Can You Really Afford College? A Tax-Time Reality Check

Paying for college has never been a cakewalk. And with final provisions of the One Big Beautiful Bill Act coming into effect on July 1st, 2026, we’re prepared to see the higher education landscape shift yet again. When it comes to family financial strategy, the process looks vastly different than they did a few short years ago. Keeping up can feel like trying to run a race when the goalposts keep moving… but with a price tag.

So let’s catch you up to speed. If you’re trying to figure out whether your family can actually afford college right now, you need to take a long, hard look at the numbers as they stand. Let’s review your financial aid strategy for college with a tax-time reality check.

What can you do? Many families find it convenient to do a “self audit” during tax season, when they have current documents on hand. That said, there’s no bad time to start creating a smart budget and college funding strategy.

Often, the hardest part of this conversation for seniors and family is getting started. So, let’s get the ball rolling here.

Got your financial aid packages? Collect your official documents and read them thoroughly. Even if you haven't applied yet, spring is a great time to start a financial aid file with everything relevant to your college costs.

This includes: 

• The combined income of all parent/guardian/contributors in your household (see W-2 or paystubs)
• Approximate summation of family assets in your household (see bank statements or other tax forms)
• Your acceptance letters and terms (from each university you are accepted to)
• Your official financial aid packages and terms (for each acceptance, if you have them)
• Key data in an easy-to-read chart about overall costs (tuition, fees, room & board, and net cost after aid is applied)

Overwhelmed by all the acronyms? Need help decoding your financial aid package? Just not a numbers person? Check out this article that helps you break down each part of the offer letter and what it all means. 

No matter what, take your time to understand everything before you get ready to sign any contracts. These are the primary sources of information you’ll build the rest of your plan around.

The biggest issue? If, when senior year rolls around, there is a gap between what your financial aid offers and what’s in your actual bank account. 

Many middle-income families are being told they can afford a certain amount (through the SAI), but that amount often exceeds their monthly discretionary income. Recent data shows that in 2025, nearly 44% of families find their FAFSA results to be “worse than expected,” leading to a general feeling of being “too rich for aid, too poor for college.” These families are increasingly facing “math” that doesn’t feel like reality.

If you think there’s been a mistake or misunderstanding (or recent changes to your ability to pay), you can also consider whether a financial aid appeal is appropriate. If there’s no room for negotiation, you need to decide what to do about it; and, if possible, how to close the gap yourself.

Here’s our advice on how to start your college funding strategy that works.

Even if your student is a freshman or sophomore, you can make a difference by saving now and starting to apply for scholarships you’re eligible for. If your student is a junior, it’s time to get organized with your family finances and application strategy. If your student is a rising senior, make it a goal to file your Free Application for Federal Student Aid (FAFSA) as soon as possible. In pretty much all cases, the earlier, the better.

For example, a 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. There’s also the 529-to-Roth IRA rollover; this new feature reduces the "fear of over-saving" because parents know they can move up to $35,000 of leftover funds into the student's retirement account. Do your research, and determine which account (529 plan, Roth IRA, or others) is the best fit for your family's education savings goals.

This goes for everybody. With federal loan caps now in place, merit aid isn't just "nice to have." Now, it’s the best way to avoid high-interest private debt if the $20,000 Parent PLUS cap isn't enough.

Got questions? You’re not alone. Let’s address some of the most common questions families are asking in 2026 when it comes to financial aid and how to afford college costs.

In 2026, scholarships are no longer considered extra credit. They are a primary pillar of the budget. At the latest, families should start the scholarship hunt by junior year, but we suggest you start as early as freshman year. The sweet spot for high-yield local scholarships you definitely don’t want to miss is between October and March of senior year, but there’s plenty you can do now to save yourself time later. 

This is a common question for 2026 after recent FAFSA updates. Thankfully, there’s good news for 2026: the net worth of family-run businesses with fewer than 100 employees (and family farms where the family lives) is now largely exempt from being counted as an asset in the aid formula.

With the new Parent PLUS caps, this is a top-tier concern. When federal loan eligibility is exhausted, there are several avenues families often explore:

• Private student loans: These are loans offered by banks, credit unions, and online lenders. They typically require a creditworthy co-signer (often a parent) for the student to qualify for a reasonable interest rate, and the rates can be higher than federal loans.
• Tuition installment plans: Many colleges offer these plans, which allow families to pay the tuition bill in smaller, interest-free installments over the semester or academic year, rather than one or two lump sums. This can ease cash flow pressure, but doesn't reduce the total cost.
• Increased student contribution: Students are increasingly taking on more financial responsibility. This can involve working a part-time job during the school year (15-20 hours a week), working full-time during breaks, or using savings from high school jobs to cover a portion of the tuition, books, or living expenses.
• Home equity: Some parents choose to use a home equity loan or a home equity line of credit (HELOC) to finance the college gap, using the lower interest rates associated with secured debt. This, however, puts the family's home at risk if payments cannot be made.
• Other savings/investments: Families may need to tap into non-retirement investment accounts or general savings that were not originally earmarked for education.

The best path depends heavily on the family's income, credit score, available equity, and the remaining gap between the cost of attendance and available federal aid/savings. In other words? It all comes down to your individual situation.

Ultimately, a realistic college budget requires looking beyond the sticker price. Tuition often accounts for only half of the total cost of attendance. Failing to plan for the rest is a common, painful mistake. With indirect costs like record-high rents, rising grocery prices, and unexpected transportation expenses, many families are blindsided by the $15,000+ per year needed just for "room and board." 

Don't let these unexpected costs derail your family's financial future. Assess your true financial situation now, expect the unexpected, and consider consulting with an expert to create a comprehensive, realistic plan. 

Empowerly is here to help you build that strategic roadmap to college affordability, offering personalized counseling that goes beyond mere applications. But you also don’t have to take our word for it. You can hear firsthand from a real Empowerly student about how her counselor helped her whole family through the application process:

Our experts guide you through the complexities of financial aid, from understanding FAFSA and CSS Profile requirements to exploring scholarships and grants. We ensure you have a clear plan to maximize your financial aid potential and confidently assess what colleges your family can truly afford. Book a free consultation to learn more about how we can help your student today.