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Suze's Financial Aid 101:

If you're filling out financial aid paperwork right now, take note: Every student needs a long-term approach that makes sense before enrollment, during school, and after graduation.

Precollege:


Invest in a 529 College Savings Plan
If Mom and Dad (or any relative, for that matter) are truly on track with their retirement savings, they can set aside money to pay for a child's college expenses in a 529 plan, which isn't subject to federal taxes if its earnings fund educational expenses. Learn about direct-sold (broker-free) plans offered in your state at SavingforCollege.com.

Scope Out Starting Salaries
Remember: A graduate's first-year salary represents the maximum amount he or she should borrow. Many 16-year-olds don't know exactly what they want to major in, but that's no reason for kids and parents not to take a look at entry-level compensation in a variety of fields. Check out Salary.com and the U.S. Department of Labor's Occupational Outlook Handbook.

On Campus


Kids Borrow First
Federal student loans are the cheapest and safest way for a family to borrow. Find more details at FinAid.org and direct.ed.gov/student.html.

Parents Borrow Last

This bears repeating: No parent is to borrow a penny if they don't have ample retirement savings. Better your kids attend a less expensive school today than support you tomorrow. Choose federal PLUS loans. (Find details at studentaid.ed.gov/types/loans/plus.) And steer clear of home equity loans to finance college; if you default, you could lose your house.

Postgraduation


Stay On Top of Your Loan Repayment Obligation

Six months after graduation, your loan will come due. No job? You can postpone payments for up to three years so long as you're unemployed, but you must sign up for a deferment before falling behind on your loan.

Avoid the Default Disaster

Student loans don't disappear when you file for bankruptcy; they stay with you forever unless you can prove that repaying them would cause undue hardship. What's more, a default will weigh on your credit report and FICO score like a 300-pound chunk of concrete.

Suze Orman's latest book is The Money Class: How to Stand in Your Truth and Create the Future You Deserve (Spiegel & Grau). To ask Suze a question, go to oprah.com/omagazine_talk. College Finances 101

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