A financial planner explains how to figure out how much you can pay for your kids' college

Fall 2017 is less than a year away. Are you ready to start paying for college? Spencer Platt/Getty

Fall 2017 is less than a year away. Are you ready?

It's easy to get caught up in your child's senior-year whirlwind. But if she plans to attend college in the fall, you may already be behind schedule when it comes to certain key steps. The first and most important document you want to complete is the Free Application for Federal Student Aid (FAFSA).

Many parents neglect to complete a FAFSA because their child is getting a scholarship or grant. Or they may think their household income is too high to qualify for student aid. You might be surprised to learn there is still plenty of reason to file. Here are a few things to keep in mind as your child transitions from high school to college.

Don't forget to consider how paying for college affects your own retirement! We are among the first generation who can reasonably expect to live into our nineties without any real safety net. Financing your retirement isn't an option. If you choose to pay more than you can afford for college, you are likely setting up yourself and your children for real hardship down the road.

Of course, some kids are naturally driven. They want to go to the elite colleges. And they're willing to do what it takes to increase their odds of doing so. But pressuring and cajoling a student who isn't motivated that way just doesn't make sense. It makes no sense from a return on investment perspective, either.

Instead, it pays to sit down and have some honest conversations with your child about their goals and inclinations. If your child isn't sure about what career they want to pursue, they can figure that out at a state school or even (gasp!) a community college first. Then, once they have a good sense of themselves and what interests them, they can look at their options and make informed choices. 

Don't make the mistake of only looking at total tuition cost, either. The number that matters to you is cost of attendance. Some private universities and colleges have thriving endowment funds and often help buffer student costs with grants, etc. College websites have tools to help you estimate costs. This is important since college tuition has been increasing so much faster than inflation.

The FAFSA is now based on "prior-prior-year" financial information. So if you are applying for 2017 matriculation, you'll submit 2015 tax returns. Remember, optimizing your income tax return for the FAFSA should begin in your student's sophomore year! If you are getting an early start, planning tactics for the base year include deferring income, timing retirement account distributions, and strategizing about the ownership of tax-advantaged accounts such as 529 plans. Because distributions from 529s count on the FAFSA as income, one smart strategy is to have Grandma and Grandpa own the 529 account that will pay for your child's senior year. 

As soon as distributions are used to pay for accredited college costs, the distributions are considered student income, regardless of who owned the account originally. Since you're no longer filing the FAFSA after the student's senior year, those distributions won't count against future aid awards.

Business owners can limit personal income from business entities in some cases. Of course, consult your tax preparer to make sure this fits your specific situation.

Here are some numbers for you as a reality check:

At $50,000 per year, your child's monthly income will be $4,166.67. Assuming 20% income tax, net income will be $3,333.33. Most student loans are expected to be paid off in 10 years, so $50,000 of student debt at a 6% interest rate will come with a monthly bill of $566.12. If that debt gets up to $100,000, which isn't hard to imagine considering the price of tuition at most schools, the monthly loan repayment bill will be $1,110.21 — nearly a third of their monthly income! 

Those kinds of repayment schedules dramatically impact quality of life and make saving for the future nearly impossible. In other words, taking on too much student loan debt is like setting your child back a decade or more. 

If you set up a 529 account 15 years ago, congratulations! You still should file a FAFSA. You also might benefit from speaking to a financial advisor who can help you get the best bang for your college buck.

If you're suffering from college sticker shock, and aren't at all sure how to pay for your child's education, don't despair. File that FAFSA and start looking into options for low-cost colleges, grants and scholarships. Remember — necessity is the mother of invention! You're likely to find you have many options you didn't know about. Clarity is always better than uncertainty, no matter how well or ill-prepared you think you are.