For some, saving money for a child's or grandchild's college education seems nearly impossible. Before you give up the battle, however, consider this: A high school graduate will earn an average annual income of $26,416. A college graduate will earn an average annual income of $34,000 to $74,000. For someone who works 40 years, that can add up to an additional $320,000 to $1.92 million in earnings. That's quite a return on an investment in a college education!

Saving for college may seem like a monumental task, but you don't need to save the entire amount overnight, and, chances are, you won't need to finance the entire expense yourself. Today, there are a multitude of loans, work programs, tax credits, and so forth designed to help put college within the grasp of nearly everyone. With a little homework, you can find all the options available to you.

Here are five sources of college funding to consider:

Grants and Scholarships. Grants and scholarships are awarded on a number of criteria, including grades, talent, heritage, race, and gender. Grants and scholarships can be offered locally, statewide, nationwide, and by particular colleges and universities. The internet, school counselors, and the financial aid offices of colleges and universities can provide a wealth of information on this topic. Grants and scholarships typically supplement college costs rather than cover total expenses. Therefore, it's important you take an active role in saving for your child's educational future.

Investments. Through the years, parents and grandparents have used savings bonds, zero coupon bonds, and growth-and-income mutual funds to help with educational expenses. All are excellent ways to save for a college education. In more recent years, however, several new tools to help save for or offset college expenses have been introduced. All make financing a college education easier than ever before.

Section 529 Plans. When you set up a Section 529 savings plan, you put money in specific investments, which are managed by the plan administrator. 529 plans can be established for a child or grandchild. When establishing a 529 plan, you choose from two options: (1) Prepaid tuition programs, where you buy future tuition credit--at today's prices --that's generally used at an in-state school; and (2) Savings plans, where your earnings are not taxed as they accumulate, and qualified withdrawals are free from federal income tax. Savings plans are the more popular of the two plans because they generally don't restrict students to certain colleges in specific states. Your plan contribution limits are high, and your withdrawals are free from federal income taxes, as long as the money is used for qualified college or graduate school expenses. (Section 529 tax benefits are only effective through 2010, unless extended by Congress. Also, a Section 529 plan could reduce your child's or grandchild's ability to qualify for financial aid. Because tax issues for 529 plans can be complicated, please consult your tax advisor.)

Coverdell Education Savings Account. Depending on your income level, you can contribute up to $2,000 annually to a Coverdell Education Savings Account. Your Coverdell earnings and withdrawals will be tax-free, provided you use the money for qualified education expenses (tuition, fees, tutoring, special-needs services, books, supplies, computer equipment, room and board, uniforms, and transportation). You can fund your Coverdell Education Savings Account with virtually any investment you choose--stocks, bonds, certificates of deposit, etc. Once a Coverdell education savings account is established, anyone--a family member, friend, or the child--can contribute to the account as long as he or she meets the adjusted gross income limits. And you can contribute to a Coverdell Account in the same year that you put money into a Section 529 plan.

Tax Credits. Even if you already have a child enrolled in college, help still may be available. The Hope Scholarship Credit and the Lifetime Learning Credit are tax credits that can be used to offset college tuition and fees. The exact amount that can be claimed depends on your family's income, the amount of qualified tuition and fees paid and the amount of certain scholarships and allowances subtracted from tuition.

"Last-Minute" Options

If you have a college-bound senior in your house and you haven't saved as much as you would have liked, don't despair. Even at this late date, you can take some steps to help pay those college bills. Here are a few ideas to consider:

Don't panic. You don't have to pay the full year's tuition, room and board up front. You will likely be billed in installments that may correspond to the school's quarter or semester system. This payment system doesn't lessen your overall costs, of course, but it does give you a bit of time to come up with additional funding sources. For example, if you have a bond coming due in the middle of the college calendar, you can use the proceeds to help pay for school.

Liquidate assets in timely manner. If you've earmarked certain investments for college, try not to liquidate them until it's absolutely time to write out a check. The longer you can keep your investments growing, the better off you'll be.

Look at a Roth IRA. If you have a Roth IRA, you can withdraw contributions, tax- and penalty-free, to help pay for your child's education. Certain conditions apply to penalty-free withdrawals, so you should talk to your tax advisor for more information. And keep in mind, if you start withdrawing earnings, you'll have to pay taxes on them unless you meet certain conditions.

