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Originally published Saturday, August 6, 2011 at 9:48 PM

Conquer college costs with a few key decisions

If your child is getting ready to start college and you just received one of these bills, you are probably among the parents fixated on that price tag.

Chicago Tribune

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It's a bill like no other, frightfully huge, with perhaps $20,000 that has to be paid almost instantly.

If your child is starting college and you just received one of these bills, you are probably among the parents fixated on that price tag. But it might not be as bad as you first think.

Break it down

If you had to sit down today and write a check for a year of groceries, that number would be disconcerting, too — probably more than $5,000 and hardly the expense you could handle on a moment's notice.

But since people pay for groceries weekly, they don't feel like they are spending thousands.

You can treat college the same way. Instead of writing a check for the full semester, put yourself on a payment plan and break your bill into more palatable monthly payments.

Many colleges can link you with a firm that provides payments to them. There should be no interest or finance charge, although you will probably pay a one-time annual fee of about $100 for the service.

Call the college billing office and ask who does their payment plans. To find a firm on your own go to www.finaid.org/otheraid/tuition.phtml.

Find more aid

Although most college financial aid has been awarded, this is the time of year when students can sometimes find leftover money. Just before classes start, some students change their mind and go elsewhere. That can leave colleges with freed-up scholarship money.

Call the director of financial aid or department heads in an area where your student plans to major. Revisit both in September and October to find surprise leftovers. And if you have lost a job or encountered a financial hardship since applying for aid, ask to be considered again.

Analyze expenses

Most people think they don't have a penny more to spend, but that may not be the case. Analyze every household expense, especially those devoted to the student leaving home, said Frank Palmasani, founder of ManagingCollegeCost.com.

Instead of spending all new money, you will merely shift some, cutting back on everything from food to car insurance, electricity and water at home.

Mick Endersbe, founder of College Planning University, said many families discover they can devote about $4,000 to college this way.

In addition, if your income is under $180,000, you could get a $2,500 education tax credit each year of college.

Parents also might be able to reroute money toward college if they temporarily cut back on retirement saving in 401(k) plans. Palmasani tells families to continue to invest enough to qualify for an employer's matching money.

Before cutting back on the 401(k), make sure you will be OK in retirement. Seventy-year-olds without money can't borrow to pay for electricity, but students can borrow for college and make payments over 10 years.

Check retirement savings on the "ballpark estimate" calculator at http://choosetosave.org. If you have plenty of savings, you can also spend any Roth IRA contributions for college without taxes or penalties.

Borrow wisely

At the college financial-aid office, request federal student loans. You can count on at least $5,500 for the first year of college in Stafford loans. By the junior year, you can borrow $7,500.

If your child is among the moderate-income students at his or her college, you might also get a low-interest federal Perkins loan. At a college with many wealthy students, even fairly affluent families might qualify.

Also, for families with incomes around $40,000 or less, ask about federal Pell grants. And in the state where you reside or attend college, contact the state's higher-education department to find low-interest state loans or grants.

Parents with a lot of equity in their homes might be able to get home-equity loans. But beware: Borrowing on your home and saving the money for future college costs could reduce aid.

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