I’m taking a brief break from the programming I outlined for myself a week or so ago. It’s September and that means that many people are looking seriously at college for the first time. They may be parents of seniors, parents of freshmen, parents at any point who think now is a good time to start investigating this big future step. And after a few google searches or conversations with friends or counselors, they have concluded, “This is overwhelming! Where do I begin?”

I had two conversations recently that frame that question pretty well, from my world view. If you’re new here, my world view is: families need to make decisions that lead them to affordable college educations for their students. Part of that is saving ahead, part of that is understanding the process and how financial aid works, part of that is doing the hard work of parenting. There are other parts too. The two conversations I had were:

  • With an acquaintance who’s a parent of a high school junior: “It feels like I’m letting my kids down if I talk about college from the perspective of cost. It feels dirty. I feel like they should have the opportunity to find what’s best for them.” Is that how you chose your child’s car?
  • With a dad looking for an advisor: “My daughter loves this school and we need to figure out how to make it work.” The school in question was going to cost this close-to-retirement family $70,000+ annually.

Where do you begin this massive and potentially overwhelming project of sending your kid to college? With what you can afford. You can find a college that can educate your child at virtually any price. And people succeed with degrees from a variety of institutions. For example:

How do you figure out what you can afford? Start with the back-of-the-envelope calculation:

  • Divide your college savings by 4
  • Determine how much you can pay out of cash flow annually
  • Are you OK with your student borrowing? If so, add the federal direct student loan amount ($6,750 is the average annual amount for four years)
  • If you’re eligible for the AOTC, add $2,500

That is what you can afford each year. There may be adjustments pertinent to your situation or goals, such as a family that has done a good job of funding retirement savings and wants to reduce 401k contributions during the college years, or a student attending a direct-admit nursing program who is willing to live at home for a few years after graduation to pay back loans.

Next, get an estimate of your Expected Family Contribution. This will help you to determine if you’re on a path towards need-based or merit-based financial aid; on a need basis, you should expect college to cost no less than your EFC. If your EFC is more than what you can afford, you need to look at merit aid and other solutions such as starting at a local college.

If all of this seems horribly unpalatable to you, please read these stories of actual student loan borrowers and then decide whether affordability is a good starting point for your family’s college planning journey.