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Do you have to save everything for college?

Many parents ask themselves how to afford college costs for children. The answer is that saving everything shouldn’t be the primary goal.

The numbers are daunting: For children who are toddlers today, a four-year degree at a private university may eventually cost upward of $500,000, according to some estimates. And with most parents saving only a fraction of that amount (an average of around $18,000, according to lender Sallie Mae), it may be surprising to hear anyone warn against saving too much to help with college tuition. But think carefully before digging a financial hole with college savings; instead follow these tips.

Be consistent. Decide on a manageable monthly amount and set it aside in a tax-advantaged college savings account such as a 529. Do that consistently; that’s the best savings rule of all. Saving something — anything, really — will add up over time. One guideline that some families use is the 2k rule: Try to have $2,000 saved for every year of a child’s age ($36,000 by 18) to cover around half the cost of a four-year public university.

Talk about college ROI with your kids. Not all professions have the same earning potential and not all college degrees are created equal. Whether you save for the cost of the degree in advance or take out loans, if it’s overpriced it’s financially unwise. A technical degree from a top-flight public university that may require graduate education may have a substantial return-on-investment (ROI), meaning the extra investment in years offers a substantial payback. Together with your student, research the expected earning potential for graduates with similar degrees from similar types of insitutions to those your child is considering.

Don’t forget about other sources of funds. The truth is, few families pay the full amount for college, particularly if they have a student who has achieved some measure of academic success or if they’re able to qualify for some form of financial aid. As parents are figuring out how to afford college, know that students may receive some sort of need-based grant, merit scholarship, fellowship, work-study aid or a combination thereof. The Federal Student Aid office of the U.S. Department of Education and Sallie Mae are good places to start. And do a search for college grants in your home state as well. Ultimately, you may want to consider urging your future student to accept responsibility for part of their education, even as a loan, so that they lend the experience the gravitas it deserves.

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