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[quote=Anonymous][quote=Anonymous]Most college financial aid is in the form of loans, especially for middle-income families.  Once your income is high enough not to qualify for need-based grants, saving more means that your kids won't have to take out giant loans.[/quote]

This is very true. There's no single cut-off for all colleges. Harvard, which has one of the best endowments in the country, provides full grant aid for household incomes up to $65,000, and lesser grant aid for household incomes up to $150,000 (http://www.admissions.college.harvard.edu/financial_aid/index.html). Of course, your kid would have to get accepted at Harvard because, to repeat, Harvard  with its huge endowment can afford to be more generous with grant aid than most schools in the country. The rest of us will be looking at FA packages that consist of loans and work study, if we even qualify for FA.

Another thing to consider is that your kid can only borrow about $5,500 in federal student loans for freshmen year (this is the federal loan for non-FA recipients). This ceiling goes up by maybe $1,000 a year each of the next three years. So if your kid wants to attend an expensive private school, and you can't finance the tuition payment out of income (those 10-month installments), then you would be looking at borrowing the balance of tuition that will be upwards of $50,000 each year. You could do this through federal student loans to parents (PLUS) loans, or by getting a loan from your local bank. There is no cap to the PLUS loans, so you could borrow the whole thing. But do you really want to do this right before you retire?

So saving more now is a gift to your kid. It will give your kid more options in the future. And, given that some amount of borrowing is likely for most of us, you will at least hold the total borrowing down.[/quote]

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