College costs can be met by parents and students through past, present and future earnings. Many parents start that college fund as soon as that stick turns pink. 529s, UTMA, Coverdell, Trustfunds, Nest eggs. Sometimes grandparents and other family members join in. Also, the kid has a piggy bank that turns into a bank account when it’s full Savings bonds , birthday money, all get a chunk taken out for savings. Errands around the house, allowances, then odd jobs like baby sitting, dog walking, poop scooping, tutoring, private sports, music whatever lessons right up to real jobs get tithed and then some for college. My kids all had college money by the time they were in middle school and they really started putting it away with summer jobs when they reached high school age. We also saved— not as much as we should have as we tried to pay for other things in life as well.
Then when college years hit, you tighten the old belt. No more vacations, or cut back. Not eating out as much. Put off expenses, that college bill comes twice a year. Kid can work part time and summers to pitch in too. These were very lean years for us , as College was a priority. Maybe take on a second job, sell off some things, start a little side business.
Then there is future income in the way of loans. Student can take up to $27k in Direct loans ordinarily. $5500 freshman year. Maybe parents match it or take out double it? Nothing wrong with loans if you understand the terms, the interest implications and have a strong case for being able to pay them back.
State school tuition can usually be met if a middle income family follows this plan; upper middle , maybe go away to an in state school; a bit more; go away to an OOS school or a private school with some merit. To pay what is now looming upwards into the $80k+ range, is tough. And a lot of those schools give very little or no merit money. Some of these schools are recognizing this and upping financial aid ceilings to income over the $200k range, capping home equity values. Some are not.
If you live in a high COL area, if you’ve just started making a high income, you have other special needs, had some rough years, there might not have been anything you could have done. Could not savie more and may even have debt you are repaying. Little to none of that counts in the financial aid formula.
I live in the NYC area, and I’ve seen immigrant families squeezed in tiny apartments, living very frugally so that the college aged generation can go to college. Sometimes it’s a very expensive college, and I can tell you right now that my 18 year old self would not have allowed my parents to work themselves to the bone and live in penury for me to go to a top rated school, nor would have allowed them to borrow huge amounts, knowing they did not an income that could take on large repayments. But some parents do. Part of some cultures.
But that is a long cry from how most of us do it. I admit we did not do enough in saving for college. We also did not foresee how costs skyrocketed as the did. Foolish me— figured things would stabilize at. the $40-50k range. Ha! So wrong.
So we borrowed but repaid as we borrowed which I think is the way it should be done. It let us feel the pain of borrowing and repaying right away and we paid back every bit of our first kid’s loan by the time the last one started college.
If you cannot make it work without taking foolish financial risks, you set a budget. It hurts to tell your top notch student who’s been working to get into s most selective name recognition school that the family can’t afford it. But if that’s the truth of the matter, it’s adulthood time. It’s not like you can’t afford a bone marrow transplant. Trust me, i’ve faced that with a kid, and not getting to apply to Harvard for undergrad ain’t nothing compared to having the talk about those things. There is graduate school, professional school.