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Financing college

If applied in a son or daughter's childhood, parental foresight can ease the financial strain of putting a student through college a decade or more later. Wisely invested, relatively small amounts of money can grow over the years.

Early on, for instance, parents can set up custodial accounts involving mutual funds for their children. (Generally these accounts are best utilized by parents with higher incomes because a student of parents with an average or lower income might find his chances of financial aid greatly reduced by the presence of a substantial account).

Other ways to finance college include Education IRAs, state tuition programs, tax credits, grants (which do not have to be repaid), loans and other programs.

Of course, one of the smartest ways to plan for college is to see that the child achieves excellent grades and reaches his or her full potential in athletics, academics, the arts and school leadership. The better the grades and the greater the community involvement, the greater chance the student has to reap the benefits of scholarships and grants.

These key questions should be asked before selecting the institution best suited to the needs of the student and the financial realities of his or her family:
  • What kinds of grants and scholarships is the institution willing to give the student?

  • Does the institution offer the program that will prepare the student for the career that he or she wants to pursue?

  • Is the institution accredited so that its diplomas are meaningful?

  • What kind of financial aid and on-campus employment does the institution offer?

  • Does the institution guarantee graduation within four years if certain conditions are met by the student? Are there opportunities to graduate in less than four years?

  • Does the institution have a low dropout rate?

  • Would another institution be less expensive while offering the same educational opportunities?

  • Would the student be better off attending a community college before transferring to a university for his or her junior and senior year?

  • Does the institution possess prestige and networking possibilities that help its graduates in the marketplace?

  • Is commuting from home an option?

  • Does the institution offer the Reserve Officer Training Corps (ROTC) and if so, is the student willing to serve four years as a military officer after receiving his or her diploma? Would the student be better off serving in the Armed Forces and then taking advantage of the GI Bill?

  • Should the student attend the institution part-time while working full-time for a company that would reimburse him or her for tuition?
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
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