Loans
Federal student loans are usually preferable to most other types of loans. Not only do they carry low interest rates, but the interest is generally tax-deductible. And if you die before it's paid off, no one else is left holding the bill. "Federal education loans are discharged upon death of the borrower," says Mark Kantrowitz, publisher of FastWeb.com and FinAid.org.
Once you've learned about federal, state and student loans, fill out the Free Application for Federal Student Aid, or FAFSA, form to determine if you are eligible for federal help.
If your house has held its value, you might use a home equity line of credit, or HELOC, to help with college funding. But before you register for classes, make sure your HELOC limit has not changed. Many banks have lowered or suspended lines of credit.
Your own money
If education is worthwhile, it's worth paying for it, even if you have to use your own money. Fortunately, you're likely to have more cash of your own now than you did fresh out of high school.
If you can afford it without jeopardizing your emergency fund, consider using your nonretirement savings and investment accounts for college funding. Colleen O'Brien, a financial consultant with company Charles Schwab, recommends using investment assets if you can sell the securities. "I wouldn't borrow against the securities because they can go down in value," she says.
Avoid raiding your retirement accounts. "Your retirement savings are something you've built over time," O'Brien says. "You can't get it back if you take it out because you can't contribute more each year. You're better off getting a loan and paying that back when you get a job that pays more money."
O'Brien also doesn't recommend suspending retirement contributions while you go to school in favor of college funding. "You have certain limits each year," she says. "You can't go back. You can get a loan for education, but you can't get a loan to fund your retirement. Your retirement savings are your No. 1 priority at all ages."