What Will College Really Cost?

If your kid decides to attend Georgetown University next year, you may have to shell out $43,340 for tuition, textbooks, room and board, and other expenses.

Most Americans don't make that much in a year. And most Americans don't have that much in their 401(k)s, let alone their 529s. So how can families afford a college education?

Take heart, parents: College isn't as expensive as you might think.

First of all, the vast majority of schools charge far less than Georgetown and other big-name private universities. According to the College Board, almost 70% of students attending a four-year college paid less than $8,000 for tuition and fees in the 2003-2004 academic year. Nearly a third paid less than $4,000. And schools that come with high price tags know that many families might need some financial aid, so the final bill may not be so high.

But if you fear that it'll cost an arm and a leg to enrich your kid's brain, you're not alone. A study by the National Center for Education Statistics found that most students and parents overestimate tuition costs, especially for in-state public schools. The "Getting Ready for College" report, which was based on 1999 information, found that high school juniors and seniors and their parents estimated that tuition at a public college would cost between $5,400 and $5,800, but the real cost was approximately $3,200.

While that might elicit a small sigh of relief, it doesn't mean paying for college will be easy. After all, college costs have been growing at a double-digit pace for years (making even 1999 numbers outdated). As with all of life's big-ticket goals, the earlier you start, the higher your chances of success. Here's what you can do now:

Start saving: The "Getting Ready for College" report found that just 63% of the parents of 11th- and 12th-grade college-bound students have made any financial preparations for the impending tuition bill. Visit our College Savings Center for the lowdown on Coverdell Education Savings Accounts, prepaid tuition plans, and 529 savings plans.

Learn the process: The Department of Education recently created, a website that walks students and parents through the college degree life cycle, including applying for financial aid, choosing a career, and repaying school loans. Also, visit and run your numbers through the Financial Aid Estimation Form to get a rough idea of how much aid you might be eligible for (keeping in mind, however, that most aid comes in the form of loans).

Consider the price tag: Sure, it's impressive to have an Ivy League school listed at the top of your resume. But you still should do a cost-benefit analysis: Is a degree from University A worth $20,000-$80,000 more than a degree from College B? And that you can borrow tens of thousands of dollars to pay for school doesn't mean you can afford it. If borrowing is the only way your kid will get a college education, then it's a smart move. But if choosing one school over another will result in $20,000 more in student loans, seriously question whether that's a wise investment.

For more on footing the brain bill, check out our latest book, The Motley Fool's Guide to Paying for School: How to Cover Education Costs From K to Ph.D.

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