Financial adviser Therese Nicklas serves as a model for her Boston-based clients. Her first step was deciding on a budget based on what she could reasonably save over time and what she could take from monthly cash flow to stash money away for two kids.
"I told my kids, if you go over, you'll have to borrow," says Nicklas.
Her older son was disciplined about working and graduated with less than $25,000 in loans, but her younger son racked up so much debt he had to live at home after graduation while he aggressively chipped away at it.
One way families can come up with a reasonable budget number is by filling out the federal financial aid form known as the FAFSA, regardless of whether they think they will be getting financial aid.
Sallie Mae's survey found that FAFSA participation has made a steady climb to 86 percent, 12 percent higher than in 2008.
The FAFSA calculates an "expected family contribution" which colleges can use to calculate financial aid awards. But it also may be serving as a psychological cap for what parents can reasonably shell out.
"Two decades ago, college costs could be more related to buying a car. Now these costs are like buying a house. It’s two completely different scenarios," says financial adviser Melissa Sotudeh, who is based in the Washington, D.C. area
Facing Loans
While planning ahead works for parents, students have fewer options. Federal student loans max out at about $27,000, with no limit on higher-interest private borrowing.
Therese Nicklas is a big fan of leaning on student income from work rather than loans, but there's only so much of a dent a student is able to make in their total loans with their pay checks, especially if they face a massive tuition bill. Sallie Mae's survey found that 76 percent of students work to help pay their costs, with 55 percent of those working year-round.