It's college touring season, and many parents are on the road with their teenagers, driving from school to school and thinking about the college application — and financial aid — process that looms ahead.
Many baby boomers have already been through this stage with their kids, but because the generation spans about 20 years, others still have kids at home. So how should boomers plan to pay for school when, on average, students graduate from college in the U.S. with $25,000 in debt?
Ron Lieber, who writes about personal finance for The New York Times, tells Morning Edition's David Greene about planning strategies and pitfalls to avoid.
Think about college costs in chunks.
"It's something I picked up from Kevin McKinley, who runs a financial planning practice in Wisconsin. His basic insight is that you should divide it in chunks. He was thinking about the $60,000/all-in four-year cost. He basically looked at it like this: Think about saving $20,000 before the kid starts, which is a reasonably easy thing to do if you do it over 18 years. Then spend $20,000 out of your current earnings during the time that your child is in college. It might mean some sacrifices — some very careful budgeting, a lot of rice and beans on the table — but it's doable. And then borrow $20,000. When you start to divide it into chunks, it starts to seem at least within the realm of the possible."
Your kid has been admitted to an expensive private school? Time to get real.
Need planning help?
Learn more about average college costs.
More on student loans.
Not touring colleges quite yet? Figure out how much school will cost when it's your child's time.