Putting together a good college-funding plan--either at the last minute or years in advance--can test your resources and ingenuity. But by diligently exploring all your options, it's a test you should be able to "pass."

Randy Loren (www.randyloren.com) has more than two decades of experience in many areas of business and finance, and is currently a financial advisor for Edward Jones and a sought-after motivational speaker who educates high school students on the value of financial literacy and sound money and work practices. He is author of a new book, Climbing the Money Mountain: The Young Adult's Guide to Reaching Your Financial Peak (FN Publications, $19.95).

Posted by Candice Arnold on August 14, 2009 at 10:42 AM | Leave a Comment (0)

If you're a college student, you're learning about a lot more than what's inside your books. Living away from home is a veritable laboratory for life lessons. This year, in addition to whatever courses you may be taking, try to master some financial lessons, as well.

Of course, many students already have at least one foot in the "real world," because, in addition to taking classes, they're working many hours a week to help pay for school, rent, and living expenses. But even if you're a full-time student, living on campus, and paying for school through a combination of grants, loans, savings, and help from your parents, you can learn some financial basics that will help you throughout your adult life.

Specifically, consider these pointers:

Don't overuse credit cards. Credit card marketers aggressively target college students, so you'll need to be vigilant about all the offers that will bombard you. While it might not be a bad idea to carry a single credit card for use in emergencies, it's very easy to over-use the "plastic" and rack up big debts. You'll need to discipline yourself to save for the things you want, rather than charging them.

Shop around for financial services. You'll find plenty of banks willing to give you a T-shirt or a frying pan for opening an account with them. But these places may not be offering you the best deal on checking or savings accounts or loans. It pays to shop around. Find a no-fee bank in your area, and get in the habit of balancing that checking account each month. Use your debit card rather than a credit card so you don't get into needless debt.

Keep track of your student loans. Make sure you understand all the terms of your student loans: how much you're expected to pay each month, when payments are due, what interest rate you're paying, what credits may be available for on-time repayment, etc. You might be able to achieve a more favorable repayment schedule by consolidating two or more loans. Once you start repaying your loans, do whatever you can to stay on track with your payments.

Never stop looking for financial aid. The aid package you may have received as an incoming freshman doesn't have to be the final word on financial assistance. Colleges offer some scholarships based on college-level academic achievement or real-world experience--both of which you may have accumulated since your freshman year. Study your college's scholarships and be aggressive in going after them.

Acquire the budget habit. Budget is not a four-letter word. Done well, it is a practice that will enable you to be creative and flexible with your money. A well-followed budget can help you live without financial stress, afford big-ticket items, and make the most of your earnings.

Be a smart consumer. Learn how to negotiate for a better price on goods and services, and how to comparison shop. You can stretch your dollar by being a smart shopper--buying used or factory refurbished items, getting "off" brands, waiting for sales, asking for scratch and dent specials, etc. It never hurts to ask for a lower price or a deal.

Get your money growing. Since you're a college student, you probably don't have a lot of extra money. But whenever possible, put away a little each month. It might be as little as $20. The Motley Fool website has an instant calculator that shows how much your savings will be worth over time (http://www.fool.com/teens/teens13.htm). Save for a rainy day and you'll be glad you did.

Estimate your future income. You may not know exactly what you want to do when you graduate, but if you have a career path in mind, try to learn what sort of salary you can expect during your first few years out of college. Once you have a realistic idea of how much you're going to earn, you may have the motivation you need to avoid bad financial practices, such as accumulating big debts.

College should be a learning experience--in many ways. And if some of the knowledge you obtain during your college years can help you develop sound financial habits, so much the better.

Randy Loren (www.randyloren.com) has more than two decades of experience in many areas of business and finance, and is currently a financial advisor for Edward Jones and a sought-after motivational speaker who educates high school students on the value of financial literacy and sound money and work practices. He is author of a new book, Climbing the Money Mountain: The Young Adult's Guide to Reaching Your Financial Peak (FN Publications, $19.95).

Posted by Candice Arnold on August 14, 2009 at 10:38 AM | Leave a Comment (0)

Student loans are debt. While this may seem to be self evident, many young people tend to regard student loans as a nuisance left over from their student days. These loans are lightly regarded until it is too late, and their credit standing has been compromised. For the recent graduate, it is wise to assess the total accumulated debt from college and establish a plan to repay it quickly.

