How to Fund College Education - Are There Options?

Our children are growing up. High School will soon be completed. What's next? College? Now for the hard questions. Where? How much will it cost? Where will we get the money?

Some families have set up a savings account when their children were born. Others have opened a 529 savings account. A few families have a participating permanent whole life insurance policy from which they may "borrow" funds for college expenses.

What is the best option you ask.

Before discussing your options. Let's talk about Investment vs savings.

An investment is always a risk, a gamble, an unknown. An investment may be money put into stocks or mutual funds or even a 529 College Savings plan. We invest with the HOPE for a financial gain. However, there are no guarantees!

Savings is when we have put money into a secure place and you know up front what the return or gain be. Your savings account at the bank states they will pay you a specific amount of interest.

College 529 Savings plans although the tax advantage is attractive. They do have some definite drawbacks. What if your child chooses not to go to college, wants to attend college in a different state, or is able to get scholarships to fund his or her education? Another point to be made is that the funds have to be used for education by the time the beneficiary (your child) turns thirty, to avoid the non-qualified use penalty. Also the government can change the rules of the 529 plan at any time.

The other viable option worth serious consideration is to purchase for your child a Participating Permanent Whole Life Policy. Why? There are several solid reasons which I will highlight here.

1. It is secure. It is not tied to the stock market.

2. This type of insurance is very low cost when purchased for children.

3. It has a guaranteed rate of return.

4. You may borrow from this policy cash to pay for college education without obligation to pay a set amount each month to replace that loan. The advantage of borrowing from "self".

5. Most important is that you have full control over these funds and their availability to you.

6. Additional benefit is that you will get additional money from the death benefit.

My advise is to consult with financial adviser and consider all your options.

It is my opinion that using your child's life insurance policy to fund College is a wise decision.

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Student Loans: Simple Options to Avoid Defaulting

Simple Options to Avoid Defaulting

College is a major undertaking for high school graduates, not only because of the new responsibilities studying away from home can present, but the financial pressures that come with managing life on campus. Paying tuition fees is one thing, with a student loan simply handed over to the college administration office, but managing living expenses too.

In most cases, mistakes are made before the reality of managing finances finally sets in. But unless the trick is learned quickly, a student can simple set him or herself up for some serious financial pressure. Knowing how to manage college debts is hugely important, and the good news is that there are plenty of options available.

While student loan consolidation programs are hugely beneficial in avoiding defaulting on loan repayments, there are also other ways to ensure that the debt is repaid.

How Consolidation Works

The basic concept of loan consolidation is that different individual debts are bought out by one loan with one lower interest rate, thus lowering the size of the monthly repayments. Student loans can build up over the time a student spends in college, so pulling them together into one debt is a positive thing.

The biggest problem with having four or five individual debts is that each has an interest rate of their own. These can vary and so the repayments on the five loans can add up. Replacing these rates with one low rate lowers the interest paid dramatically. But managing college debt effectively also means extending the term of the loan, thus slashing the overall repayments.

However, it is important to note that by extending the term, the amount of interest paid over the lifetime of the loan increases. It is a small note, but the overriding fact is that student loan consolidation programs are designed to lower the monthly burden - and that is exactly what they do.

Consider Federal Employment Programs

Instead of seeking consolidation loans, it is possible to work back a portion of the debt from student loans. The Federal Employment Repayment Office of Personnel Management provides information on how to access this method or loan repayment, and what conditions exist.

Simply explained, the program sees federal departments hire recent graduates and, in return, pay a portion of their college debt each year. Currently, a limit of $10,000 can be repaid by the department in one year, and a maximum of $60,000 in total. That means that a graduate can be hired for a maximum of six years on this basis, though student must sign a three-year work agreement at least.

Managing college debt in this way has many benefits. Not only are repayments covered by the new employer, but the new graduate gets valuable work experience too. In this way, it holds an advantage over a student loan consolidation program.

Loan Forgiveness Programs

Another method of clearing the existing student loan debt through work is to sign up to the Teacher Loan Forgiveness Program. This is designed to benefit the education system, with trained teachers sent to low income schools, whether elementary or high schools. In return, the government will forgive a maximum of either $5,000 or $17,500 from the loan balance.

The lower sum is forgiven from the loan balance for teachers who taught for five consecutive full academic years in a qualifying school, while the larger sum is secured if the teacher specialized in teaching mathematics or science, or if they provided special education services for students with disabilities.

This is obviously a highly effective way of managing college debt, especially for long-standing graduates who are too long out of school to qualify to join a student loan consolidation program.

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