By Patti Brugman

         Starting early is the best way to tackle the problem of college money.  We suggest planning your college list with target, reach and safety schools.  Likewise, no matter your savings, create a list that allows for financial “safety” schools (in case the bottom falls out of the market) and one financial “reach” school (in case a huge bonus or legacy befalls you.)

But for the middle of the market and for most families, consider these plans:

Your savings:  If you have been both industrious and realistic, you might have managed to save $1000 a month per child since they were born.  If so, you’re set.  The money is there earning interest to cover any tuition increases and you’re still continuing to save.  If you haven’t saved “per month,” you might have saved annually, taking Christmas bonuses, gifts from grandparents and the rest to invest or just save in a 529 Savings Plan.  (For details see: http://www.savingforcollege.com/)

Whatever your plan, you want to plan for financial freedom for both the family and the college student.

The payment plan:  Perhaps you have a small college fund and intend supplement by paying out of pocket as you go.  Cutting back on expenses is a great start to help support upcoming costs.  Remember that students in the home actually cost between $5-10k a year, money you’ll be transferring to the cost of college.  Also consider that a stay-at-home parent who goes back to work is like having money in the bank. Maybe this is your opportunity to cash in on your skills, update your resume, and get back into the workplace.

Loans:

Direct Plus Loans: For details on how to qualify for these loans and repayment schedules, see www.direct.ed.gov. These loans are low interest, but must be repaid on schedule starting right after graduation.

State Loans: In California, check out www.calgrant.org to see what is required to qualify for a low interest state loan.  Each state offers their own version of this kind of loan to residents only.

Private Loans:  Many good loans can be secured for college students.  The temptation here is to go all out.  It is better to think of loans as a supplement to college savings, rather than a bankroll for the full cost.  Remember that student debt is a huge burden.  We suggest that students stay under $40k for their entire student debt for four years. (See your bank for details.)

Home Equity Loans: If you own your home, you can do well by borrowing against it.  The interest is very low and, if you bought early, you might have access to quite a bit of that equity.  Be warned though, that this is not free money and if you suddenly need a new roof, you might be in trouble.

Other money: Grants, athletic scholarships, merit scholarships and gifts from Grandma are excellent sources of money. The best news is that they don’t have to be repaid.  By choosing the right school, a talented student might be granted 20-100% of the cost of education.  (See us for details.) If you have a generous and able relative who is willing to bankroll a budding scholar, all the better.  But for the student without athletic talent, great grades, or willing grandparents, the right loan is often the way to go.

--All the best from Perfectfitcollege.Net  7/12