According to the Bureau of Labor Statistics, total college enrollment has risen steadily over the years, and the market has reciprocated in a troubling way. Over the past three decades, the cost to attend college has more than tripled — far outpacing the standard rate of inflation. The fact of the matter is, it’s more expensive to attend college than ever before, and funding that dream school can be one of the most significant financial burdens of a lifetime.

There is a reason this trend is known as the student debt “crisis.” More than half of college students have to borrow some amount of money, and as a result, student debt represents the second highest consumer debt category only behind mortgages. In fact, 45 million borrowers have accrued a student debt total of (drumroll please): $1.4 trillion. 

Educating children about education

College is kind of a double-edged sword: on one hand it’s a great opportunity for personal and professional enrichment; on the other, you’re asking a high school student to seriously consider the repercussions of incurring tens of thousands of dollars in debt. 

The best thing you can do for your child is establish realistic expectations. Precocious kids will inevitably be enticed by the reputations of big-name schools, but it’s important for them to understand the return on such a monumental investment.

It turns out, an expensive education doesn’t necessarily translate to a high-paying career. There has been serious economic study on the issue, and the long-term results prove that college brand name has little-to-no impact on lifelong earnings. According to TIME, economists found that the difference in the end result of an education from an “elite college” and “moderately selective college” is negligible. The 20-year study found that that lifelong earnings and job satisfaction could not be proportionally attributed to the cost of the education. 

Unless your child is on track for a substantial scholarship, try to impart to them the value of an in-state education. An education at a state university, with in-state tuition, will typically be far more realistic than an education at an institution such as NYU. And, most importantly, the data show that paying a premium for tuition doesn’t guarantee a premium career or earning potential after college.

How to make savings a habit

According to Investopedia, the average student loan balance is around $35,000. A loan balance in the tens of thousands of dollars, plus interest payments, can be difficult to pay off when working entry-level jobs straight out of college. This is why it’s helpful to build an education savings account early.

Even after taking all the necessary financial precautions, college will still be expensive. There’s no way around it. Whether the main financial burden falls on you as the parent, on your child, or a mixture of both, will come down to a conversation within the family. Either way, it’s a good idea to grow a savings account early to help minimize the amount of money you need to borrow.

Experts recommend the “2K” rule, which means saving $2,000 every year of your child’s life. Under this model, you will have saved around $36,000 by the time your child reaches the age of 18, and this amount would help pay for around half of their education.

There are a variety of vehicles you can use to grow a savings account for higher education:

• Savings account: While this tried-and-true method doesn’t yield the greatest return, it is one of the safest ways to save money.
• 529 plan: This is a tax-advantaged savings account that is designed specifically for education. Offered under this model is the Education Savings Plan in which you can save for a beneficiary's eventual qualified higher education expenses. These include tuition, fees, and room and board. This plan tends to come with annual fees, but withdrawal is not subject to federal or state income tax if funds are used toward qualified expenses.  

• UTMA and UGMA accounts: These are custodial accounts, which means accounts set up in the name of a minor. UTMA and UGMA accounts allow for stock, bond, and mutual fund investments. Similar to the 529 plan, there are significant tax benefits to custodial accounts. For example, the amount of money sitting in a UTMA or UGMA account will go untaxed and instead be taxed at the child’s tax rate not the parents’.

Saving for college can seem overwhelming, but given ample preparation it is a lot more attainable than you might realize. Don’t set your kid up to be part of the 11 percent delinquency or default rate — set realistic expectations, save incrementally, and pick the right savings vehicle to maximize funds for your child’s education.