In my last entry on The Blog, Getting Schooled: 6 Steps to Better College Prep, I talked about helping your child maximize his or her chances of gaining college acceptance. Today, I’ll discuss how you can help yourself (and your child) prepare for and manage the cost of college.

As I contemplated this post, I realized there was any number of things I could talk about when it comes to the broad topic of paying for college. I could go on for pages about financial aid, loan options, 529s and other saving vehicles — and I will touch on these down the road. For now, I decided to focus on one simple piece of advice that I think tends to get overlooked: The undeniable importance of saving.

A recent study by Sallie Mae found that half of American families with children under 18 are saving for college, but half are not. The reasons why are probably as varied as the people using them. But my experience working with financial advisors and individual investors tells me that parents hear estimates on the cost of college, which can be as high as $300,000 for a four-year education, and paralysis sets in.

Uneasy thoughts of “I’ll never save enough” lead to the easiest of actions — which is inaction, or not saving at all. And that’s a mistake, for two key reasons: 1) That $300,000 “sticker price” is not necessarily reality and 2) any savings is better than no savings and can make a huge difference in your bottom-line expense.

Let’s look at each of these important components of college affordability:

Sticker Price and a Grain of Salt

While almost always overwhelming, college costs are almost never completely transparent. And that can make it difficult to determine affordability. Know that few people pay the published sticker price for a given school. Your costs could be defrayed by merit aid (free money) in the form of grants, gifts and scholarships, and/or by financial aid.

On average, 65% of college costs are covered by parents’ and students’ financial resources (income, savings, loans); 35% is covered by other means, including grants and scholarships, according to Sallie Mae. While 35% may or may not represent your experience, it does illustrate that there is attractive “discount” potential.

Savings Change the Equation

Now, savings are kind of a big deal … and that’s an understatement. In fact, by our calculations, every $1 you set aside for college today can equate to over $2.50 you won’t need to pay back on a loan in the future.*

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