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Paying for Tuition
"If you can't afford to fund both your child's college
education and your retirement, putting money aside for your
retirement should be your first priority. You can borrow
for your children's college education. But you can't borrow
to fund your retirement."
- Ilyce R. Glink, author of
100 Questions You Should Ask About Your Finances
A financially distraught dad once quipped, "Of course two
can live as cheaply as one. My wife and I live as cheaply
as our daughter at university!" All joking aside, college
planning is a difficult task in the wake of all the other
things you might be trying to save for, such as a house or
retirement.
For the last 10 years, college expenses have risen an average
of 7% per year. That's much higher than general inflation,
which has averaged about 3.4% over the same period. The following
tips are geared to help you find ways to help finance your
children's college education.
- Apply for financial aid: visit our Financial Aid Center
for information and guidance about applying for different
types of financial aid.
- Borrow from retirement accounts.
- Take out a home equity loan.
- Borrow against your life insurance.
- Tap government loans, such as the Sallie Mae (Student
Loan Marketing Association).
- Take advantage of prepaid state tuition plans.
- Invest $500 a year in an Education IRA.
- Invest up to $50,000 a year in the new 529 plans, now
available in some states.
- Take advantage of the Hope Scholarship or Lifetime Learning
credits on your tax return.
- Investigate various college student loans, including:
- Stafford Loans
- Perkins Loans
- Plus ("Parent loans for undergraduates") Loans
- Apply for a personal loan from a private lender
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