How to pay for college

If you keep stashing away money in retirement
accounts, it’s reasonable for you to wonder
how you’ll actually pay for education expenses
when the momentous occasion arises. Even
if you have some liquid assets that can be
directed to your child’s college bill, you will, in
all likelihood, need to borrow some money. Only
the affluent can truly afford to pay for college
with cash.
One good source of money is your home’s
equity. You can borrow against your home at
a relatively low interest rate, and the interest is
generally tax-deductible. Some company retirement plans — 401(k)s, for example — allow
borrowing as well.
A plethora of financial aid programs allow
you to borrow at reasonable interest rates.
The Unsubsidized Stafford Loans and Parent
Loans for Undergraduate Students (PLUS), for
example, are available, even when your family
isn’t deemed financially needy. In addition to
loans, a number of grant programs are available
through schools and the government as well as
through independent sources.
Complete the Free Application for Federal
Student Aid (FAFSA) to apply for the federal
government programs. Grants available through

state government programs may require a separate application. Specific colleges and other
private organizations, including employers,
banks, credit unions, and community groups,
also offer grants and scholarships.
Many scholarships and grants don’t require
any work on your part — simply apply for such
financial aid through your college. However,
you may need to seek out other programs as
well — check directories and databases at
your local library, your kid’s school counseling
department, and college financial aid offices.
Also try local organizations, churches, employers, and so on, because you have a better
chance of getting scholarship money through
these avenues than through countrywide scholarship and grant databases.
Your child also can work and save money
during high school and college for school. In
fact, if your child qualifies for financial aid,
she’s generally expected to contribute a certain amount to education costs from employment (both during the school year and summer
breaks) and from savings. Besides giving your
gangly teen a stake in her own future, this training encourages sound personal financial management down the road.