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colleges and degree programs. There are numerous resources for doing this. My new book, Paying For College For Dummies (Wiley) includes lots of material on fast-growing and cheaper alternatives to traditional four-year colleges and which ones lead to great jobs and careers. And it also covers, of course, more traditional higher-education options.

      Among other resources for rating and evaluating traditional higher-education options, those which I’ve reviewed and found useful are the following:

       Kiplingers’ “Best Value Colleges” considers numerous factors including student-to-faculty ratio, the test scores of incoming freshmen, four-year graduation rates, likelihood of graduating students with financial need, affordable sticker prices, generous financial aid and consistency of that during time at school, and low student debt at graduation. See www.kiplinger.com/college-rankings.

       PayScale, the large online salary and benfits information collector, ranks colleges and majors on a return-on-investment basis over 20 years. Visit www.payscale.com/college-roi.

      Making the most of student loans, grants, and other financial aid

      If you’re still in school or considering going back to school, a host of financial-aid programs, including a number of loan programs, allow you to borrow at reasonable interest rates. Most programs add a few percentage points to the current interest rates on three-month to one-year Treasury bills. Thus, current rates on educational loans for students are in the vicinity of rates charged on fixed-rate mortgages (parent loan rates are a little higher). The rates are also capped so the interest rate on your student loan can never exceed several percent more than the initial rate on the loan.

      A number of loan programs, such as unsubsidized Stafford Loans and Parent Loans for Undergraduate Students (PLUS), are available even when your family is not deemed financially needy. Only subsidized Stafford Loans, on which the federal government pays the interest that accumulates while the student is still in school, are limited to students deemed financially needy.

      

Most loan programs limit the amount that you can borrow per year, as well as the total you can borrow for a student’s educational career. If you need more money than your limits allow, PLUS loans can fill the gap: Parents can borrow the full amount needed after other financial aid is factored in. The only obstacle is that you must go through a credit qualification process. Unlike privately funded college loans, you can’t qualify for a federal loan if you have negative credit (recent bankruptcy, more than three debts over three months past due, and so on). For more information from the federal government about these student-loan programs, call the Federal Student Aid Information Center at 800-433-3243 or visit its website at studentaid.gov.

      If you (or your parents) are homeowners, you may be able to borrow against the equity (market value less the outstanding mortgage loan) in your property. This option is useful because you can borrow against your home at a reasonable interest rate, and the interest is generally tax-deductible on up to $100,000 borrowed. Some company retirement plans — for example, 401(k)s — allow borrowing as well.

Parents are allowed to make penalty-free withdrawals from individual retirement accounts if the funds are used for college expenses. Although you won’t be charged an early-withdrawal penalty, the IRS (and most states) will treat the amount withdrawn as taxable income. On top of that, the financial-aid office will look at your beefed-up income and assume that you don’t need as much financial aid. Because of these negative ramifications, funding college costs in this fashion should only be done as an absolute last resort.

      

In addition to loans, a number of grant programs are available through schools, the government, and independent sources. You can apply for federal government grants via the Free Application for Federal Student Aid (FAFSA). Grants available through state government programs may require a separate application. Specific colleges and other private organizations (including employers, banks, credit unions, and community groups) also offer grants and scholarships.

      One of the most important aspects of getting financial aid is choosing to apply, even if you’re not sure whether you qualify. Many scholarships and grants don’t require any extra work on your part — simply apply for financial aid through colleges. Other aid programs need seeking out — check directories and databases at your local library, your high-school counseling department, and college financial-aid offices. You can also contact local organizations, churches, employers, and so on. You have a better chance of getting scholarship money through these avenues.

      Benefits for military people

      Special student-loan benefits are available to those who serve in the U.S. military. If you have student loans and then join a branch of the U.S. military (except the Marines), up to one-third of the amount you borrowed or $1,500 per year of service, whichever is greater, may be forgiven. There’s a reimbursement limit of up to $10,000 for the Air Force and $65,000 for the Army and Navy.

      Numerous educational assistance programs are available for those who serve while in college or go to college after serving. See www.military.com/education/money-for-school for details by branch of the military, as there are many programs and they vary by branch.

Paying Off Consumer Debt

      Assuming you aren’t saving money, you accumulate consumer debt (credit-card debt, auto loan debts, and so on) when your expenses exceed your income. Therefore, it stands to reason that to pay off consumer debt, you need to decrease your spending (see Chapter 5) and/or increase your income. Slowing down the growth of your debt can also assist. The following sections help you jump-start the elimination of your consumer debt.

      Kicking the credit-card habit

      It’s fine to use your credit cards as a convenient payment method — and possibly to earn benefits and rewards — if you pay your bill in full each month and don’t spend more due to having the cards. I’ve used them my entire adult life and also have reward cards that provide me with free and discounted airline tickets and hotel stays.

      However, with their wide acceptance by merchants and their ease of use, having credit cards can foster living beyond your means by extending credit. That’s why I recommend that you cut up all your credit cards and call the card issuers to cancel your accounts if you have a habit of accumulating debt on credit cards.

      You can manage your finances and expenditures without having a credit card. Now, if you can trust yourself to be responsible, keep one credit card only for new purchases that you know you can absolutely pay in full each month. But if you decide to keep one widely accepted credit card instead of getting rid of them all, be careful. You may be tempted to let debt accumulate and roll over for a month or two, starting up the whole horrible process of running up your consumer debt again. Even better than keeping one credit card is getting a debit card (see the next section).

      

If you’re not going to take my advice to get rid of all your credit cards or secure a debit card (discussed in the next section), be sure to keep a lid on your credit card’s credit limit (the maximum balance allowed on your card). You don’t have to accept a higher limit just because your bank keeps raising your credit limit to reward you for being such a profitable customer. Call your credit-card service’s

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