College tuition is spiraling out of control. While the economy experienced deflation in 2009, tuition is up an average of about five percent!

The problem is that there's too much loan money floating around. If people had to pay upfront for their education, they'd likely be smarter consumers. But the kaleidoscope of available loans doesn't exactly encourage price sensitivity.

In addition, if we did not have easy access to student loan money, colleges would be forced to run more efficiently and keep their costs down.

That's why you'll get more bang for your buck at community colleges and so-called "directional colleges." The latter is simply any school with a description of where it is geographically located in the name, such as Clark's alma mater Central Michigan U. These kinds of schools tend to devote more of their money to educating students instead of running a bloated operation.

Consider spending your first two years at a low-cost community college before going on to finish up your degree at a prestigious university.

According to a new school study, tuition increases at private schools during the past year were 4.5 percent -- the smallest they've been since 1972. At the same time, student borrowing is up 25 percent year over year, according to a new report from the U.S. Department of Education.

What's going on here?

First, state-supported schools have probably had higher tuition increases as state budgets have dwindled. Second, and more importantly, families that could help with tuition expenses in the past can't do so this year because of job losses or cutbacks.

Today's average student graduates with debt of over $23,000, according to The Wall Street Journal. Is that a reasonable amount?

Well, Clark has a rule of thumb regarding borrowing for undergraduate studies: Your entire loan burden for four years should be equal to or less than your expected earnings during your first year of employment after school.

So if you're contemplating borrowing yourself way into oblivion to pay for school, perhaps the alternative is two or even four affordable years of college at a community school.

There have been several studies lately questioning the value of a college education. It's understandable during a recession that's been equal opportunity about hitting people of all education levels.

Yet four-year degree holders on average make far more than high school graduates. In fact, the Census Bureau has estimated that having a college degree will net you an average of 67 percent more money over a lifetime.

Clark firmly believes that education creates opportunity. He's heartened to see that enrollment levels at community colleges are booming off the charts. They're having to schedule classes at very odd hours -- before daybreak, late into the night and on weekends.

Community colleges are a great way to get the training you need to change fields if you're in a dead-end job. President Obama is launching a new initiative to help community colleges provide affordable education for our nation's workers.

And the boom at community colleges may create opportunities to teach part-time right now in your area of expertise.

In today's economy, we have to continually reinvent ourselves. A small number of us get a very specialized education and that's all we need -- such as doctors, chemists, physicists and others. But even in those fields, you can switch what kind of doctor you are by going and getting more training.

Clark's daughter is a college junior who is slightly behind schedule to graduate on time. He's offered to get a tattoo the size of a quarter if she finishes on time! Clark hates tattoos, but the offer really impressed on his daughter his feelings about the importance of education.

Textbooks can be one of the biggest expenses of a college education. Clark upsets college professors whenever he picks on them for requiring students to use the newest edition of a book -- instead of allowing students to purchase older used versions.

Some professors have even accused the consumer champ of trying to stifle education!

Meanwhile, certain schools take kickbacks from book publishers for mandating that students use custom-edition textbooks. The production runs on these custom texts are small enough to be targeted for specific university courses.

These "boutique" books -- which may excise certain material or add a professor's published papers -- come embossed with a warning that it's illegal to sell back as a used book. The campus book stores are, of course, complicit because they refuse to buy these books from students.

So there are a lot of factors conspiring against students who are on a budget.

But what if you could rent your textbooks? Chegg.com offers just that opportunity. Chegg claims to have saved students $41 million to date. (Editor's note: This figure is accurate as of July 28, 2009.) Give it a try this fall semester.

There's a radical change coming on the student loan front that Clark wants you to know about.

Effective July 1, 2009, an income-based repayment plan (IBR) will become available to borrowers with federally guaranteed student loans such as Stafford loans and Grad PLUS loans.

Under the new program, your payment will be based on your current income and family size. Your monthly payment could be an unprecedented zero dollars, according to Kathleen Pender of The San Francisco Chronicle.

You must apply for the IBR. Contact the lender or lenders who hold your student loan(s) for more details.

In addition to the IBR, other new provisions going into effect include loan forgiveness options for certain workers.

Employees of non-profits and certain levels of government can have loan forgiveness after making on-time monthly payments for 10 years. If you work in the traditional for-profit sector, it will take 25 years of on-time payments before you're eligible for loan forgiveness.

Do you need to borrow to fund college education for yourself or your child? Be sure you take the Clark Smart approach to borrowing as detailed below.

Subsidized Stafford loans are the single best source of money you can borrow. The interest is picked up by taxpayers while you're in school. For the 2009-10 school year, subsidized Stafford loans will carry a fixed interest rate of 5.6%. The rate will be lower still at 4.5% next year, and all the way down to 3.4% the following year.

Freshman can borrow $3,500 annually; sophomores can borrow $4,500 each year; and juniors and seniors cap out at $5,500.

Once you exhaust your subsidized Stafford stockpile, you want to move on to unsubsidized Stafford loans, which are now at 6.8%. Remember, though, to borrow as little as possible because the interest on these unsubsidized loans will accumulate while you're in school.

As a third option, parents can take out PLUS loans, which are issued at a fixed rate of 8.25%.

