Wednesday, March 4, 2009

Ways to Pay for College

Posted By: Asim Mohammed

Even though parents save up for their kids future college tuition, many parents still are in shock that they didn’t save enough after all the years.

For example the Matheny’s saved up $50,000 in college savings for both of their children. However, both of them are attending private schools this year and they Matheny’s are looking at $100,000 bill for the upcoming school year.

There are some options available to start helping to pay for colleges this year. Starting with the new economic stimulus plan President Barack Obama signed today creates yet another new tax break for college. The American Opportunity Education Tax credit increases maximum credit from $1,800 to $2,500 per year per student allowing more families to qualify. Claiming one of these tax breaks reduces your federal tax bill dollar-for-dollar, for a potential $2,500 savings. That makes it worth more than a $4,000 deduction, saving families at most $1,400 in federal tax.

Other ways a family can save and help pay for college is to fill out the FAFSA aid helping to get subsidized loans. Also many colleges have payment plans, allowing families to stretch the payment plans for a semester or even the year. Other options include, to max out the federal aid, generally the Stafford loan. Using the home-equity lines of credit, especially since they are averaging 6.1%, this may seem as an appealing option.

Even though the economy looks bleak into the future, and families are worrying over paying for college, there are options out there for families to look into, especially with a new government and stimulus plans being sent out.

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