They hope son can get academic scholarship - but what if he can't?

DEAR HARRY: Our son will go to college in the fall of 2014. He is an only child and quite bright. We are hoping his academic achievements will get him a scholarship, but we cannot be sure. As a result, we're looking ahead to the possibility of our having to pay for the tuition and expenses ourselves.

Neither my wife nor I have ever earned much money (she is a salesperson in a clothing store, and I drive a bus), so we don't have much saved. We own our home clear of a mortgage, and we have no other debts. What should we look for in terms of loans?

What Harry says: Before we discuss loans, let me suggest that he look into colleges that have grants to students in place of loans. These are all heavily endowed colleges, like Penn and Princeton, so your son's academic prowess will help him gain admission. If he has to get loans, try to avoid the Parent Plus Loan Program and private student loans because they are costly and have other disadvantages.

You should consider a Home Equity Line of Credit (HELOC) and Federal Student Loans. The HELOC has the disadvantage of possible interest-rate hikes in the future, as well as the fact that your home is on the line as security for the lender.

Your son can apply for the federal loans, and you can help him to repay. There are also provisions for modification of the loan in the future if he should have financial problems. This is my first choice, followed by the HELOC. Good luck!