Bills.com Suggests Families Can Pay for College Education

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Tips offer 9 ways to make education affordable

While college costs increase every year, a college education is more important than ever, says Andrew Housser, co-CEO of online consumer portal Bills.com (http://www.bills.com) -- and he offers nine tips to help families fund college education.

"Today, two-thirds of American students will attend some type of post-secondary school. But 70 percent of those students emerge with some student loan debt," Housser said. "Parents want to help, but costs are skyrocketing. Here's how families can work together to evaluate the costs of education and make school work."

1. Plan ahead. Because of the benefits of compound interest and the tax benefits of government-sanctioned college savings accounts, time is the best friend of families planning to send children to college. "Often, parents-to-be can sign up for savings accounts when they register for nursery furniture and diapers at the baby superstore," said Housser. "The bottom line: The sooner you can start saving, the better."

2. Enlist relatives. Despite the benefits of saving early, the demand for savings comes just as most families are facing multiple expenses. Saving for retirement (which should be prioritized), paying hospital bills, paying for childcare, and perhaps buying or renting a larger home and a larger vehicle all take a toll on parents' ability to save. "Ask relatives to contribute to a college fund instead of buying more toys," Housser suggested. "Often, grandparents or single aunts and uncles would love to help."

3. Secure the family's future. Always place home payments, insurance and retirement savings before education savings. Housser reminded families, "It is most important to ensure you can survive. While it's best to avoid debt, one can repay education loans -- but we can not borrow to fund our golden years."

4. Look into 529 plans. Qualified tuition plans, known as 529 plans, are state- or college-sponsored plans that allow families to save for tuition expenses. Investment and interest earnings are free from federal income tax (and in many states, state income tax) as long as the proceeds are used to pay education expenses. Check your state's options and rules for specifics.

5. Seek out scholarships. Look into every scholarship the student qualifies for. Scholarships may include honors for projects, sports or essays, or gifts from colleges, parents' employers, religious organizations, teams or community groups. Many small scholarships can add up to a bundle of help.

6. Work it. Most students can work at least part-time while in school. Encourage the student to pay for his or her own living expenses -- leaving savings, parent contributions and loans to pay for tuition, fees, books and related costs.

7. Don't go anywhere. Students can save money by living in the family home while they attend school. "This arrangement might demand negotiation to keep everyone at peace, but it can save $7,000 to $8,000 in annual room and board," Housser said.

8. Transfer in. Tuition costs are more than twice as much at a four-year school as at a two-year institution. Save an average $7,000 by spending the first two years at a community college.2 If you can then transfer to, and graduate from, a four-year school, your diploma will look the same as everyone else's - at a significantly lower cost.

9. Pay it forward (and pay it back). If the student is entering a field with opportunities for public service, look into options that pay back all or part of a student loan in exchange for service. Some teaching, law and health care fields offer these opportunities.

"Whether you borrow or pay cash, an education is a good investment," Housser said. "Make the most of it by being careful with your spending, and you'll be off to a great start in life."

Based in San Mateo, Calif., Bills.com is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. The company blogs about consumer finance issues at http://www.bills.com/blog. Since 2002, Bills.com has served more than 20,000 customers nationwide while managing more than $500 million in consumer debt. Bills.com is a division of Freedom Financial Network, LLC, whose co-founders and CEOs, Andrew Housser and Brad Stroh, have been named Northern California finalists in Ernst & Young's Entrepreneur of the Year Awards.

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Aimee Bennett
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