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Decide
if you're saving for public or private college.
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Get
the current average annual cost of private versus public school.
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Determine
what college will cost when your child is ready to attend.
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Set
up a timeline for saving:
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Determine
how long you have before you need to shell out cash for tuition.
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Figure
out how much you have already saved and how much you still need
to put away to meet that objective.
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If
you don't have one already, establish an investment philosophy
and determine a financial strategy that works for your family.
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Consider
hiring a professional financial advisor.
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When
college is more than 15 years away:
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Consider
opening an Education IRA.
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Consider
setting up a custodial account for minors.
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Think
about investing in aggressive mutual funds.
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When
college is ten to fifteen years away:
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Look
into prepaid tuition plans.
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Look
into state-sponsored college savings plans.
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Begin
to stabilize your financial portfolio.
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When
college is five to ten years away:
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Move
a portion of your investments into fixed income or bonds.
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When
college is five years or less away:
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Move
your child's college money into more conservative investments.
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When
it's college time--tax breaks:
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Look
into the Hope Credit.
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Look
into the Lifetime Learning Credit.
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The
Hope Credit and The Lifetime Learning Credit are mutually exclusive.
Parents must choose one or the other for each student; they
both can't be claimed at the same time.
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See
if you qualify to take a tax deduction on the interest paid
on your child's student loan.
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Consider
withdrawing funds early from your traditional or Roth IRA and
taking a penalty waiver.
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When
it's college time--parent loan:
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Look
into the federal Parent Loan for Undergraduate Students (PLUS).
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When
it's college time--financial aid:
The
main types of financial aid are loans, grants and scholarships,
and work/study programs. The majority of financial aid comes
through the U.S. Department of Education—nearly 70 percent of
all money given—mostly in the form of loans. The rest comes
from a combination of federal or state grants and programs,
from the universities themselves, and from corporations, foundations,
professional and service organizations, and community groups.
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Fill
out the Free Application for Federal Student Aid (FAFSA) form.
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ClubMom's
checklist Helping Your High Schooler Find the Right College
has helpful financial aid information.
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When
it's college time--student loans:
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If
your child qualifies for a Federal Stafford Loan (which gives
students a break on loan interest payments), factor this into
your financial planning.
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If
your child qualifies for a Perkins Loan, factor this into your
financial planning.
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When
it's college time--grants and scholarships:
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If
your student qualifies for a Federal Pell Grant, factor this
into your financial planning.
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If
your student qualifies for a Federal Supplemental Educational
Opportunity Grant (FSEOG), factor this into your financial planning.
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Look
into the Leveraging Education Assistance Partnership (LEAP)
program.
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Find
out about money available directly from the college and universities
to which your child is applying.
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Find
out about special interest groups and organizations that supply
cash for college.
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Beware
of scholarship search firms that promise you scholarship money
for a fee.
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Work/study
programs:
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If
your child qualifies for a work/study program, factor this into
your financial planning.
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Alternative
approaches to financial aid:
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Consider
reducing the cost of college by having your child start out
at a community college.
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Consider
having your child apply for a four-year U.S. Army ROTC scholarship.
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