Last-Minute Ways to Pay for College
Avoid These Money MistakesMistake No. 1: Oversaving in Your Child's Name
Before offering you financial aid, a school will review your assets and your child's. Thirty-five percent of a child's assets are considered available for tuition, but only 6 percent of a parent's. If too much money is in your child's name -- whether stocks, bonds, 529 plans, mutual funds, or savings accounts -- it could lower the amount of aid you'll be offered. For example, if you've saved $100,000 in your name, a college will expect $6,000 to be put toward tuition; for $100,000 saved in your kid's name, it'll expect $35,000. So any new money you set aside should stay in your account.Mistake No. 2: Paying with Plastic
Many institutions allow you to charge tuition on a major credit card, but it's seldom a good idea. Unless you intend to pay the entire balance immediately, you'll be paying interest after month one, and with rates averaging around 13 percent or higher, you could still be paying years after your kid graduates.Mistake No. 3: Raiding Your Retirement Plans
Financial advisers agree you should never take money out of your retirement plans to pay for your child's education. While you can usually take out loans for college, no one will ever lend you money for your retirement.
Originally published in Ladies' Home Journal magazine, April 2005.