Last-Minute Ways to Pay for College

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3 Secret Money Sources

Smart Move No. 3: Investigate Less-Known Scholarships

Top scholars and prizewinning athletes may score the most obvious scholarship opportunities, but those aren't the only talents that can get your child free money for college. He could be eligible for grants if he's left-handed, interested in cars, or taller than average. Numerous scholarships are available for students with all sorts of surprising talents or characteristics.

To find little-known awards, sign up with Web-based databases that compare your child's background with available scholarships. Reputable sites include FastWeb (, which has information about more than $1 billion in awards, and Scholarship Resource Network Express (, which provides details on available funds worth some $35 million. These and other sites are free, and there's no limit to how many awards your child can apply for or receive. But be scam-savvy. If a site asks for money or claims to have award information unavailable elsewhere, consider it a red flag.

Smart Move No. 4: Take Advantage of Education Loans

Some parents, reluctant to saddle their kids with college loans, may think their best option is to borrow money in their own name, despite potentially high interest rates. But the federal Parent Loan for Undergraduate Students (PLUS) was created specifically for parents who want to fund a child's education -- with the child bearing no financial responsibility. With an interest rate capped at 9 percent, these loans are currently carrying a low 4.17 percent. You can borrow the total cost of tuition and related education expenses, minus financial aid. Payments start 60 days after the school receives the money, but you can take 10 years to repay.

With even lower interest rates, various student education loans are also a good choice. Stafford Loans, which now boasts a record low 3.37-percent interest rate, allows undergraduates to borrow up to $2,625 for freshman year, $3,500 for sophomore year and $5,500 for junior and senior years. Loans come in two varieties: subsidized and unsubsidized. Subsidized loans are need based, with the federal government paying the interest until six months after your child graduates. Unsubsidized Stafford Loans aren't based on need, and interest begins accruing at once (although the student can wait until after graduation to begin paying the interest). Also available are Perkins Loans, which are need based and currently have an interest rate of 5 percent. Undergrads can borrow up to $4,000 per year with a cumulative limit of $20,000; no loan payments are due until after graduation.

Smart Move No. 5: Tap Home Equity

If you own your home, you can take out a home-equity loan or line of credit and use the funds for tuition. Given the low interest rates (at present around 5 percent) and potential tax deductions for the loan interest, this could be some of the cheapest money out there, and it's worth investigating to cover whatever conventional education loans won't.

Continued on page 3:  Avoid These Money Mistakes


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