How Are You Going to Pay For It?
August 19, 2025
According to Sallie Mae's How America Pays For College, about 2/3 of families who borrowed to pay for college planned to do so. That means that 1/3 of borrowers did not intend to borrow, but something happened that changed that plan-- perhaps college cost more than they thought, or their aid package changed, or their ability to pay changed. Chances are good that a decent percentage of people without loans paid more for college than they expected, too. With Parent PLUS loan borrowers representing the fastest-growing segment of student loan borrowers and new restrictions on borrowing amounts and repayment plans, now is a great time to figure out what college is likely to cost and how you're going to pay for it. And yes, this is something you can do at any age but it's imperative for families with high school students!
Overspending on college tends to happen for a couple of reasons:
- College costs more than you expected
- You incur college expenses that you didn't expect
- You overestimate your ability to pay
Let's tackle these individually.
How much does college cost? There are a couple of ways to get a handle on what college actually costs.
Google costs for your in-state schools to get a baseline sense of cost-- which might include starting at a community college or graduating in less than four years because of college credits earned in high school. Look, too, for scholarships that are awarded automatically; most public colleges offer merit scholarships to all students with GPAs, and sometimes test scores, above certain thresholds. And if college is a few years out, check what typical tuition inflation rates have been so you have a better sense of what it will cost when your student enrolls.
If your student is interested in private colleges, do net price calculators for those schools to determine whether they'll fit your budget or whether you need to research alternatives that do. (Google "[school name] net price calculator" to find a college's net price calculator.)
All those tools are helpful, but they might not include all the costs a student and their family could potentially incur-- and that's where excess borrowing tends to come into the picture. What costs aren't included? Here are a few:
- Travel. Before you say, "My kid is staying in-state!" think about the trips you might make down there. Will you stay overnight when you drop them off? Will you go to parents' weekend? Will they go to an orientation session where they have to pay to stay on campus? And for students who go away, it's often not just round trip airfare for the student three times a year; are you budgeting for parent visits too?
- Lab fees or other course- or major-specific costs. These are especially common with lab sciences and engineering courses, but can appear in lots of places.
- Social activities. Sure, your student will have lots of opportunities to participate in on-campus activities at low or no cost, often with free pizza included. But what about more expensive things like Greek life or sports tickets? What if typical social activities on campus include eating out or weekend ski trips?
- A car. Will your student need one on campus? If so, include that in your budget-- insurance too.
- Study abroad. If this is an experience you'd like your student to have, find out what it costs. Most programs have surcharges; most colleges have scholarships available to offset some of those costs for eligible students. And don't forget to budget for airfare.
- Business clothes. Many majors require students to have professional attire.
- Course- or career-related travel. Many colleges offer career treks to visit major employers or pursue other pre-professional activities.
This is by no means a comprehensive list, but hopefully gives you a starting point for thinking about expenses beyond just cost of attendance.
Another good step in avoiding unexpected borrowing is to understand what your family can actually afford for college. What you can afford each year is the sum of:
- 1/4 of your college savings
- The amount you can spend out of pocket
- The amount your student can contribute
- The American Opportunity Tax Credit if you're eligible
- The Direct Student Loan, if you're OK with borrowing
- Any amounts others have committed to your college, whether that's an outside scholarship, a generous relative or something else.
As an advisor, my experience is that families tend to overestimate how much they can pay out of pocket for college each year. The problem is that if you think you have $200 more available every month than you actually do, and you have two kids going to college, that's a shortfall of almost $20,000. So take a good hard look at your budget-- maybe through a tracking app like Monarch Money or YNAB-- to get a realistic handle on what you can actually contribute. Think hard about what expenses will decline or go away when your student leaves home (club sports fees-- yes; groceries-- maybe not, especially if you have other kids at home).
And then don't forget to talk with your student about college costs and how you're able to support them.
Need more help?
Contact The Mather Group, your advisor, health insurance professional, or your state’s health insurance assistance program (SHIP) for additional information. SHIP is a national program that offers one-on-one Medicare counseling and assistance to individuals and their families.
