The days when you could write a check for college and know that four years later your little darling would have a cool graduation party, find a decent-paying job, and live on their own have gone the way of the eight-track tape. For one thing, only 59% of full-time undergraduate students at “four-year” colleges graduate within six years. Plus, even if your offspring do accomplish this feat, every extra semester will cost your family a pretty penny.

To illustrate, we compared projected costs at the University of Florida and Northwestern University. If your favorite teenager enrolls at the University of Florida in 2016 and graduates in four years, in-state tuition and costs will total approximately $83,915, assuming 5% annual inflation of higher-education costs (which tend to outpace overall inflation). The five-year plan will cost an estimated $107,580; the six-year plan, $132,428. At Northwestern, those same estimates are $296,307, $379,869, and $467,609, respectively. Ouch.

With stakes this high, getting it right the first time is imperative. I often hear from parents and grandparents who are understandably frustrated by these outrageous price tags. But time and again they share the same three funding mistakes.

Mistake #1: College plan contributions do not appreciate automatically. If you’re diligently contributing to a 529 college savings plan and/or a Coverdell Education Savings Account and enjoying the tax incentives, do not assume the custodian is investing your family money effectively.

The custodian has likely given you investment options labeled “conservative,” “balanced,” and “growth,” or something similar, but with few additional details. No one wants to lose money earmarked for college, so well-intentioned parents often pick the most conservative-looking option without investigating further. However, if you want to have the money you contribute work for you, you’ll have to read past fund names and labels.

The “set-it-and-forget-it” approach is a mistake. Saving and investing college money is akin to building a retirement nest egg—but on a smaller scale over a shorter timeframe. When your children are young you can take on more risk. As they move into middle school, a conservative shift is in order. And by the time high school rolls around, protecting the principle is paramount.

Keep in mind that when you open up these sorts of accounts, your investment choices won’t change unless you change them—which you can now do twice a year for 529 college savings plans.

When in doubt, pick the products with the lowest fees. Over a 10- to 18-year period high fees can eat up gains and make a big difference in how much is available for your children.

Mistake #2: Underestimating costs. You can use this tool to calculate the cost of attending most US colleges, but don’t stop there. Anticipate increases of at least 5% per year (which you can calculate here).

Are you ready for this? Only half of public four-year colleges report on-time graduation rates for 50% or more of their full-time students. That is by design, at least in part.

Colleges are a business designed to extract as much revenue as possible from students and their families. If you don’t have the money, no problem! They will help you rack up student loans. The university system knows how to keep the revenue flowing in.

This is where parents and grandparents need to step in. What better “guidance counselor” could your child possibly have? If you don’t do that, there is a high probability your offspring will be on the six-year plan before they even finish their freshman year.

If the school suggests your teenager take the minimum number of full-time credits as an incoming freshman, this a red flag. Yes, less schoolwork means less school stress for the kid. But what about the money stress when she owes $50,000 in school loans, or when you’ve taken out a second mortgage? Don’t take the bait. Help your child build a four-year graduation plan before she moves into her first dorm.

Mistake #3: Paying for more after graduation. Graduation pride ain’t what it used to be. For previous generations, graduation marked the transition to adulthood. Yes, watching the apple of your eye walk down the aisle and receive a diploma was great, but more important, it meant your son or daughter could (and would) be financially independent. Moving back in with mom and dad, continuing to receive financial support, and paying off student loan debt with few good job prospects in sight was not part of the program.

What good is a college degree if it doesn’t push your offspring into independent adulthood?

Raising a self-sufficient 22-year-old starts when your child is in grade school. Help them understand the world outside the nest. What is the right major for them in school? What do you expect of them after graduation? What skills will be in demand when they graduate?

Discussing these questions with your children early and often can stave off disaster. Leaving an 18-year-old to work it out with a guidance counselor is not cutting it for most students. And by the time the money is spent, it’s too late. You may end up sacrificing some of your own retirement—though I don’t recommend it—to fix an avoidable problem.

On the Lighter Side

Jo and I are temporarily homeless. All of our belongings are in storage, and we’ve made our way to Arizona where we are plan to live. We told friends we were traveling out West in a covered wagon (a Toyota) to start a new life.

The speed limit on I-10 in western Texas is 80. A little over a century ago, families doing the same thing were lucky to go 80 miles in a week. Plus, we had the luxury of stopping at Love’s Travel Stops or McDonalds, which have the most consistently clean restrooms across the country. That’s progress.

And finally…

Points to ponder, courtesy of my good friend Dick B.:

  • Good health is merely the slowest possible rate at which one can die.
  • We could all take a lesson from the weather. It pays no attention to criticism.
  • In the ‘60s, people took drugs to make the world weird. Now the world is weird, and people take antidepressants to make it normal.

Until next week…