Visit FAFSA.ed.gov to determine your eligibility for all these loan options.

One category of loans to avoid are private student loans. Back in 2005, the private student loan industry bought off enough politicians to gain the right to do any and all tactics short of causing you bodily harm in their efforts to collect on their money.

Private student loans typically can't even be dismissed in bankruptcy.

Finally, remember the consumer champ's rule of thumb when it comes to determining what level of borrowing you can comfortably handle: Do not take on loans that exceed the likely first-year earnings in your field.

Stories about college affordability seem to be dominating the newspapers right now. The acceptance letters have gone out…and parents and teens are now faced with the question of how to pay for college!

Clark speculates we're seeing so many newspaper stories about this topic because reporters have college-age kids themselves. They're trying to figure out how to fund education too!

College has become cost-prohibitive for many Americans. Even the state schools have run up their tuitions as they face state budget crunches.

So have you thought about a 2-year community college? This option has long been recommended by the consumer champ as a way to start your education on the cheap.

Community colleges are now allowed to offer 4-year bachelor degrees in 17 states, according to The New York Times. Historically, community colleges only offered 2-year associate degrees.

Florida alone now has more than a dozen community colleges offering bachelor degrees.

Let's say you decide to do your first 2 years at a community college. People often worry about the lack of prestige. But most employers only look at the name of the traditional college that issues your degree after you've put in your time at a community school.

In fact, Clark believes an employer might even prefer someone who worked their way through a community college and had to struggle financially. Doesn't that make for a more compelling story than a job candidate who cruised through a 4-year college on the silver spoon plan?

So if you're contemplating borrowing yourself into oblivion to pay for school, perhaps the alternative is 2 or even 4 affordable years of college at a community school.

Morningstar has released its annual review of 529 plans, and the results are very similar to Clark's favorite picks in his perennially popular 529 guide.

529 plans are state-sponsored plans that allow you to save for your child's education. You don't need to put your money into your state's plan; you can pick any plan from anywhere in the nation. To make things even more complicated, states can lend their name to more than one plan of varying qualities. One state even has 6 plans under its name!

With 529 plans, you save money tax free and it's spent tax free down the road on your child's college. Be sure to put the plan in your name and list your child as the beneficiary. If your child doesn't go to college, the money can later be transferred to another non-related child.

The only danger with 529 plans comes when they're bought through ultra-high commission brokerage houses. Rest assured that none of those plans are on Clark's list.

Both Morningstar and Clark single out the Utah Educational Savings Plan Trust as one of their top picks. Ohio CollegeAdvantage and Virginia Education Savings Trust also get a thumbs-up in both assessments.

So who's the worst? The great state of Nebraska made the list twice -- for the Nebraska State Farm College Savings Plan and the Nebraska AIM College Savings Plan -- for the worst college saving plans in the United States.

Ohio is in the unique position of having plans on both the best and worst lists, according to Morningstar. What is the difference? The bad plan -- Ohio Putnam CollegeAdvantage -- is only sold through a commissioned stock broker.

Once you identify the state plan you want to participate in, where should you put your money? Clark suggests picking an age-based portfolio. That means the risk level automatically adjusts every 2 years based on your child's horizon of time before they need the money for college.

But before you start a 529 plan, you must save for your own retirement first. After all, there are no scholarships or student loans for retirement!

Recent college grads are finding themselves either underemployed or unemployed and in no position to pay their student loans.

In that situation, the last thing you want to do is hide from your obligation. Federal student loans follow you like a plague. They typically can't even be removed by bankruptcy, and collectors can garnish your wages without having to prove the debt in a court of law.

Instead of defaulting, why not consider a forbearance or deferral? They're similar programs in that they both allow you to stop paying for a certain amount of time, but they do have some key differences. Visit the U.S. Department of Education's website for more details on each.

By going that route, you can get as many as 6 years of additional time to work through whatever situation is preventing you from paying.

It's also important to know about options for student loan forgiveness. Public service employees can enjoy full loan forgiveness after making 10 years of monthly payments on their federal loans. See our briefing for more information.

Meanwhile, FinAid.org details loan forgiveness options for those who volunteer with AmeriCorps, those who join the military and others.

Now, all of this addresses what to do after you've gotten yourself deep into student loan debt. But how should you avoid it in the first place?

Clark has a rule of thumb regarding borrowing for undergraduate studies. Your entire loan burden for 4 years should be equal to or less than your expected earnings during your first year of employment when you get out of school.

When we think of college, we typically think of a traditional 4-year experience or even longer. But by cramming an education into 3 years, you can actually save a bundle by eliminating the cost of housing, meals and transportation for a fourth year.

That move will typically reduce the final cost roughly by a quarter. This is exactly what Clark did when he worked during the day through undergrad school and took classes at night over 3 years

More schools are now experimenting with this idea. For example, Hartwick College in upstate New York is offering a 3-year undergrad degree, according to The New York Times. It involves a modified schedule where you go to school for a fall term, followed by a January term (sometimes called a "minimester") and then a spring semester. This kind of scheduling saves you $40,000 at Hartwick over the course of your education.

State schools can also boost their bottom-line by adopting 3-year degree programs. After all, the state schools are already bursting with new students who have enrolled in pursuit of a cheap education. So a full-year calendar increases the capacity of a state school by 33% without the expense of having to build any new facilities. Now that's stretching taxpayer dollars!

