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(ARA) – As you send your son or daughter off to college, you have a lot
on your mind – will they be OK on their own, will they eat right, will
they call? If you’re like many parents, you’re probably also wondering
how you’ll pay for the next four years.
Many middle-class families are stuck in college tuition limbo – they
make too much to qualify for financial aid, yet don’t make enough to comfortably
cover ever-rising tuition costs. For many families, a home equity loan or line
of credit is a good option.
A home equity loan provides you a lump sum, while a home equity line of credit,
sometimes called a HELOC, functions more like a credit card that you can use
as needed. “Using the equity you’ve built up in your home to help
pay for college can be a smart choice,” says Matt Coffin, president and
founder of LowerMyBills.com, a free online service where consumers can shop
around for the lowest rates on monthly bills and reduce the cost of living.
Chances are the interest rate on a home equity loan or line of credit will
be substantially lower than the interest on your credit cards. And in many cases,
the interest payments on a home equity loan are tax deductible, making them
even more attractive. To get the best rates and the most appropriate loan for
your needs, it pays to shop around for the best deal. Web sites like www.LowerMyBills.com
make it easy to find and compare various loan options
Tuition is just one of the many expenses that goes along with school. There
are many other small and large costs from dorm room furnishings and text books
to electronic necessities like cell phones and computers. “Shopping for
these items with your college-bound student is a great opportunity to provide
your child with some financial coaching and teach them about budgeting, prioritizing
and spending wisely,” says Coffin.
For example, if they have their eyes on a particular item, show them how to
comparison shop to get the best deal. For some items, like their stereo system,
this might involve trips to local stores, comparison shopping on a Web site
like www.PriceGrabber.com, and keeping an eye out for sales.
For other items, such as cell phone service or Internet access, comparison
shopping is as easy as visiting www.LowerMyBills.com. The Web site is a great
resource for both students and parents (since you’re probably paying the
bills). Simply log on, check and compare the deals available and find out where
to get them in your area. The Web site also provides easy comparison shopping
for long distance calling plans, which can help you save on calls home from
school.
Another way to teach responsible spending is with a credit card. A recent study
showed that more than 92 percent of college students will have a credit card
by their sophomore year. And nearly one in four college students owe more than
$3,000. Talk to your kids about building good credit and how late payments and
credit card debt can negatively affect their credit, as well as other ways to
control their spending, such as making and following a budget that includes
monthly spending limits.
Of course, paying off the credit card balance in full every month should be
the goal, but in reality, that doesn’t always happen. Explain to your
child how paying interest can really add up and teach them to look for cards
with the lowest interest rates and no annual fees.
A little coaching on “Finances 101” can help your student make
the transition to living on his or her own with fewer pitfalls.
For more information on how to save money on recurring bills such as cell phone
plans and credit cards or to apply for a HELOC, visit www.LowerMyBills.com.
Courtesy of ARA Content
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