Budgeting for school, family and your sanity

Bills can pile up faster than dirty dishes on Thanksgiving. Just when you've paid one, another hits your mailbox -- then another and another. And if you're in debt already, the last thing you want to do is add a student loan bill to the mix.


But with the economy in a lull, education may be just what you (or your son or daughter) need to get that next raise or move into a more stable and/or lucrative career. The following tips can help you find ways to make college affordable -- and then craft a plan to settle your student debt once you've graduated.

Student loans: The big picture

FinAid, a website devoted to educating students on scholarships and financial aid, reports that over $100 billion in federal education loans and $10 billion in private student loans are created every year. Furthermore, the site reports that in June 2010, student loan debt exceeded credit card debt for the first time ever. Whether you're thinking about going back to school or you've already made the commitment to hit the books, you have every right to be worried about this impending debt tidal wave.

Learn student budget basics now, not later

With the stress of applying for college, choosing classes, and remembering how much work it takes to write a four-page essay, your impulse might be to put off thinking about your budget until the loans go to collections.

Bob Gaudry, a College Funding Advisor at College Funding Professionals, notes that failing to anticipate the cost of paying back years of student loans can make those loans pile up on one another, compounding interest rates and making your life harder once you're out of school.

"Sure, in a perfect world all debt would be avoided," Gaudry says, "but as that is not an option, practically speaking, these days one needs to be able to make wise choices between debt options available."

  • Budget Tip: Federal student loans should be at the top of your list of financial aid options. They come with lower interest rates and other perks, and count as "good debt" in Bob's book. Try to avoid paying tuition with a credit card if you can.

Mamas, don't let your babies grow up to be debtors

As hard as it can be to budget for your own college education, saving up for your child's schooling while they're spending the money on pizza and nights out might be even more frustrating. Jeff Gordon, Founder of business consulting firm InterActive99 and a proud dad to 18-year-old student at NYU, suggests tough love.

"I've proven in the past that if my kid breaks the budget she's on her own," says Gordon.

  • Budget Tip: Help your college kid break the semester into costs, including food, fun money and supplies like printer ink.

"We pay for housing and load up the food budget on the cafeteria credit card," says Gordon. "The rest is loaded on a bank debit card." This avoids getting your kid into credit card debt before he or she is even old enough to get into a bar.

Get the financial aid department on your side

Hint: baking them a plate of cookies probably won't work, but the financial aid department at your school should be ready and willing to show you ways to reduce your debt before you even take any on.

"Work with any one of the growing number of financial college funding advisors that can help families legally reduce college costs and increase eligibility for aid," says Gaudry, adding that advisors help you "use the pieces in [your] 'arsenal' to play this tactically challenging game of chess that obtaining an affordable college education has become."

  • Budget Tip: Go into the budgeting session prepared, with tax returns, income estimates and loan information. And sure, maybe a plate of cookies.

Get creative with your funding options

If there's any way to work while you're in school and pay as you go, you get the dual benefit of graduating with a job and less debt. For even more help, snag a job that includes tuition reimbursement benefits for employees. Certain government jobs even come with loan forgiveness programs or other provisions.

Budgeting your time to earn a degree is only part of the college challenge. But with a smart move here and a budget plan there, you can avoid sinking in the mire of student debt, whether your budget is for yourself or your child.

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