Meanwhile, Clark also wants to salute a teacher named Abby Brown in a distant suburb of Minneapolis-St. Paul called Marine on St. Croix. This sixth-grade teacher was spotlighted in The New York Times because she's developed a desk design where the children stand. It's said to increase concentration and alleviate boredom by allowing the students freedom of movement.

Way to think outside of the box, Abby!

Finally, the consumer champ has received a lot of questions from people asking why he stands during his HLN show. When the radio station where he works was being built, they hired a consultant to design the studio who believed that talk show hosts have more energy if they're forced to stand!

For months, Clark has been telling you how the student loan market has fallen apart, and how difficult it is to put together financing for school. The latest blow now comes with news that MyRichUncle.com has gone bust. MyRichUncle.com was an online student lender that offered clean, legit deals with low interest rates.

The U.S. Department of the Treasury has been trying to restart lending. Clark, however, wishes they'd just stop. Part of the problem with the tuition run-up over the years has been that it was too easy to borrow money.

Universities have become inefficient providers of education. Much of the money goes to large bureaucracies and to research -- not to the actual cost of educating undergraduate students.

You'll get more bang for your buck at community colleges and so-called "directional colleges." The latter is simply any school with a description of where it is geographically in the name, such as Clark's alma mater Central Michigan U. These kinds of schools tend to devote more of their money to educating students instead of running a bloated operation.

Remember, if we open the student loan spigot again, we take the pressure off schools that is necessary for them to reform.

College is often considered one of the best ways to step up the income ladder and have flexibility in terms of career choice. But right now, the affordability of college itself is in doubt.

The National Center for Public Policy and Higher Education has issued a "report card" with grades for every state that rank them on college affordability and other criteria.

Every single state got an F except for California, which got a C-.

Why did California earn the only passing grade? The state has had a longstanding tradition of students spending their first 2 years at a cheap community college and their last 2 years at more expensive 4-year schools. In essence, college students in the Golden State have been getting degrees at 50% off for years.

This is one circumstance where the other 49 states can learn from California. Clark would love students in all states to consider doing a few years at a community college before jumping into a traditional 4-year school.

The penny-pincher often gets calls from people with massive student loan debt. Don't be one of those people. Think about the alternatives.

There are so many stories right now filled with doom and gloom for those seeking loans for college. In fact, Clark believes there's a gross overreaction to the situation and wants to set the record straight.

Here are the facts. First, the private lending market for college is frozen. Second, many colleges are finding themselves pinched because their endowments have not done well in the stock market. Third, state universities depend on tax dollars for at least half of their costs and that money is shrinking.

So what's the good news?

Well, Clark believes the student loan market freeze may reverse the runaway tuition hikes that had become so common. Borrowing for college became way too easy and it created deep debt for too many people. The loans were based on a false economics and made it possible for colleges to increase tuition at 3 times the rate of inflation. There was no marketplace resistance; people just borrowed more money as tuitions rose.

Meanwhile, the federal government has moved in to fill the vacuum of the private loan market. According to FinAid.org, the feds now provide $4 out of every $10 -- and that's likely to rise.

However, some changes may be in order on your part. Clark advises people to look at doing a few years at inexpensive commuter colleges before transferring to pricey 4-year schools.

For example, California is now routing freshman and sophomores into their network of junior colleges -- where the cost for core curriculum is much lower than in their state university system. Only after you complete 2 years at a junior college can you enter a state university.

Some parents have lost huge amounts of money by fooling around with their children's 529 accounts, which are designed to build college savings.

The key to intelligently doing a 529 plan is to take an age-based approach to it. Simply put, the level of risk of the investments should adjust as your child ages. Let's say your child is 2 years old. You'd want to have most of the money in stocks. But when that same child is just about to start college at the age of 18, the money should be in the most conservative investments possible. When you use an age-based portfolio approach, the mix of investments automatically adjusts every 2 years or so.

Clark has a daughter who is a sophomore in college. Her 529 plan made a little over 1% this year, which is basically like a savings account. His 3 year old, meanwhile, has a more volatile portfolio since he has time to make up any losses.

What if it's already too late for you and your teenager in college? Well, there are always inexpensive community colleges and in-state schools. There's no tragedy in spending a year or 2 at such an institution and then transferring to a 4-year school.

Clark actually went to what was thought of as an expensive private college. His American University bachelor's degree (1973-1976) cost around $2,400/year. When you adjust that figure for inflation, it's around $6,000/year. Compare that to nearby George Washington University in Washington, D.C., which costs some $50,000/year for tuition, room and board. Wow!

The penny-pincher believes that private college tuition will moderate. If the money is not there from 529s or to borrow, colleges can only charge what the market will bear. The era of galloping college tuitions is about to come to an end.

Meanwhile, if you're a parent, do not feel guilty if you can't give your child a free ride at Party Central U. somewhere. College should make you grow up and become more responsible, in addition to letting you gain a skill to make a living.

For months, Clark has been telling you about the student loan market collapse and the woes it has caused for students and parents alike. The tightening of lending has made it particularly hard to get a private, non-governmental educational loan.

