Wondering How to Pay for College?

So your kid is off to college and you're not one bit worried about those looming bills because you've been saving since he was in diapers.

Congratulations, you can stop reading now.

See also: Try our College Savings Calculator.

But if you're like the millions of befuddled parents and grandparents who are wondering just how you're going to come up with the big bucks, take heed. After all, paying for college is different today from what it was when boomers were campus-bound, says Myra Smith, executive director of financial aid services for The College Board.

Expenses have skyrocketed, and government aid is down. A four-year degree at a public university can easily cost $100,000. A private university can generate a bill twice that high.

So here are six strategies that can help you make smart decisions in the years ahead.

1. Preserve your nest egg. Don't divert future 401(k) or IRA contributions. "It's hard for parents to say to their kids, 'I'm going to pay for my own retirement before I pay for your education,'" says Mary Malgoire, a certified financial planner at The Family Firm, a fee-only personal adviser in Bethesda, Md. But with savings having taken such a hit in recent years, "we are more concerned with parents being able to retire. It's either that or you're looking at being a burden to your child later on."

Instead, think of ways to modify your lifestyle, or sell assets — artwork, a car, jewelry or something else that you may not need — so that you can contribute without undermining your future.

2. Look for scholarships. The financial aid office at your child's college can recommend scholarships that your student might be eligible for. You'll probably want to do a more thorough search yourself at such websites as FinAid.org, Fastweb and the Collegeboard.

Some scholarships are awarded based on academic achievement, others are based on who the student is. For instance, some go to kids of certain ethnic or religious backgrounds, some to kids whose parents are in the U.S. military, some to kids who plan to study in a particular field. There are many scholarships out there; be sure you're aware of every one for which your child might qualify.

3. Borrow. First, a few statistics. College tuition has risen faster than the rate of inflation for two decades, and today over two-thirds of students borrow to pay for higher education. The average student loan debt for college graduates is $26,000; 10 percent owe more than $54,000.

Financial planners say educational loans should only be enough to close a funding gap and no more.

But should it be parents or kids who apply? That's a personal decision only families can make. But you should talk it out in detail to devise the best strategy. And think long and hard before cosigning a loan with your child to lower the interest rate. It may seem like simple parental duty, but you could get stuck with the monthly payment on a debt that may remain on your shoulders even if you file for bankruptcy.

If the student borrows in his or her own name, federal government-sponsored financial aid will be the best deal. Applications can be filed online.

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