Money
Surviving the Worst Financial Times

Q: I read about the possibility of having some of my federal student loans cancelled or deferred. Where can I find more information on this?

A: We received several letters on this subject, one from a teacher asking why the forgiveness of loans applied only to those made after Oct. 1, 1998. I searched the Web using www.google.com and asking for "student loan forgiveness teachers," something anyone who is interested in this possibility might do.

One site, www.cbhe.state.mo. us/mostars/loanforgiveness.htm, lists the conditions under which up to $5,000 of Stafford loans can be forgiven for a teacher who works five years in a low-income school. The site includes a directory of schools that qualify. It seems the program must be renewed each year. All of the sites suggest calling your lender to find out whether you are eligible. As for the Oct. 1 date, there's not much to be said. When Congress gets an idea, it attaches a date to it. It usually has to do with projecting how much the program might cost.

Q: I've had a tax- sheltered account (TSA) in a moderate risk fund for 2.5 years. It hasn't earned a single penny and has lost over $450 in value. What should I do? Get out of it? Stop adding money? Can I transfer my money into another company's more conservative fund without paying a fee?

A: The two-and-a-half years between March 2000 and September 2002 when you wrote in were one of the worst times in stock market history. Even financial professionals suffered losses. I suggest you check the performance of your fund against an index like the Standard & Poor's Index of 500 stocks, which lost 36.34 percent from the beginning of March 2000 to the beginning of September 2002. If your fund compares favorably to the index, it's probably a good time to add money to your TSA. The market can't go down forever.

Q: I am concerned for the widower who thinks he can retire at 65. Those of us born in 1946 and after cannot retire on full benefits until we are 66. He might be eligible to retire from his job at 65, but Social Security does not kick in until 66.

A: Thanks for bringing up this excellent point. The change begins with those born in 1938. For them, the normal retirement age moves up to 65 years and two months and then it continues to move up two months each year until it reaches 67 for those born in 1962 and later.

Q: I am a second- year teacher and a divorced mother of three sons. Two of them are getting ready for college. I am having trouble budgeting my finances. It hasn't been easy only getting paid once a month. Do you have any advice?

A: It certainly isn't easy to budget for a whole month. You need help. Does the boys' father contribute to their support? He should. Do the boys work? I know it's tough to balance schoolwork and a job, yet many of the teenagers in the small town where I live do it. If the boys could work 15 hours per week, it would give them spending money and ease up the burden on you. Over the summers, they could accumulate college savings. I hope they are applying for financial aid for college. I've been reading college admissions guides, and it seems the majority of students get some kind of financial aid.

I suggest you sit down with your boys, make a list of priorities, and enlist their support. When kids hear how much money their parents make, it sounds like a fortune. But when they see how much goes to taxes and nonnegotiable items like health insurance and rent or a mortgage, a car plus insurance for both home and car, it's a real eye-opener.

Talk about how you could increase the income as a family. Could you tutor? That pays well. Is there any kind of summer business you could do as a family?

You should be taking money off the top for your 403 (b) plan and then for savings, even if it's only a little. List your nonnegotiable expenses and see what's left. Talk as a family about how that can best be stretched.

We never want our kids to worry about money. But running short of money is a fact of life and kids should understand that and be given the opportunity to help out.

Q: I went back to school to earn my master's degree and wonder if I can deduct any of the tuition costs on my taxes.

A: I think so. You don't say whether the master's degree is in education or your subject field. The rule has always been that if you go to school to learn a new profession, the tuition is not deductible. But if you go to improve your skills in your present profession, that tuition is deductible. For a time, there was a very strict interpretation of this rule that said if you might be able to get a different job with your new degree, then it wasn't deductible. But I think that has been loosened up a bit. I would consider earning a master's degree to be education that would improve your skills in your present job as a teacher.

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Mary Rowland is an author and contributor to several financial planning magazines. E-mail your personal finance questions to MoneyQuestions@neamb.com.

Thrifty Educator

This month's tip comes from Beverly Divarry, a computer lab paraprofessional in State College, Pennsylvania.

So many teachers have complimented my decorative touches that I want to share my bulletin board idea, which is suitable for all teachers.

Use a double roll of vinyl (self-adhesive) wallpaper to cover any bulletin board. Apply the wallpaper horizontally and staple the two strips up.

It looks great, it can take tape as well as staples and push pins, and it is washable and durable. You can also use wallpaper border strips for a terrific border application. Look for rolls on sale for an elegant, inexpensive bulletin board treatment.

Heads Up from NEA Member Benefits

Did you know that most NEA members are eligible for free life and accidental death and dismemberment insurance coverage? Since 1985, NEA Member Benefits has offered NEA DUES-TAB® Insurance to Active, Reserve, and Staff members, as well as to Life members actively employed in the field of education. All you have to do to confirm your eligibility and register your beneficiary is call the NEA MB Member Service Center at the numbers below or register online at www.neamb.com.

Providing for your family's security is always a concern, and that's why NEA Member Benefits offers the NEA Preferred Term Life Insurance Plan. Underwritten by the Minnesota Life Insurance Company, the plan features level premiums and level benefits, meaning rates do not increase with age for the life of the policy, and benefits never decrease during the plan term. Coverage is available in two amounts, $100,000 and $250,000, for a period of 10, 15, or 20 years.

Rates are attractive, too--for example, a 40-year-old non-smoker in good health could obtain $250,000 of coverage for as little as $218 per year. Competitive rates and discounts in other underwriting classes are also available. An "accelerated" benefit rider, automatically included, enables participants who are diagnosed as terminally ill with 12 months or less to live to receive their death benefit right away to use however they wish.

To find out more, call NEA Member Benefits toll-free at 800/637-4636 (voice) or 800/445-1269 (TTY), Monday-Friday, 8 a.m. to 8 p.m. (or Saturday, 9 a.m. to 1 p.m.) ET.