Previously, the best Clark could do was suggest that students who needed additional funds petition the financial aid office at a private college or talk to deans and department heads at state schools.

But now he has 2 new options to share with you. GreenNote.com and Fynanz.com both specialize in peer-to-peer lending specifically for the educational market. Students can borrow from friends, family and strangers alike.

Just be careful how much loan debt you take on. The fact is that you can't even get rid of it in bankruptcy. Collectors can garnish your wages -- even for private loans -- without going to court to prove that you owe the money.

And after you pay your student loans off, keep your pay-off statements forever!

But the best option is to not accumulate a lot of student loan debt to begin with. The cost of a community college is one-tenth to one-twentieth that of a private college. The cost of a state school, meanwhile, is one-fifth to one-seventh that of a private college.

Being harassed by a debt collector over your student loan? Visit StudentLoanJustice.org to find out how you might be able to pushback.

Here's an important alert if you or someone you know is in college. The student loan market is in a world of hurt right now because of wider economic trends. Private loans are hit-or-miss when it comes to availability.

In essence, the lending spigot is dry. So that means students have to employ extra creativity to remain in school when money isn't necessarily available.

Clark believes that private universities will find they'll have to offer payment plans in order to keep enrollments up. Work-study is another route to ensure you can stay in school. Or you may have to work for an employer that pays for your education. That's what Clark did for his graduate degree.

If you can't find the funds for a private college, you may have to dial back to a community college or a state school during your freshman or sophomore years.

The silver lining to not being able to find private educational loans is that people won't burden themselves with massive debt. If you have to find another way to get that degree because you can't borrow, that could be a good thing…

Good news for students and potential students! There are new loan rules in effect as of today (July 1, 2008). While it's a confusing system, the deals are better now than those that existed under the previous student loan rules.

Under the College Cost Reduction and Access Act (CCRAA), it really pays to be a freshmen this year or shortly after. That's because the interest rate goes down each year over the next several years. While it's 6% right now, next year it will be 5.6%. By 2010, the rate dips to 4.5% and then to 3.4% in 2011. If Congress doesn't act after 2011, the rate will then double back up!

Debt forgiveness is also a new feature of the CCRAA. Those who choose to go into public service can enjoy full loan forgiveness after making 10 years of monthly payments on their federal loans. For the complete scoop, check out Clark's CCRAA guide. Finally, if you are out of school and want to consolidate your loans, check your options at Ed.gov.

We're getting a large increase in the number of calls about student loans. The lending market is essentially frozen because of the fallout from the mortgage crisis. Are you still trying to figure out how to pay for college this fall? Clark has 2 important pieces of information to share with you.

There's emergency legislation working way its through Congress that will allow the federal government to be the "bank" for educational loans for this fall. Clark has full faith that this legislation will be pushed through in time for school.

Yet federal loans may not cover a tuition bill in its entirety. You can try to get a private loan, but very few private lenders are disbursing funds. So where do you turn? Try the peer-to-peer online lending sites where you can borrow directly from other people and cut the banks out of the equation.

Here's how they work: A borrower posts the amount they need to borrow; their credit rating; their debt-to-income ratio; and how much interest they're willing pay. Multiple lenders can then log on and each lend just a fraction of the money to limit their individual risk. Prosper.com is one of the most popular sites for this sort of thing. Clark also has a list of other P2P lending sites available.

There's a lot of tumult in the student loan market right now. Because of fallout from mortgages, many educational lenders are not able to borrow money to service their customers. One lender recently went bust and left students stranded high and dry with their tuition checks bouncing. Other lenders are not even making loans for kids going to college this fall. While this is a problem, it's not the severe crisis you might imagine. The U.S. Department of Education is required to step in and pick up the slack with loans.

Meanwhile, 8 of the top 10 lenders are no longer doing consolidation loans. Yet there's a great opportunity here for those who haven't yet consolidated their loans. Wait until after July 1 and you can fix your rate at 3.25%. That's tremendous.

Just know that trying to secure a loan for next fall will be like going through a funnel. Clark's advice is to start early. Take care not to borrow too much. Doing so can create a back-breaking financial burden in your 20s. Clark advises students to do college on a 3-year or 6-year plan. With the former, you take summer classes and eliminate 1 year of living expenses. With the latter, you work nearly full time and go to college part time. You also pick up great work experience and defray the cost of your loans along the way.

Clark recently told you that there have been changes in student loans laws. Now the latest news is that the student loan market is drying up as fallout from the housing crunch. Michigan has completely shut down its student loan program. The reason here is that student loans are funded by bonds or securities, the trading of which has been hurt by our slowing economy. So the credit squeeze is affecting areas that are completely unrelated to housing.

Clark has a thought that may seem callous to some. He believes there's an advantage to student loans being difficult to get. Think about it: College costs have grown way beyond the rate of inflation because it's been too easy to borrow for school. But if students have a hard time getting money, then schools will be forced to rein in their spending and become more efficient. They'll also have to deliver an education at an affordable price. Previously, the unlimited spigot of student loan borrowing provided no incentive for them to do so; the very oversupply of money fed the rise in college costs.

