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Paying for College.

Even more scary than your child leaving the nest may just be paying for their new nest! If your son or daughter will be attending college in the near future, you may already be experiencing some anxiety about how to pay for college tuition. Fortunately, there are several options you can look into for financial assistance.
 
Stafford Loan
These are federal student loans that can be either subsidized or unsubsidized. Subsidized loans are available for undergraduate students who demonstrate financial need. With unsubsidized loans, the borrower is not required to demonstrate financial need. The terms are different for both so it’s important to look at each closely. Plus, Stafford Loans are typically offered at lower interest rates than private loans.
 
Perkins Loan
Perkins Loans are administered by the school and are low-interest federal loans for students who demonstrate a financial need.
 
PLUS Loan
These are federal student loans that can be used by parents of dependent undergraduate students. They are not based on financial need and the borrower must be in good credit standing.
 
Direct Consolidation Loan
This type of loan enables you to combine multiple pre-existing federal education loans into one new loan at a fixed interest rate. This creates one monthly payment instead of several payments.
 
Private and State Loans
Private and state loans are not processed by the federal government and would be a possible alternative if the borrower doesn’t qualify for federal aid. Interest rates and terms would vary.
 
Home Equity Loan
After taking advantage of federal student loans, you may consider taking out a home equity loan to cover any additional education costs. With today’s low interest rates, it may make wise financial sense to use a home equity loan and in most cases the mortgage interest would be tax deductible.*
 
Borrowing from Retirement
Borrowing money from your retirement savings is not recommended as an option for your child’s education costs. As wonderful as it is to provide for your child, college funding is not a necessity; saving for retirement is. With your encouragement, your kids can apply for scholarships, work, and choose an affordable school. In the meantime, you can continue to save for your future.
 
For comprehensive information on federal student aid, click here to visit the Federal Student Aid government website.
 
 
Information gathered from http://www.asa.org/default.aspx and http://studentaid.ed.gov/.
 
* The above is not intended to be tax advice, was not written by a tax professional and is informational only. Please consult a tax advisor for your specific situation.


Posted: 3/7/2014 with 8 comments

Categories: College, Education, Finances, Planning, Students



Comments
Lynn
Really helped me know what is available as we plan for our child's college in the near future.
3/10/2014 at 9:14 PM

Shelly Keefe
I know while we have been planning our high school senior's college experience, we have had to get creative! Make lists of everything and keep all the information, even if you don't think it's relevant or you will need it - you never know when you need to refer to a call you made or an email you received. Brainstorm - ideas can lead to other ideas - no idea is too silly. Ask other parents for ideas, especially ones who have been there and done that. Finally, involve your college-bound student. You never know what ideas they have!
3/10/2014 at 6:06 PM

Cameron Gray
I am currently a senior physics major at a private college here in Indiana. I think this post is crucial for anyone intending to pursue higher education. One should not just stop here in planning, but also continue on to research each of these topics so as to efficiently budget your finances, particularly in terms of student debt. It accumulates rapidly and can often affect your performance in your field for the rest of your life. Furthermore, be sure to make kids understand that their performance in high school and beyond can save them (and you) tons of money and headaches in the future. Make them realize just how direct their influence on finances will be based on their performance.
3/10/2014 at 5:33 PM

Katherine Byers
This is very useful information. Our oldest is getting ready to graduate and has been accepted to a private university down south with a partial Academic scholarship. We are investigating what all of our options are to make up the difference in tuition and fees and scholarship money.
3/10/2014 at 5:26 PM

Roxy S. Sease Coleman
Preparing for an education requires money management. Forum offers classes and even a free credit report.
3/10/2014 at 5:12 PM

Frank Sebastian
I saved for families college by having a Home Equity Loan which you can also deduct the interest from your taxes if you itemize.
3/10/2014 at 3:23 PM

Toby Slunaker
With a son heading to college in 2 years, I found this blog to be extremely helpful and one I want to return to several times! Thank you!
3/10/2014 at 3:11 PM

Susan Ball
It is nice to have a consolidated list of all the resources that you can use to pay for college. This site is a good reference tool.
3/10/2014 at 3:08 PM

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