NPR’s Morning Edition conducted a valuable interview on college debt with Ron Lieber of the New York Times (Debt and the Modern Parent of College Kids).  Mr. Lieber provided tough, but common sense,  solutions to the problems of financing education. Two parts of the discussion stand out.

First, he suggested that parents think of funding college in three 33% increments (the 20/20/20 plan if education were to cost $60K over four years) . First, parents could save one third of the costs of college over the period of 18 years through a manageable savings plan. Second, they could pay 1/3 of the costs out of pocket while their child was in school. He stated

“It might mean some sacrifices — some very careful budgeting, a lot of rice and beans on the table — but it’s doable.”

The final third of higher education costs could be subsidized through federal loans.  The 20/20/20 plan seems sensible because

[w]hen you start to divide it into chunks, it starts to seem at least within the realm of the possible.

Mr. Lieber’s second useful suggestion involved a bit of pragmatic toughlove for parents. He says that sometimes emotions have to be trumped by rationality when children get accepted to a top tier school.

[T]here’s this feeling of ‘Can I or should I say no to my child who wants to go to a $60,000-a-year school when they’ve already gotten admission to the flagship public university in our state that only costs $20,000?’ And then there’s the question of ‘Is it worth it? What am I getting for the extra $40,000 and would we be able to pay our own debt back if we were to support the dream of our child?’ These are all deeply emotional decisions, and you have to begin by acknowledging that it’s feelings that are on the table first before you look at the hard science of the numbers.

Please listen to the rest of the story for more information on what types of loans to take out and whether it is worth it to borrow against retirement.