Parents across the country are freaked out over their 529 statements. They're seeing balances shrink because they may be heavily invested in the volatile stock market. Do not do stocks when your kids are teens -- that's like playing with fire. Note that doing a 529 plan and picking mostly stock investments is only a problem if your kids are 5 or less years from college. If they're not, you can actually benefit by contributing dribs and drabs each month during the tough times in the stock market. That way you accumulate more stock for your dollar before the selling prices bounce back.

Clark has 2 simple rules for you to follow when it comes to 529 plans. Rule No. 1: Make sure you're going the commission-free route when you buy. You wouldn't go to a commissioned stock broker, so why would you buy into your 529 plan through a commissioned salesperson? Rule No. 2: Do the age-based portfolio options. You need different investment mixes when your kids are 5 and when they're 15, for example. That usually means taking on risky stocks in the early years and picking safer options as you get into the teen years. Age-based portfolios adjust roughly every 2 years to make your risk level more and more conservative. So don't stop contributing because you're worried about the stock market. Just change how you invest. Check Clark's recently updated 529 plan guide for his top picks of plans around the country. You usually get a state tax advantage by going into your state's plan. But if you're state is not listed, forget the tax benefit and go into one of Clark's top 3 choices. One final caveat: Make sure you fully fund your 401(k), Roth or SEP before saving for college. There's no scholarship plan for retirement, but your kids can always take out loans or work their way through school.

The teller window on student loans is being closed slowly but surely. Lenders are worried that they can't sell off the loans because of the slowing economy. They also have data telling them which schools have the highest default rates. It goes without saying that they won't make loans at some schools based on that information! The upside here is that it's getting easier to get rid of existing student loans. Clark's advice is to wait until after July 1 and refinance your federal student loan when the rates reset. The best guess is that rates for federal loans subject to consolidation will be between 4-5 percent. Compare that to consolidating now; when you'd get a rate that's more than 8 percent. So keep paying at your variable rate and lock it in low over the summer. Meanwhile, a new law guarantees full loan forgiveness for those who go into public service and make 10 years of on-time payments. There's more information available at the U.S. Department of Education's website or in Clark's own guide to the College Cost Reduction and Access Act.

Parents with prospective college freshmen living under their roofs have turned to hiring college coaches to help their children gain entry to their dream schools. These coaches are part advisor and part magician because they promise to boost your child's acceptance prospects well above the usual suspects of safety schools. Business Week recently reported that some parents pay up to $40,000 for these services. It's also not uncommon for parents to pay an average of $15,000-$20,000 to help their children gain coveted places in top-tier universities. So are these investments really worth it? Well, Clark admits that he has a big-time bias: He knows plenty of people who went to mediocre schools and have gone on to be very successful in life. So he believes that simply having a degree is a more important predictor of success than going to a particular prestige university. Of course many parents feel the opposite and want to get their children into a specific school. But Clark thinks it's crucial to just get the education and not worry about any particular school name being on the diploma.

One of the hottest areas of Clark's site is his 529 Plan Guide. He's now made his fourth revision to this invaluable resource so that you can continue being "Clark Smart" when saving for a child's education. The idea behind 529 Plans is that the money you save will grow tax-free and can be spent tax-free on college education. If the child doesn't go to college, you can transfer the plan to another child for free without being taxed. If there are no other children you want to have the money, you can use it yourself. But beware that you'll pay a 10 percent penalty plus tax if you take this latter option.

All 529 Plans must have state sponsorship, but you're not limited by where you live as far as making contributions. You may, however, enjoy a state tax deduction if you select your own state's plan. 529 Plans are great when they're purchased correctly. But a lot of money goes in the wrong way through commissioned salespeople, banks, stock brokers and financial advisors who take a cut of your money. You should buy 529 Plans directly through the state that sponsors them. If your state isn't listed in the "Honor Roll" section of Clark's guide, pick a state from his "Dean's List." There you'll see plans from Utah, Iowa and New York. These are the lowest-cost plans available across the board. Utah is by far the single best plan in the country. One of the most unique things about 529 Plans is that they're all very flexible. You can put in as little as $15/month or a rich grandparent can pop in as much as $60,000 all at once. One caveat from Clark: Do not save for your child's college education until you save for your own retirement. There are no scholarship plans for retirement!

Sometimes it takes a scandal or two to change an industry. After hearing about all the bank kickbacks to schools and dirty deals on campus in the student loan industry, there's finally some good news coming. The House and Senate have a plan that will disburse $5 billion that the banks stole from taxpayers, students and parents through their atrocious student loan practices. The plan will be phased in over a number of years and has a lot of great provisions. First, the interest rate on student loans will drop from seven percent to just over three percent over the next several years. Second, there will be new procedures in place by 2009 for the PLUS loans that parents take out. The new rules will be very clear and banks will have to bid against each other for the right to write these loans in each state. Third, there will be a loan forgiveness program that amounts to $4,000/year for teachers of science and math and any teacher who works in a high-needs public school. Finally, members of the military, law enforcement, firefighters, nurses, public defenders, librarians and early childhood teachers will be granted full loan forgiveness after 10 years. That means their balance will be wiped away if they make the minimum payments on time for a decade! The best part of it all is that not one cent for these programs will come out of taxpayers' pockets. All the funding is coming from the money the banks stole in the first place.

