The majority of parents who are currently saving for their child's education have saved less than $10,000, according to a recent survey.
That would barely cover the tuition and fees for one year at a 4-year public college for in-state students.
The average tuition and fees for a 4-year public college for in-state students was $9,970 a year and for out-of-state students was $25,620 for 2017-18, according to the College Board. A private non-profit college would cost $34,740 a year.
And that doesn't include other expenses like room and board, books, transportation and personal expenses.
The non-profit organization's Trends in College Pricing Report estimates that a full-time on-campus undergraduate budget for the 2017-18 school year averaged $25,290 for public in-state, $40,940 for public out-of-state and $50,900 for private non-profit.
The survey of 1,035 Americans currently saving for college found that:
• 57% have saved $0-10,000
• 22% have saved $10,001-20,000
• 9% have saved $20,001-30,000
• 5% have saved $30,001-40,000
• 3% have saved $40,001-50,000
• 4% have saved $50,001 or more
The survey was conducted using SurveyMonkey on Jan. 23 and 24, 2018 by Student Loan Hero, a company that offers student loan management and repayment tools.
"The price tag of tuition is rising and so too are parents' savings goals," Andrew Pentis, the Student Loan Hero survey's lead author, said in a statement. "That makes it all the more important for parents to choose the right vehicle to grow their college savings. If they wait for their teenager to navigate the college financial aid process, they're late to the game."
Other worrisome findings in the survey:
• 44% of parents feel guilty that they haven't saved more for their kids.
• 37% said they have considered using their retirement savings to pay for college costs.
• Only 26% of parents are saving in a 529 college savings plan and 24% are saving in cash.
• 16% plan to use credit cards to help pay for college.
Options for paying for college:
So, what is a parent to do when faced with helping to put several children through school? Here are some options:
Scholarships and grants
The first place to look when trying to pay for college are scholarships and grants since these are types of financial aid that you can apply for that you don't have to pay back.
They are the number one source of funding and cover about 35% of college costs for the typical family, according to Sallie Mae's 2017 college study.
Scholarships are generally merit-based and awarded for academic achievement.
Most grants are financial need-based and require you to fill out financial aid forms, like the Free Application for Federal Student Aid.
529 college savings plan
One of the best options to pay for your child's education is a 529 plan.
These are tax-advantaged education savings plan sponsored by states and educational institutions that allow you to stash money in an investment account that won't be taxed if it's used to pay for college expenses.
Many employers allow you to contribute to a 529 plan through automatic payroll deductions.
Since the cost of college can be prohibitively expensive, many students and families are forced to turn to student loans to help pay the costs.
Education is an investment but borrowing money should be a last resort and steps should be taken to minimize the debt burden you take on.
There are generally two options: government loans and private student loans. Start with government loans since they usually offer lower interest rates and have better protections.