Although the combined amounts of the student loans can be astoundingly huge, the government who backs the loans tends to make even the largest loans manageable for the borrower. The good news is that most college graduates are able to find decent jobs and have little other debt to contend with at this point. This means that with another couple of years of tight living, most of the student loans can be eliminated.

See if any government programs exist in your field to reduce or write off student loans.

Jobs that deal in social areas like education, often have programs that target them to help pay off student loans. Usually, these programs require the young worker to stay in the field for about 5 years to reduce the loan to zero. A percentage of the loan becomes a write off each year and no payments are required during this time. Many times, loans of $10,000 to $20,000 can be repaid in this fashion. Continue reading ...

Article by, Allen Teal and courtesy of Associated Content, Inc.

Posted by Candice Arnold on August 12, 2009 at 9:03 AM | Leave a Comment (0)

The ceremonies are over. The cap and gown is hanging in the closet. The parties are done, too.

What isn't over is repayment of perhaps tens of thousands of dollars of student loans. And if you're a recent grad without a job in hand, it's a huge reality.

Washington Post financial columnist Michelle Singletary suggests that new grads should do just about anything they can to start paying off those loans. This means downsizing that cell phone contract when it's up for renewal, getting a roommate, moving back home or even taking a second job if you're already employed.

But what if you have no income? Singletary says that graduates who even suspect that they'll have difficulty repaying their student loans should get in touch with the respective lenders right away to discuss their dilemma. The options vary according to whether the loans came from Federal or private sources.

Many students who graduate without a job offer in hand are tempted big time to go directly to grad school. Singletary states that this is in most cases a bad idea because advanced degrees don't guarantee big salaries. Students who borrowed to finance an undergraduate education will most likely have to do so to finish a graduate program, incurring tons of additional debt in the process. And with the tightening of criteria for student loans, they might not even be able to borrow more money. Continue reading ...

Article by, Vonda Sines and courtesy of Associated Content, Inc.

Posted by Candice Arnold on August 12, 2009 at 8:52 AM | Leave a Comment (0)

I have a wonderful friend who offers the most complete information on college loans, Steve Sterling of www.mycollegecalendar.org He wrote me the following when I asked him a personal question... Where does a young person start, especially a student interested in the teaching profession? So, here is Steve...

First, here's a summary table of available loans:

http://www.mycollegecalendar.org/explore/pdf/student-loans-summary-table.pdf. This summary table is up-to-date for the 2009-2010 academic year and is a good starting point for understanding loan options. Another helpful summary table published by the Feds is http://studentaid.ed.gov/students/attachments/siteresources/Loan_Programs_Fact_Sheet_04_2009.pdf.

Your student should pursue the Federal Gov't. Loans first (of course!); they have the best interest rates and repayment options. IMPORTANT: the student probably will have to enroll at least as a half-time student (minimum 6+ credits each semester) to be eligible for the loans (check the loan eligibility criteria). The student also should research loans/grants/scholarships given by his/her state gov't (To find a state agency go to: http://wdcrobcolp01.ed.gov/Programs/EROD/org_list.cfm?category_ID=SHE ).

Regarding private loans, the largest (and easiest to use) lender for private loans is Sallie Mae ( http://www.salliemae.com/ ). Also, your student should call the financial aid office at the college he/she will attend to ask for a list of preferred private lenders and ask for suggestions/advice.

Also, your student may be eligible for future teacher-type grants from the Feds ( http://studentaid.ed.gov/students/attachments/siteresources/Grant_Programs_Fact_Sheet_04_2009.pdf ).

Lastly, if your student is planning to enroll in college in fall 2009, he/she should immediately complete the online FAFSA ( http://www.mycollegecalendar.org/explore/seniors/FAFSA-get-started.aspx). If he/she doesn't complete the FAFSA he/she won't be eligible for government (Federal and State) loans.

Article by, College Parenting Expert, Dr. Debi Yohn, whose advice on successfully getting college students through college with an emphasis on graduation and rewarding employment is sought by parents from around the world. Now for the first time, she reveals 27 Winning Strategies for Success - a guidebook geared to parents of new college students. Get her free e-Book now at http://www.collegeparentsadvice.com/ and improve your child's chances of a successful college experience.

Posted by Candice Arnold on August 7, 2009 at 9:48 AM | Leave a Comment (0)