For several weeks, Clark has been talking about the shameful college loan programs that have been duping students into high-interest loans. Well, now that one of the largest banks in the country has been named in the scandals, the story has made national news. Citibank is the latest shoe to fall in this ongoing travesty, and a number of schools in the Northeast must now pay back students who were overcharged on loans. The University of Pennsylvania, NYU, Syracuse, St. John’s and Fordham are just a few. You would think that the financial aid office at a college would be the safe zone. But it’s just the opposite. Colleges have been cheating you - and your son or daughter - so administrators could earn kickbacks from the banks. Clark thinks people should go to jail over conduct like this. Instead, the banks get a slap on the wrist and never have to admit to any wrongdoing. And, the layers just keep shedding. In addition, people with no kids in college and no student loans are still paying huge subsidies to banks to pay for those loans. It’s out of control and it calls our current tax system into question once again. Now would be a great time to revamp the tax code so the system is fair to taxpayers and does not allow for the lining of legislators’ pockets.

You’ve probably heard of college savings plans. What you may not know is that every plan must be sponsored by a state, and states can sponsor more than one plan. Clark has a guide on the site telling you exactly which plans will give you the best bang for your buck. Utah has the lowest cost of any plan in the country, and is Clark’s top choice. You can find more great plans on Clark’s list. In addition, residents of one state can buy a plan in any other state. But you want to buy one of the good plans. On the other hand, Morningstar conducts an annual survey of plans to give you the worst 529 plans out there. One of the worst plans in the country comes from Alaska, for example. But the state also has a great plan. The way you tell the difference is if you see that the plan is sold by a commissioned-salesperson. You don’t want this. You want plans that are either “direct sold” or they say “direct plan” on them. Cost is the central issue with these plans, so pay attention.

What’s up with the current student loan system these days? Well, federal subsidized student loans are dropping to about 3.4 percent! Interest rates had been bumped up to more than 7 percent by the last Congress, and it was part of a corrupt, political move to pad the pockets of bankers. Thankfully, the new Congress is reversing that. As you probably expected, banks are livid. They want rates to be higher so they can make more money. But the outcry of the people will hopefully prevent them from winning out. This is for people taking out money going forward, so shop around before you settle for a rate.

The federal student loan program changed drastically in 2006, as you may or may not know. Interest rates charged to students and parents effectively doubled. So - before it happened - many people were able to lock in lower rates before the deadline, June 30. If you didn't lock in before that time, it seemed pretty hopeless that you'd get a break from the new, higher rates. But hope springs eternal! There is one last opportunity to lock in low rates. You won't get the super cheap rates that were available before July 1, but they are the ones available to people who graduated from college in 2006. Basically, you’re given 180 days after graduation to lock in that rate, and the most you’ll pay is about 6.5 percent. But if you shop around, you could beat it by a lot more. One great site to try is myrichuncle.com. So, don’t let those 180 days pass you by. If there is less student loan money floating around, colleges are less likely to raise tuition. That is the good side of the rate hike, so try to look at it that way.

Over the years, Clark has been a big advocate of saving for your child’s college costs through college savings plans – also known as 529 plans. Unfortunately, these plans have suffered in the market lately because the law allowing money to be spent tax free was about to expire. So people stopped putting money in. The good news is that a more recent law passed by Congress negates that and makes permanent the tax free status of 529 plans. So, contributing is a wonderful idea. What you need to remember is that are two kinds of plans – bad ones and good ones. The bad ones are the outrageously priced, commission-laden plans that take a huge chunk of your money. The good ones are those with very little commissions that you set up yourself. There is no need to pay a commission to a firm or company because you do it all yourself. One unnecessary level is that each plan must be sponsored by a state, according to the law. And states can lend sponsorships to multiple plans. So, there could be good plans and bad plans in one state. That’s why you need to refer to Clark’s 529 plan guide. The guide has only good plans for various states. Clark recently opened a 529 plan for his son and it took him all of 8 minutes using the guide. Get smart about this and keep more of your money.

You’ve probably hear about the new federal law boosted student loan rates for parents and kids. Parents’ rates went up about 80 percent, and that won’t be coming back down. The good news is that the rates – 6.8% for students and 8.5% for parents – are the maximum rates. In other words, people in the lending business can undercut those rates. And one site - myrichuncle.com - is offering discounted rates. So, check it out.

The changes coming in the student loan program affect people who already have loans AND those who are taking out new loans. It’s a major overhaul and you need to pay attention regardless of your situation. Clark wants to give you a recap. Recent college graduates normally wouldn’t get around to consolidating their loans for about six months. But that luxury doesn’t exist for them anymore. They need to lock in their rate immediately because come July 1 the rates will go up dramatically. People in that situation can lock in for about 4 percent. Those who graduated more than six months ago or who dropped out of school a while ago and never consolidated can lock in now for a little more than five percent. If you took out a PLUS loan for your child, you want to consolidate as well. You will fix the loan at about 6 percent instead of paying the new, higher 8.5 percent rate. If you have a son or daughter in college right now, you want to do what’s called in-school consolidation. That normally wouldn’t happen until about six months after they graduate, but things are different now. You will avoid the much higher rate that goes into effect after July 1. To get started, click here. It's a government site that will walk you through the process.

