(NBC) - Millions of college-bound high school seniors are receiving college acceptance letters and financial aid award packages this month. Now it's decision time.
But in talking to the children about choosing the right school, too few families have prepared for this moment by having "the talk" about how they will pay for college.
Many students may have already decided where they want to go to college this fall, meanwhile they're parents are still figuring out how they'll pay for it.
Many parents seem to be overwhelmed by the cost of college, which has ballooned since they were undergrads. A Sallie Mae study found families spent an average of $21,178 on college costs last year.
Most families pay for nearly a third of college costs with "free money," scholarships and grants, according a Sallie Mae survey. 27 percent of the total college tab is covered by student and parent's loans, and the same percentage comes from parents' income and savings,
A plain-vanilla savings account is often their top choice, but 529 plans offer more tax savings.
With 529 plans, funds can be withdrawn "tax-free" to pay for "qualified education expenses," including tuition and fees, room and board, books, supplies and equipment. But how much should parents withdraw each year?
Many families may also need to to turn to loans to pay at least a portion of the college bill. If your child qualifies for the Federal Stafford Loan, Hurley says, that's a "good deal," with zero percent interest while in college and a very low interest rate after graduation.