Understand these facts:
1) Colleges work in academic years, while the IRS works in calendar years. So the reality is, it takes you 5 calendar years to get that 4 year degree.
2) Scholarships, grants, 529 distributions and all other education assistance received is reported as such in the tax year it is received. It does not matter what tax year that money is *for*.
3) Tuition, books, lab fees are claimed as education expenses in the tax year they are paid. It does not matter what tax year is paid *for*.
Now since some credits such as the AOTC are limited to four years, that's why you want to pay in full all qualified expenses for the last semester of the 4th school year, before the end of the first semester of the 4th school year.
