Given the many competing demands on our money, many parents find themselves in a panic when their kids enter high school and they realize they have very little saved to pay for college. With the average annual cost of a private university now exceeding $45,000 and the average cost of a public university close to $25,000, most people can’t easily pay for college out of cash flow.

What’s a concerned parent to do?

While the best solution is to start saving for college in a 529 account when your child is very young, if you find yourself with high-school aged kids and insufficient college savings, there are still things you can do to make college more affordable.

  1. It’s ok for the child to have “skin in the game”. While many parents aspire to paying fully for any school their child wants to attend, this may not be financially realistic and not in the best interest of the child. Research shows that kids who have to pay a portion of their college expenses do better academically. However, saddling them with debt loads disproportionate with their future earning potential can have negative consequences as well, so it’s best to limit the amount of debt students take on and instead encourage them to work part-time to help pay their way.
  2. Shop for schools that offer lots of need and merit-based financial aid. Many schools offer generous financial aid packages, both need- and merit-based, to attract the best students. Very few students pay full sticker price. Research the “net price to attend” of the colleges under consideration. Net price is the sticker price less any free money, such as scholarships and grants. Become familiar with as it has a lot of information about each university and the amount of financial aid they offer.
  3. Encourage your child to focus on “best fit” instead of brand name in deciding which colleges to apply to. If you leave the college selection process up to your child, their list is likely to either resemble a Who’s Who of elite, brand name colleges, or contain the schools their friends and current love interest plan to attend. Popular colleges and universities are harder to get into and are also stingy with free money, so unlikely to help make the cost more affordable. Furthermore, given that as many as 33% of freshman drop out after their first year of college, it makes sense to make sure your child chooses schools that are a good fit for them, not their friends, to increase the odds that they’ll stay in school and finish on time. US News posts a list of first year retention rates for each college/university.
  4. Focus on schools that have high student satisfaction and 4-year graduation rates. Another often surprising way the cost of college can increase a lot is if it takes your child longer than four years to graduate. For various reasons, some schools have a very low rate of students graduating in four years. For example, San Francisco State has a 13% 4-year graduation rate, whereas Cal and UCLA have a 70% graduation rate.

In summary, don’t despair if you haven’t saved a lot for college. There are other ways to reduce the financial burden while still giving your child a great college education.