Thursday, April 23, 2009

Paying for college through loans

By Jeffrey Kam

Many high school seniors faces the most challenging problem with their parents in the month of April, how to pay for college. This year college funds have been taking hits this year due to the stock markets. Parents might not have amount saved up for college tuition. Although there is a portion of the stimulus bill from the Obama Administration are aiming to give some cash to save the mess, but it takes time. Below are two tips that will help families to pay for college.

Limit your student loans, this year freshman’s are allow to borrow up to $5000, $6,500 sophomores and $7,500 for seniors this year. Although these are small loans, parents can borrow from the federal PLUS loans for the rest of the college fees. Banks also offer loans but at a higher rates and more expensive, these are mostly for families that can afford to repay in the future, or school that are worth the extra debt.

Parents can also use some home equity or their house for helping the loan. Home equity interest rates are 5.5 percent on average, but you can find rates that is as low as 3.3% when you have a good credit score or have a good amount of home equity. These loans are tends to be cheaper than other students loans. The down side to these loans is that debt might carry over into their retirement plan.

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