The student loan program as we have known it comes to an end June 30. It will be replaced with a new program that has extremely high rates and it will negatively affect people taking out loans this fall. For those who have been in college or are about to finish college, you can avoid the high rates. All you need to do is what’s called an “in-school consolidation.” To do that you must give up your six month grace period and lock in RIGHT NOW. Don’t wait until June 30 because everyone will be trying to do it around that time. Again, this is the last time you’ll be able to lock in at a decent rate. The new rates are going to be much higher. For parents taking out loans, the rate will be 8.5 percent. For students, it will be 6.8 percent. But if you lock in right now, your rate will be between 4 and 6 percent. Normally, students don’t think about doing anything for six months after they graduate because of the grace period, but you need to act now. For more information go to, loanconsolidation.ed.gov. And, Get Clark's latest update.

Students are taking on 50 percent more debt than they did in the 1990s, according to USA Today. At the time the debt is accumulating, students don’t notice it much. But once out of school, the debt becomes a huge burden. It’s affecting their ability to buy homes, get married and save for retirement. Clark encourages people to follow their dreams and go back to school if that’s what will help them get there. But student loan rates are going up because of a new federal mandate. So, if you are in school or thinking of going back to school, consider scaling back on the extras many students have nowadays. Living in a great place and living it up on the party scene may have to take a back seat. Spending the first two years of college at a community college is another option. They are the same classes and you cut your college costs in half by doing so. Transfer to a better school your third year and work while you’re there. There are ways to reduce the burden. Check out the changes to the student loan system.

Fewer people are investing in 529 plans or college savings plans these days. Why? Apparently, many of these plans have gone down in value instead of going up so they’re not investing. These people should be upset because they’ve been dealing with a greedy commissioned broker. Remember that you can open a 529 plan yourself. You don’t need a broker. Check out Clark’s 529 plan Honor Roll and Guide to get started.

If you have a son or daughter in college or you are a college graduate, you should be aware that major changes are happening with the country’s student loan program. If you are a student right now, you’re probably paying about 4.7 percent on your loans. If you’re a graduate, it’s about 5.3 percent. And parents are paying about 6 percent. But under the current legislation, student rates are jumping to 7 percent and parents will be paying more than 8 percent. The good news is that you’ll have through June to lock in the old rates. It’s called a loan consolidation. The disadvantage is that you’ll lose the deferment of interest and payments. But at the same time, you’ll have much lower payments for many years to come. Clark will keep you posted on how to consolidate under the old system once the new bill is signed into law.

People responded excitedly when Clark talked in the spring about locking in student loan rates. Graduates could lock in their student loan rates at about 2.75 percent, and those who’d been out of school a while could consolidate at about 3.3 percent. So many people took advantage of this deal, which expired July 1, that the lenders that were supposed to rework the loans couldn’t handle it. In other words, student loan lenders have been unable to consolidate all of the loans and they’re not hurrying to do so either. As a result, some companies are billing those former students at the current rates instead of the consolidated rates they were supposed to have after July 1. All the lenders have to do is ask the Department of Education for a waiver, according to the Dow Jones News Wires. The DOE is granting permission to give the cheap rate to anyone who submitted the application prior to June 30, but lenders don’t seem to care. And they’re not too focused on making sure people get switched over soon. You should not be stuck with a higher rate just because the bank hasn’t gotten around to giving you the correct rate.

Parents are saving for their kids’ college education in very large numbers these days. That’s a great thing, except if you’re doing it in place of saving for your own retirement. According to Allstate insurance, half of parents are saving equally for retirement and college. And one in seven are saving only for their children’s college and not at all for their own retirement. This is not a good idea. If you’re putting off saving for yourself, you not have had enough time to build up what you’ll need. There are no scholarships or financial aid in retirement, and you need your money to compound over time. So, as long as you’re putting the max you can into your retirement account, feel free to save for college. If you could be putting more into your retirement plan, put off the 529 plan until you get a good nest egg going. Don’t be scared by the statistics about how much college will cost. You’ll make it happen.

If you are a college student or the parent of a student, listen up! You have the opportunity to get the same deal on your student loans as people who have graduated or are graduating this spring. Traditionally, within six months of graduation, students are able to fix the rate on their loans for up to 30 years. Right now, the available rate is about 2.8 percent. If you’ve graduated more than six months ago, you can lock in at about 3.4 percent. But what happens if you’re still in school? Up until now, it’s looked as though you were stuck with the current rate when you graduated. Rates are expected to go up to 5 percent after a few years, for example. But, the U.S. Department of Education has just decided to allow students in school to consolidate all of their qualified loans at the low rate. It’s going to be called “in-school” consolidation. The down side is that you have to start paying the loans right away. You can’t dilly dally on this. A number of people are going to want to do this, and it may not last, so act fast. It applies whether you are in or out of school. You can learn more about this at the U.S. Department of Education site, loanconsolidation.ed.gov. So get moving on this!

Today Clark talked with Ben Kaplan, recent college graduate who has thoroughly researched scholarships and fellowships and set up his own Web site. He did the research originally when he was applying to Harvard and his family was worried about the cost. But he’s turned it into a resource for high school and college students, as well as older people who are out of school but want to go back. His site is scholarshipcoach.com. It has tons of info about lots of other sites with information and is a tremendous resource.

