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2006: A look back - A look ahead  
  Change was the name of the game in 2006 while the biggest push for reform in 2007 will be aimed at college-related debt.
 College financing
 Personal finance calendar  Personal finance calendar 

Paying for college: best strategies for the year

Find out when you must begin paying off the loan. Can payments be deferred while a student is enrolled in college or graduate school? If so, will delaying payments cost extra? How much more?

Does the loan offer discounts, such as an on-time payment break? Robert Shireman, president of Project on Student Debt, says borrowers can't even have one late payment, nor can they adjust their repayment schedules, to qualify for on-time discounts. As a result, he says, few actually do end up getting it.

There are other considerations, too. Be sure you can temporarily defer or reduce loan payments in the event of some sort of fiscal hardship, such as illness or job loss. And, finally, never take out a loan without first finding out how much you can borrow without adversely affecting your eligibility for other forms of financial aid.

"At times, getting a private loan could require the financial aid professional to adjust other portions of their student aid award," says Brett Lief at the National Council on Higher Education Loan Programs. Bottom line: Ask the college's financial aid expert for help when dealing with private lenders.

Another option: Seek help from individuals who specialize in college financing. The National Institute of Certified College Planners, for example, certifies advisers who stay up to date about tax strategies, financial aid program changes and new twists to investment plans that affect college savers.

Stay on track
Finally, don't forget that even the simplest steps can have a big impact on college costs.

Only four in 10 college students graduate in four years. Motivate your student to be in the minority.

In some cases, there's good reason for the delay. Individuals may take time out to work through (and pay for) school. But in other cases, students extend their stay in academia because of lost credits in a transfer to another institution, a change in major or simply because they goof off.

That costs a bundle -- up to 25 percent more for every extra year.

If your genius is on the slow track, it may be time to put some fire under his or her feet. Students can take extra courses during the regular semester or over the summer. He or she can sign up for summer school at a local community college, which may be more affordable, and transfer the credits.

It can start as early as high school, where students can sign up for rigorous advanced-placement classes that can be counted toward college credit.

Finally, don't downplay the power of parental persuasion.

Says financial planner Dee Lee, author of Let's Talk Money: "We told our kids we'd pay for their room, board and tuition for four years, but they'd be on the hook for everything else."

-- Posted: Nov. 1, 2006
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