Personal Finance: Conquer college bills with four simple tips - Philadelphia Daily News |
| Personal Finance: Conquer college bills with four simple tips - Philadelphia Daily News Posted: 15 Aug 2010 12:10 AM PDT Posted on Sun, Aug. 15, 2010 It's a bill like no other, frightfully huge, with perhaps $20,000 that has to be paid almost instantly. If your child is getting ready to start college and you have just received one of these bills, you're probably among the parents fixated on that price tag while trying to count sheep at bedtime. But it might not be as bad as you first think. Break it down. If you had to sit down today and write a check for a year of groceries, that number would be disconcerting, too - probably more than $5,000 and hardly an expense you could handle on a moment's notice. But because people pay for groceries weekly, they don't feel as though they are spending thousands. You can treat college the same way. Instead of writing a check for the full semester, put yourself on a payment plan and break your bill into more palatable monthly payments. Many colleges can link you with a firm that provides payments to them. There should be no interest or finance charge, although you will probably pay an annual fee of about $100 for the service. Although colleges generally refuse to let students sign up for fall classes until they pay for the first half of the year, enrolling in a payment plan will usually be sufficient. Call the college billing office, or, to find a firm on your own, go to http://go.philly.com/finaid. Find more financial aid. Although most college financial aid has been awarded, students can sometimes find leftover money. Just before classes start, some students change their minds and go elsewhere. That can leave colleges with scholarship money that was previously assigned. Call the director of financial aid or the head of the department your student plans to major in. Contact them again in September and October to see whether there are leftovers. If you have lost a job or encountered a financial hardship since applying for aid, go back to the financial-aid director and ask to be reconsidered. Money under sofa cushions. Most people think they don't have a penny more to spend on household needs. But many can find thousands of hidden dollars. Analyze household expenses, especially those related to the student who will be leaving, said Frank Palmasani, a college counselor and founder of ManagingCollegeCost.com. Instead of spending all new money, you will merely shift some, cutting back on food, lessons, gasoline, car insurance, electricity, and water at home. Mick Endersbe, founder of College Planning University, said many families discover they can devote about $4,000 to college that way. In addition, if your income is under $180,000, you could get a $2,500 education-tax credit for each year of college. Parents also might be able to reroute thousands of dollars toward college if they temporarily cut back on retirement saving in 401(k) plans. But Palmasani suggests still investing enough to qualify for an employer's match. Before cutting back on the 401(k), make sure you will be OK in retirement. Check the "ballpark estimate" calculator at choosetosave.org. Borrow right. At the college financial-aid office, request federal student loans. You can count on at least $5,500 for the first year of college in Stafford loans. By the junior year, you can borrow $7,500. If your child is among the moderate-income students, you might also get a low-interest federal Perkins loan. At colleges attended by many wealthy students, even fairly affluent families might qualify. Also, for students from families with incomes around $40,000 or less, ask about federal Pell grants. In the state where you live or attend college, contact the state's higher education department to find low-interest state loans or grants. Parents with a lot of home equity might be able to get home-equity loans, perhaps through credit unions. But beware: Borrowing on your home and saving the money for future college expenses could reduce aid.
Gail MarksJarvis is a personal-finance columnist for the Chicago Tribune. E-mail her at gmarksjarvistribune.com.
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