A Get-Real Guide to Saving for College

What if I Can't Save Enough?

Don't get discouraged if you crunch the numbers and realize you'll never save enough to foot those staggering bills by the time your child turns 18. The fact is, about half of middle-class families don't pay the actual "sticker price" tuition that you hear from financial planners and see cited in college brochures -- and yet their kids still get a degree. How do they do it?

Believe it or not, more than 75 percent of full-time undergraduate students today get some kind of financial aid to cover college costs. Some of that comes in the form of scholarships that schools offer to attract high-achieving kids. Colleges seeking to increase their prestige, for example, will lure top students by giving them big tuition breaks, regardless of family income. Many schools with large endowments (think Ivy League) also promise assistance for any kid who's admitted but who can't afford to pay. (That's why encouraging kids to maintain good grades from the get-go is a smart component to any college plan.)

Another big chunk of financial assistance comes from loans. In fact, the percentage of full-time undergraduate students who borrowed for their higher education increased from a third in the early 1990s to about half today, says Kevin Walker, CEO of SimpleTuition.com, a comparison-shopping Web site for student loans. At present, there are three federal loan programs: the PLUS, Stafford, and Perkins loans, all of which have varying qualifying criteria, interest rates, and repayment plans. Another option for many families is using a tax-deductible home-equity line of credit to help defray college costs.

Finally, many parents use their regular income to help pay for college. When you're cash-strapped because of diaper, daycare, and preschool expenses, it's tough to imagine ever having extra money from your paycheck for college tuition. But remember that you're not in your peak earning years when your kids are young. In 15 years, your salary will likely be higher than it is today; some child-related costs will have gone away; and you'll have more disposable income to help with those tuition bills.

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