Three Girls and a Mic ? Pockets Hurting: Paying for College

Everyone always stresses college to you. It used to be an option, but now, according to society it?s a requirement. Now you would think since in today?s world since you have to have a college degree that institutions would make it affordable but NO SIR! Filling out online scholarships seems hopeless because you almost never get them no matter how many you fill out and the government tries to help but the money they give you isn?t nearly enough!! I?m always stressing about how to pay for school and what loans I can pull out that won?t send me plummeting into debt with high interest rates but alas, I have failed.

As I was browsing through the Washington Post?s website I found an article that explained the different ways for which parents pay for school and unbeknownst to me grants and subsidized loans aren?t the only way. Apparently parents are using credit card, home equity, tuition installment plans?.the list goes on. Now I definitely think I found some alternatives as opposed to taking high interest loans but either way it goes it looks as if most of us we?ll become slaves to the debt we?ll acquire in college. Read for yourself:

Tuition Installment Plans

Interest Rate: None

Some 90% of colleges offer these plans, which allow families to spread tuition payments over nine to 12 months, according to the National Association of College and University Business Officers, which represents chief financial officers at nonprofit public and private colleges. Most plans don?t charge interest, though many levy an enrollment fee of $40 to $75 or more.

Zero-Interest Loans

Interest Rate: None

As college endowments bounce back from their financial-crisis lows, some schools are lending money to students with rates as low as 0%, says Justin Draeger, president of the National Association of Student Financial Aid Administrators. Schools, eager to attract students, can include these loans in their financial-aid letters.

Home Equity

Interest Rate: About 3% to 6%

Tapping home equity to pay for college can be relatively cheap. Rates on home-equity loans and lines of credit average about 6.4% and 5.1%, respectively, according to Bankrate.com.

And that?s before the tax breaks. Homeowners can take an itemized deduction for the interest paid on home-equity debt of up to $100,000 used for any purpose, including college. The higher one?s tax bracket, the bigger the advantage likely will be. However, for tax filers who are subject to the alternative minimum tax, home-equity interest deductions are allowed only when that debt is spent on home improvements.

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Credit Cards

Interest Rate: 0% during introductory period

Parents who know they will be able to pay tuition bills soon?for instance, if they are expecting a bonus or tax refund?might want to consider using a credit card that has a 0% promotional interest rate.

The average length of 0% periods on purchases ran nearly 10 months during the second quarter, up from about eight months a year prior, according to CardHub.com, a credit-card comparison site. For example, Citigroup?s Simplicity and Diamond Preferred credit cards offer 0% rates for 18 months.

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Life Insurance

Interest Rate: 4% to 5.5%

?Permanent? life-insurance policies combine a death benefit with a tax-advantaged investment account, and policyholders can borrow cash from the policies to pay for various expenses. Parents can take loans from such policies to cover tuition bills.

Interest rates on these loans, which can be fixed or variable, typically range from 4% to 5.5%, says Scott Moffitt, a college-planning consultant in Cincinnati. That?s lower than most federal and private student loans.

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Alternative Loan Sources

Interest Rate: Varies

Since last year, a small number of start-ups have launched offering loans to students.

This month, SoFi, based in San Francisco, began making loans to undergraduates at 45 colleges, including New York University, Northwestern University and the University of California, Los Angeles. Alumni of those institutions fund the loans.

The interest rates are fixed at 6.49%, and they can drop to 5.99% upon graduation. Loan payments can be deferred until six months after graduation, though interest begins accruing while the borrower is in school.

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-Charlie Rose

@charlierosegold

goldcolouredrose.tumblr.com

Source: http://threegirlsandamic.com/2012/07/30/pockets-hurting-paying-for-college/

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