Magazine article Newsweek

Give It the Old College Buy

Magazine article Newsweek

Give It the Old College Buy

Article excerpt

Cash-strapped parents are filling out their aid forms in the face of higher college costs, a credit crunch and new student-loan legislation from Washington. TIP SHEET's Linda Stern asked Mark Kantrowitz, publisher of FinAid.org, how you can get the most cash for your kids.

STERN: Will there be college money for next year's freshmen? How much will it cost?

KANTROWITZ: There will be fewer lenders, but students will still be able to obtain federal education loans. Undergraduate federal student loans will cost 6 percent if they are subsidized, 6.8 percent if they are unsubsidized, and parents' loans will cost as much as 8.5 percent.

Those rates all seem pretty pricey. Shouldn't families just get a home-equity line instead?

Remember that these are fixed rates, and home-equity rates will vary, so over the long term they may go up higher. And student loans have some other favorable terms like hardship deferments and extended repayment plans. But, if you think you can pay it off over the next couple of years, I'd recommend the home- equity line.

Do you have any strategic tips for families?

Students should apply to a "financial-aid safety school"--a college where the student has a very good chance of admission and where they could afford to attend even if they got no financial aid. If you've been saving money in a child's name, you could liquidate that account and use that to invest in a 529 education savings plan, and you'd be in a better position to get more aid. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.