We are at a point when student loan rates are the lowest they've ever been. Graduates have until July 1 to refinance or consolidate their loans into phenomenal rates. Unfortunately, there is an unpleasant side to student loans. Students used to never consider student loans as real obligations, and this forced the government to absorb billions of dollars of debt. To correct the problem, the government decided to give student loan collectors tremendous power. Now, student loan collectors are allowed to collect money from you without ever proving that you owe money. The Wall Street Journal reported that a current tactic of loan collectors is to look for terminally ill people who owe student loans. Terminally ill patients receive disability checks, which the student loan collectors are allowed to seize. They basically leave these people without any money before they die. About 40% of college graduates delay buying a home because of their student loans. An answer to student loans is attending junior or community college for your first two years. Sending your kids to a junior or community college first will cut down on their debt dramatically.

We are at a point when student loan rates are the lowest they've ever been. Graduates have until July 1 to refinance or consolidate their loans into phenomenal rates. Unfortunately, there is an unpleasant side to student loans. Students used to never consider student loans as real obligations, and this forced the government to absorb billions of dollars of debt. To correct the problem, the government decided to give student loan collectors tremendous power. Now, student loan collectors are allowed to collect money from you without ever proving that you owe money. The Wall Street Journal reported that a current tactic of loan collectors is to look for terminally ill people who owe student loans. Terminally ill patients receive disability checks, which the student loan collectors are allowed to seize. They basically leave these people without any money before they die. About 40% of college graduates delay buying a home because of their student loans. An answer to student loans is attending junior or community college for your first two years. Sending your kids to a junior or community college first will cut down on their debt dramatically.

There is a special student loan forgiveness program out there for people who want to become teachers. There are a few requirements and hoops to jump through, but the Taxpayer Protection Act will make some future teachers very happy if the President signs it into law. Congress has already passed the bill. Under the program, a teacher can erase up to $17,500 in student loan debt. Applicants have to teach specific courses, including math, science or special education. Applicants also have to be “highly qualified” and teach in less desirable school districts in order to be eligible. Many teachers may already meet all of those criteria and not even know it. The traditional amount of forgiveness was $5,000. Now it’s $17,000. So, that is a huge improvement. Learn about it here: ed.gov. The idea of wiping out student debt is not a fantasy anymore!

When it comes to parents and kids, Clark gets more calls about how much college will cost than any other question. He always stresses that parents should be saving for their own future first, and then saving for their children’s college education. That is one important note. The second is that there are a lot of dirty scoundrels out there selling people completely inappropriate plans. In fact, the NASD (National Association of Securities Dealers) found that 90 percent of sales of 529 plans by brokerages have been inappropriate. By inappropriate, we mean that the brokerages are charging monstrous fees for setting up an account. They can line their pockets by recommending plans that aren’t the best for you but cost a lot in commission. The good news is that some of these bad brokerages are heading for the hills because the SEC is after them. That means that the legitimate companies will be left, and that is good news. Even better is the news that the two best companies are are emerging as the giants in the 529 field. Vanguard and TIAA-CREF are considered the best and people are starting to realize this. For help picking funds, check out Clark’s 529 guide. In the next few months, Clark hopes to have several more to offer you. A 529 plan is the best way to save for your child’s college because if they don’t go to college, the money is yours. Not to mention the fact that through 2011, money spent on college education is tax free!

Clark gets many calls from the parents of newborns, who want to know about putting aside money for their children’s’ college education. Clark asks them first how much they are saving for themselves, and often he is met with silence. He wants you to save for your children, of course. But you need to save for yourself first. New data out shows that people are saving tons through 529 plans. Also known as college savings accounts, these are tax exempt accounts that allow you to put away money for college education. Better yet, the money is spent tax free. People have spent $50 billion this year, which is 67 percent more than last year. In the next year, it will be up to $100 billion. But please max out your retirement savings account before you start one of these plans. Your retirement savings account is the most tax efficient plan out there. Secondly, if you are invested in a 529 plan, make sure it is with a legitimate, low-cost plan that does not charge commission. Clark has created a 529 Honor Roll that gives you his top choices for plans and tells you exactly how to contribute money. Coverdell accounts also allow you to put money away for your child's elementary, middle or high school education.

Clark has been very concerned with corruption going on in 529 or college savings plans. These are wonderful investment opportunities to help pay for college educations and all of the earnings are tax-free for the next seven years. They are very flexible, too. But Congress overlooked some things when they set up the 529 system. According to law, these plans must be sponsored by a state and administered by a brokerage or financial house. Unfortunately, the states don’t always check out the companies that offer to host the plans and some corrupt organizations have gotten involved. As a result some plans have been hijacked and investors’ money was stolen. But Clark has a sure fire way not to get taken. He has put together a “529 Honor Roll” that includes great plans with very low fees. The best, in his opinion, comes from Utah. Utah gets highest honors in his new, revamped survey. But the other 11 plans are listed on the honor roll. Check it out. If your state is on the list, go with that one because you’ll get the added tax benefits of being a resident there. If your state is not on the list, go with Utah. You can also put money into Coverdell plans at the same time. Just remember to fund your own retirement first. That is always your first priority.