Paying college tuition - Your Money

College costs are skyrocketing. Tuition at even relatively more affordable state schools went up 9.6 percent last year, according to Kalman Chany, author of Paying for College Without Going Broke (Random House, see campusconsultants.com). For help with tuition costs, if you're a parent, invest in a 529 College Savings Plan.

Opening a 529 Plan account is easy. Savingforcollege.org, a site sponsored by state treasurers, contains links to state Web sites where you can download a plan application. Just complete the short, simple form and make the minimum contribution. Many plans require as little as $25, although some need an initial deposit of $250. That's it. Contributors can give up to $11,000 a year. Specialists like Virginia B. Morris (who wrote Guide to Understanding 529 Plans [Lightbulb Press, (800) 581-9884 or lightbulbpress.com]) suggest you start by checking out your own state's plan, though you can often buy one in another state.

All 50 states and the District of Columbia offer a 529 Plan. No matter how much or how little money you make, you can open an investment account for a specific child and deposit through regular installments or a lump sum. Though the money itself is not tax deductible, any funds you invest in a 529 Plan grow tax deferred and can be withdrawn tax-free as long as the proceeds are used to cover qualified higher-education expenses. This includes postsecondary technical and vocational schools, as well as colleges and universities, and graduate professional schools. If, for some reason, the child you name as beneficiary on the account doesn't continue his or her education, any other child in the same family can use it for qualified higher-education expenses.

Two types of 529's are available in many states. The college savings plan is the most popular and the most flexible, allowing you to accumulate money toward covering the cost of school at any qualified institution for the child whenever she's ready. With the prepaid-tuition plan available in some states, you can prepay actual college credits for one to five years of education at any public college in the state. (Some state prepaid plans cover private colleges, too.) The only drawback is the child may then be committed to attend a college in the state where you have purchased the credits.

Financing Your Own Continuing Education

If you're an adult and want to head back to the classroom yourself, there's help for you, too. First, if you're age 24 or older or have dependents, you can qualify for the same kinds of loans and grants that a dependent undergraduate does. Only your income not your family's--is counted in the financial-aid formula. Other possible sources:

* Get your employer to foot the tuition bill. Companies can subsidize up to $5,000 a year without its being taxable to you. And some employers offer tuition reimbursement plans. Check with your company's human-resources department.

* If you have significant work history but no degree, look into "external-degree programs" where you're granted credits for certain life experiences. For example, if you have already earned a real-estate license, and the college offers real-estate courses, it may give you credits toward a business degree.

* Certain fields of study like teaching or nursing have programs that will subsidize or pay tuition costs to recruit new people looking for second careers. If you're recently unemployed, you may qualify for financial aid to help you meet requirements for entering a new field. Surf ed.gov for even more options.

Valerie Coleman Morris is an anchorwoman with CNNfn.

COPYRIGHT 2003 Essence Communications, Inc.
COPYRIGHT 2003 Gale Group