BOSTON (CBS) – If your kid is in her senior year of high school and there is nothing set aside for her college education it’s too late to do much more than stick whatever extra cash you can in a savings account.
Colleges will look at your assets and your income as well as the student’s to determine Financial Aid. Aid consists of grants, which do not have to be repaid, loans and work-study programs. Work-study programs are good for the kids for they will need to learn to manage their time studying, working and playing. Which is a key lesson in college.
College-sponsored loan programs usually require payments to start in September of freshmen year. There are several federal loan programs, the Perkins loan, Stafford loans and there is the PLUS, Parent Loans for Undergraduate Students.
Start your search with the Massachusetts Educational Financing Authority’s website.
You might consider using some of the equity in your home if you have any. I am not a big fan of using your home as a revolving bank account. Look to refinancing or taking out a home equity line of credit. The interest becomes deductible even if you use the money for college expenses.
Last resort; your retirement assets. You may be able to borrow from your retirement plan at work. If you lose your job though the loan will need to be paid back immediately or it is considered a withdrawal with taxes due and a penalty of 10% if you are under 59½.
You can also tap into your IRA. But once the money is withdrawn there is no putting it back, for the government considers it a withdrawal. No penalty if you are under 59½ if used for college but taxes will be due.
If you have a Roth IRA you can tap into the contributions you made to it and because you have already paid taxes on the money you will not incur any more.
You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m. and 3:55 p.m.
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