According to Sallie Mae's How America Pays For College, about 2/3 of families who borrowed to pay for college planned to do so. That means that 1/3 of borrowers did not intend to borrow, but something happened that changed that plan-- perhaps college cost more than they thought, or their aid package changed, or their ability to pay changed. Chances are good that a decent percentage of people without loans paid more for college than they expected, too. With Parent PLUS loan borrowers representing the fastest-growing segment of student loan borrowers and new restrictions on borrowing amounts and repayment plans, now is a great time to figure out what college is likely to cost and how you're going to pay for it. And yes, this is something you can do at any age but it's imperative for families with high school students!
Overspending on college tends to happen for a couple of reasons:
- College costs more than you expected
- You incur college expenses that you didn't expect
- You overestimate your ability to pay
Let's tackle these individually.
How much does college cost? There are a couple of ways to get a handle on what college actually costs.
Google costs for your in-state schools to get a baseline sense of cost-- which might include starting at a community college or graduating in less than four years because of college credits earned in high school. Look, too, for scholarships that are awarded automatically; most public colleges offer merit scholarships to all students with GPAs, and sometimes test scores, above certain thresholds. And if college is a few years out, check what typical tuition inflation rates have been so you have a better sense of what it will cost when your student enrolls.
If your student is interested in private colleges, do net price calculators for those schools to determine whether they'll fit your budget or whether you need to research alternatives that do. (Google "[school name] net price calculator" to find a college's net price calculator.)
All those tools are helpful, but they might not include all the costs a student and their family could potentially incur-- and that's where excess borrowing tends to come into the picture. What costs aren't included? Here are a few:
- Travel. Before you say, "My kid is staying in-state!" think about the trips you might make down there. Will you stay overnight when you drop them off? Will you go to parents' weekend? Will they go to an orientation session where they have to pay to stay on campus? And for students who go away, it's often not just round trip airfare for the student three times a year; are you budgeting for parent visits too?
- Lab fees or other course- or major-specific costs. These are especially common with lab sciences and engineering courses, but can appear in lots of places.
- Social activities. Sure, your student will have lots of opportunities to participate in on-campus activities at low or no cost, often with free pizza included. But what about more expensive things like Greek life or sports tickets? What if typical social activities on campus include eating out or weekend ski trips?
- A car. Will your student need one on campus? If so, include that in your budget-- insurance too.
- Study abroad. If this is an experience you'd like your student to have, find out what it costs. Most programs have surcharges; most colleges have scholarships available to offset some of those costs for eligible students. And don't forget to budget for airfare.
- Business clothes. Many majors require students to have professional attire.
- Course- or career-related travel. Many colleges offer career treks to visit major employers or pursue other pre-professional activities.
This is by no means a comprehensive list, but hopefully gives you a starting point for thinking about expenses beyond just cost of attendance.
Another good step in avoiding unexpected borrowing is to understand what your family can actually afford for college. What you can afford each year is the sum of:
- 1/4 of your college savings
- The amount you can spend out of pocket
- The amount your student can contribute
- The American Opportunity Tax Credit if you're eligible
- The Direct Student Loan, if you're OK with borrowing
- Any amounts others have committed to your college, whether that's an outside scholarship, a generous relative or something else.
As an advisor, my experience is that families tend to overestimate how much they can pay out of pocket for college each year. The problem is that if you think you have $200 more available every month than you actually do, and you have two kids going to college, that's a shortfall of almost $20,000. So take a good hard look at your budget-- maybe through a tracking app like Monarch Money or YNAB-- to get a realistic handle on what you can actually contribute. Think hard about what expenses will decline or go away when your student leaves home (club sports fees-- yes; groceries-- maybe not, especially if you have other kids at home).
And then don't forget to talk with your student about college costs and how you're able to support them.
Need more help?
Contact The Mather Group, your advisor, health insurance professional, or your state’s health insurance assistance program (SHIP) for additional information. SHIP is a national program that offers one-on-one Medicare counseling and assistance to individuals and their families.
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