before the base year begins:
- How can I lower my income and assets on paper?
- Do I qualify for any tax loopholes? (Hint: check out more articles on WPC.)
- Do I have an accountant who is knowledgeable about college financial aid?
- Do I have a financial adviser who is knowledgeable as well?
The most important thing is starting with your income taxes. This is where parents often fail. They start by filling out the FAFSA and trying to make themselves look poor on this form. However, it is too late. You must start by taking steps to lower your income and assets on your taxes.
We highly recommend looking at our Tax and Finance Help section for tax loopholes, financial strategies and overall financial planning for college. This section is designed to provide the UMC parent and student with legal strategies to lower their income and assets in the eyes of the federal government and universities. The best way to utilize this section is to read, jot down notes and then approach your financial adviser and accountant with ideas that pertain to your individual case.
Remember, the base year is the most important. Use it to your advantage and you may receive a great financial aid package.