How to finance college

<p>My husband and I have saved over the years for our two sons (a senior and junior) college. My question is this: is it better to invest our college savings in other ways and take out loans for college? Will colleges take all of our savings before giving us loans? I'm new at this, any help would be appreciated.</p>

<p>A complex question, but the basic answer is that if you believe that the after tax return on the investment of your savings is likely to be greater than the interest on loans for college, then you should take out the loans. Otherwise, spend the savings.</p>

<p>In my opinion, you are very fortunate to have saved money for the college educations of your two sons. Yes, the colleges will take a %age of that savings each year for college expenses. But you are so lucky to have that money for that purpose.</p>

<p>Your kids will be eligible for Stafford loans (if no need they will be unsubsidized, if you have financial need they will be subsidized) by just filling out the FAFSA. The total of these loans is from about $3000 a year as a freshman to about $5000 a year as a senior. </p>

<p>Personally, as parents, I would rather use the college savings I'd set aside than take out loans. </p>

<p>I'm not sure what other types of investing you are thinking about that would really help you with these college costs.</p>

<p>Maybe real estate investments although I'm not a big risk taker.</p>

<p>Djrooney...any real estate you own that is NOT your primary home is considered an asset on the FAFSA.</p>

<p>One thought - I know some parents who are investing in real estate in the town their kids attend college. They are buying a condo or even a house.
Their children are living in it while in school and in some cases charging rent for housemates.</p>

<p>The problem with investing college money is real estate is that if you need the cash it is not liquid and depending on the market may not be liquid for a long time.</p>

<p>The FAFSA asks for real estate values of all properties that are NOT your primary residence...and this would include a condo for the college kids to live in. However, I also know some families who made the decision to do this as it was financially a good idea for them, the didn't need the cash for the condo to pay college tuition costs, and they wanted to have the peace of mind of knowing their kid had good housing..and where.</p>

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The FAFSA asks for real estate values of all properties that are NOT your primary residence...and this would include a condo for the college kids to live in.

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<p>absolutely - one would not do this thinking they would get more FA. The parents I have know are self-paying for their kids college.
They collect enough rent to pay the mortgage and plan to sell (hopefully at a profit) when their student graduates. Of course there are landlord headaches involved.</p>

<p>Investments seem somewhat risky. There is no guarantee that they will payoff.</p>

<p>Thanks. I think I'll just pay for college especially since I've already saved a decent amount.</p>