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| College 101 |
Paying for College
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Successful college planning requires research, planning, and
time. Students and parents need help exploring the
reality of college costs, savings opportunities, loans, and
managing expenses. College
Answer has helped many counselors by offering paying-for-college
information all in one location.
There's more than one way to pay for a college education:
College Costs
| Savings Plans | Tax
Incentives | Free Money | Loans
| Other
College Costs
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Education Savings Plans
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529 Savings Plans:
Most states offer programs to help families save and pay
for college. The most common are state savings and prepaid
tuition plans.
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Coverdell Education
Savings Plans (ESA) (formerly called Education IRA)
is the most attractive way to save for K-12 expenses.
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Savings Bonds:
Series I and EE savings bonds are 30 year bonds that offer
tax-deferred growth and partial or full exclusion from
federal income tax when proceeds are used for tuition
at an eligible postsecondary institution.
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UGMA/UTMA:
Before 529 plans, the Uniform Gifts for Minors Act (UGMA)
and the Uniform Transfer to Minors Act (UTMA) were the
most tax efficient ways to save for college and transfer
wealth to children and grandchildren.
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IRAs and Other
Savings Plans: Families can reduce the amount of income
subject to tax while financing a child's education.
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College
Savings Advice: The ESP Wizard not
only advises families on which 529 plans to invest, but
also offers strategies on how to maximize financial aid
eligibility.
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Tax Incentives
Tax Benefits:
Even the IRS can save families money. Tax credits and
deductions are a way to recover some of the costs of higher
education.
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Free Money
Free money for college is available from a variety of
sources and can come in the form of scholarships
and grants.
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Loans
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Federal
loans are the largest source of education
loans. Loans available under federal programs have very
attractive terms when compared to most borrowing
options: lower interest rates, the possibility of interest subsidized by the federal government while the
borrower is in school, the ability to postpone
payments, longer repayment terms, and less stringent credit
requirements.
Federal loans include Stafford
and Perkins
Loans (for students) and Parent PLUS
Loans (for parents).
View our federal loan comparison table.
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Private
loans are designed to supplement federal
loan programs and are available from schools, banks, and
education loan organizations. Private loans are also known
as alternative loans and the terms often vary considerably
based on the lender and borrower credit histories. Private
loan options include:
Signature Student Loan® offers undergraduate and graduate students financing beyond what federal programs offer.
Tuition Answer®Loan allows creditworthy parents and students with income to borrow to cover any education-related expense.
Signature Student Loan® for Community Colleges offers financing beyond what federal programs can offer. The loan is specifically designed to provide financing for students enrolled in Associate degree and Title IV eligible certificate programs.
The Career Training LoanSM can be used to cover the total cost of attendance for students pursuing technical training or a trade school education.
The K-12 Family Education LoanSM helps families finance the cost to send their children to private primary and secondary schools.
MBA LOANS®, LAWLOANS®, Medical School LoansSM, and DENTALoansSM offer graduate students a package of federal and private loans to cover the entire cost of their studies.
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Other loan sources include home
equity loans and retirement
plans.
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Other Ways to Pay
It's important to note, in addition to scholarships and student
loans other possibilities exist to help pay for college: work
study, military
service, community
service, and loan
forgiveness. Then consider suggestions on how to reduce college costs.
TuitionPay® is the interest-free, debt-free way to spread tuition payments over a number of months. The TuitionPay Plan is not a loan, so there are no interest payments, only a low annual enrollment fee.
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