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Saving for college: scary thought?

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What’s more frightening to parents than terrorism and violent video games? Paying for college, reports one recent parent survey.

It’s easy to see why when you consider that one year’s in-state tuition at a state school costs an average of $17,000 and the tab for a private university runs about $35,000 a year.

Whether you’re a parent who has been saving for years or are just starting, says money expert Jean Chatzky, take these three steps to prepare:

1. Take a realistic look at what college is really going to cost.
The costs above apply to students enrolled now, but that figure will rise with inflation. Fail to take that into account, and you may come up significantly short. Online tools at can help you predict what you’ll need.

2. Become familiar with financial aid. It’s not too early to research what aid you might qualify for. People usually draw from several sources, such as aid, loans, scholarships, grants and work-study programs. Check out your options at

A word of caution from Chatzky: “Financial aid administrators are there to help, but that doesn’t mean they can’t say no. It’s their job to distribute the financial aid money fairly among those who qualify, so aid could depend on the year and the college.”

What’s more, most aid administrators report that many parents saved less than they should have because they fully expected their children to receive merit scholarships.

“No matter what you think the future holds for your child in terms of aid and scholarships, don’t scale back on your savings goals,” Chatzky says.

3. Start a college savings account now. You can start a 529 college savings plan with a fairly low minimum, and earnings grow tax-free. A Roth IRA is another option. The Roth, unlike other retirement accounts, allows you to withdraw earnings without penalty if you use the money toward education.

Tip: Save in little, everyday ways. For example, Chatzky enrolled six years ago in Upromise, a rewards program that puts money into your college savings account when you shop online or eat at participating restaurants. “Without even taking full advantage of the program,” she says, “I’ve still managed to rack up about $1,000 in my account.”

— Adapted from “Saving for College,” Jean Chatzky,

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