suze orman
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Q. I love my goddaughter dearly, and she's starting college next year. I'd like to contribute to her education but didn't think to start a 529 plan when she was born. What's the smartest way for me to contribute now? Is there any way to take a tax deduction on the money I'll be spending on her tuition?

Suze: I've said this plenty in the past, but it is so important, it bears repeating: Retirement comes before love. Promise me that before you spend a penny on your goddaughter's college costs, you have taken care of your own retirement savings. So often we focus on what seems most pressing today—in this case, your goddaughter starting college—and push aside long-term financial goals, such as retirement.

There are a few different tax breaks related to college expenses, but unfortunately they are allowed only if the student is claimed as a dependent on the payer's federal tax return. That doesn't mean you can't help your goddaughter, though. Once she's chosen her school in the spring, ask what financial aid she will be receiving. If part of her aid package is unsubsidized federal Stafford loans, you have a great opportunity to help her graduate with less debt. With unsubsidized Stafford loans, the student has the option of paying interest while in school or letting it accrue until after graduation. Obviously, the latter approach means there will be a bigger balance to pay off once she's out of school. So here's where you could step in with a structured plan that has a big impact: Offer to pay the interest charges while she is in school so she graduates with a smaller balance.

Suze Orman's new book is The Money Class: Learn to Create Your New American Dream (Spiegel & Grau). To ask Suze a question, go to

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