Paying for college

When you haven’t saved enough

If college tuition is looming and you don't have enough to cover it, you aren’t alone. Four out of 10 families who hope to send kids to college aren't saving for that goal, according to Sallie Mae. Among those who are, parents of kids ages 13 to 17 have saved an average of $22,985. That's not enough to pay for the typical college education. The net average cost for just one year of college, after scholarships and grants were deducted, was $15,367 in 2017, according to Sallie Mae. Four years? Closer to $60,000. Here are some steps to help manage. 1 Set limits The federal PLUS loan program allows parents to borrow the full price of virtually any college education but that's rarely a good idea. In general, parents should limit borrowing to what they can afford to pay off before retirement, while still being able to save for that retirement. It's also reasonable to ask the student to first exhaust federal student loan options before parents consider borrowing. Students typically can borrow up to $5,500 in federal student loans for their first year and a total of $31,000 for an undergraduate education. 2 Vary schools College counselors typically recommend students apply for three types of schools, based on their perfomance: "safety" schools virtually certain to say yes, "target" colleges likely to accept them, and "reach" options where acceptance is a long shot. Families also should also include at least one financial “safety” school, with costs they know they can handle; a “target” school that could be affordable; and a “reach” school that may surprise them with generous financial aid. 3 Consider alternatives If a four-year degree is a must, consider a year or two of community college. It can significantly cut costs but also may increase a student's risk of dropping out. Community college may be best for self-motivated types who are determined to get a degree and can manage a transfer. For kids who aren't that motivated or are unsure what they want to study, a gap year may be a good option to provide another year to grow up and get focused, without racking up education expenses.