Athletic fees, housing costs, student activity fees and books are not eligible expenses for the Hope or Lifetime learning credits. The lifetime learning credit has the same adjusted gross income and eligible expense limitations as the Hope credit.
Financial aid planning for college is often more important than tax planning.
Steps can be taken to increase your child's chances of receiving grants or a subsidized Stafford loan by decreasing the child's income and assets and if possible your income and assets. This should be done the year before you apply for loans or grants. However, any tuition costs that are used in the calculation of the Hope or lifetime learning credits cannot be included in determining whether the Series EE bond redemption is tax-free. If you are not fully utilizing all of your IRA contributions for your own retirement, one of the best college investment strategies is to use a Roth or traditional IRA to fund your child's education. The Hope and lifetime learning credits are unaffected by IRA distributions.