Image: Graduation cap © Stephen Wisbauer, Getty Images

Like virtually everything else about parenting, the topic of who should pay for college tends to bring out extremes of opinion.

At one end of the spectrum are the parents who declare their jobs are done when their progeny turn 18. "I've fed them, clothed them and kept a roof over their head," these parents reason. "If they want to go to college, they can pay for it."

At the other end are the parents willing to bankrupt themselves so Suzy can attend her dream college. They're the ones who ask me if they should take out a massive home equity loan, or withdraw the money from their retirement accounts, to pay the oversize bills.

Let me make the modest proposal that the best approach for many families is somewhere in between these opposites. You shouldn't sign your kid up for an education you can't afford. But even if you can't contribute a dime toward college -- many families can't -- you also shouldn't simply wipe your hands of the whole matter. Your kids need you to be an active participant and adviser if you want them to avoid a debt disaster.

Whenever I hear from young people with mind-blowing amounts of debt, like a woman who racked up a quarter-million dollars of loans for a bachelor's degree or a med student on his way to half a million dollars in debt, they're often kids from modest homes whose parents don't have college degrees themselves. The parents didn't or couldn't provide guidance on how much debt is reasonable, and their children likely will be paying for that for the rest of their lives.

It may be just as bad to let your darling think any education, no matter how expensive, is within her grasp just because you're footing all or part of the bill. If you won't have the full cost saved up before she starts -- elite private colleges run $60,000 a year or so now, and that cost will continue to soar -- then you need to start managing her expectations long before she starts applying to schools.

That means researching your options. You can start by checking out the net cost calculators of the schools you're considering. Not all net cost calculators are accurate, warned Lynn O'Shaughnessy, the author of the upcoming second edition of "The College Solution: A Guide for Everyone Looking for the Right School at the Right Price."

Liz Weston

Liz Weston

Calculators that ask only seven or eight questions won't be as predictive as those that ask 30 or more, she said. But you should be able to get a ballpark idea of how much the schools will cost your family.

You also can fill out the detailed expected family contribution calculator at FinAid. Using this calculator usually takes some time, but it can give you an idea of how much public and private schools will expect you to pay out of pocket.

You can match those expected costs against the amount you have saved for school and how much you think you can contribute from your income to see if a school might be affordable. If there's a yawning gap between your resources and your expected contribution, it might not be.

To pay for school, parents shouldn't:

  • Cut back on their retirement savings.
  • Borrow from retirement funds.
  • Take on loans that would require them to delay retirement.

Borrowing against home equity is risky, too, because that's a financial cushion you may need in an emergency or to fund your retirement.

What's more, borrowing vast amounts of money or postponing retirement to pay for college isn't necessary, O'Shaughnessy said. Your kid has too many other, affordable options to get an education for you to bankrupt yourself.

"Don't sacrifice and throw your family into financial turmoil," said O'Shaughnessy, who offers a workbook for parents called "Shrinking the Cost of College" at her website, The College Solution. "People get too hung up on the grand name. Smart kids will do well, wherever they go."

For those of you who think your kid can just skip college -- your numbers are dwindling, but I know you're still out there -- let me give you a little context. Yes, these days there are college graduates without jobs. But people without college degrees have twice the unemployment rate as those who have them, and the picture isn't going to get brighter down the road as good union and manufacturing jobs continue to disappear. Some post-secondary education will be all but essential for those who want at least a middle-class standard of life. For more, you can read "Should your kid skip college?"

What if you can't, or don't want to, help your kid with college? People certainly pay for their own college educations these days, just as they have in the past. It's just tougher now. Consider:

Tuition inflation + stagnant wages = an uphill climb. Working your way through school is harder than it was a generation or two ago. College costs have risen far faster than incomes. The college inflation rate has been roughly twice that of general inflation. Meanwhile, real incomes for many Americans have stagnated; incomes for those without college degrees have fallen. So someone trying to work her way through school is likely to face higher costs and worse-paying jobs than in the past.

Loans have replaced grants. A couple of decades ago, financial aid packages consisted largely of grants, which didn't have to be repaid. Now they consist mostly of loans, which do. Although free money is still available, particularly to the neediest students, many students discover their colleges expect them to borrow -- and perhaps to borrow a lot.

"Independence" isn't likely. Previous generations of students could declare themselves "independent" and often qualify for more financial aid, with relative ease. As long as their parents didn't claim them as a dependent on their tax returns for two years, many schools would base financial aid packages on the student's income and assets, rather than the parents'. In 1992, however, the rules changed. Financial aid administrators can make exceptions, said Mark Kantrowitz of FinAid, but typically do so only in extreme cases, such as abandonment by parents or a "documented adversarial relationship," with court orders or other paperwork documenting abuse. Now to be independent, students must be one of the following: 24 or older, an orphan (both parents deceased) or a ward of a court, a U.S. military veteran, a graduate or professional student, married, or someone with a legal dependent other than a spouse.

Financial aid administrators can make exceptions, said Mark Kantrowitz of, but typically do so only in extreme cases, such as abandonment by parents or a "documented adversarial relationship," with court orders or other paperwork documenting abuse.

If a student isn't independent, his parents' income and assets help determine how much aid he gets -- regardless of whether the parents are willing or able to contribute.

The dropout rate is high. The other problem with cutting your kids loose is they're more likely to fail. Public Agenda surveyed college dropouts as well as college graduates and found the dropouts were far more likely to be "going it alone" financially. Nearly 60% of students in the study who left college without graduating said they had to pay for college costs themselves. Meanwhile, more than 60% of those who had completed their degrees said they had at least some help from parents or other relatives to cover the costs of school.

That doesn't mean kids can't successfully work their way through college. Writer Zac Bissonnette did, and his book "Debt Free U" would be a good primer. Your kids also could get help paying for their educations by joining the Air Force, Army or Navy Reserve Officers' Training Corps in college or by serving in the military and then taking advantage of the GI Bill.

Whether or not you contribute financially to your child's education, you should:

  • Familiarize yourself with the financial aid process so you understand what help is available and can assist your child with the paperwork.
  • Use tools such as the net price calculators to compare likely costs.
  • Talk to your child about the importance of limiting debt. A good guideline is to limit total borrowing to no more than what the student expects to earn the first year out of college. If at all possible, the student should limit her borrowing to federal student loans only. Federal student loans offer fixed rates, flexible repayment plans, consumer protections and the possibility of forgiveness; private student loans do not. But the maximum you can borrow as an undergraduate is $33,000.

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  • Encourage your kid to finish. A college education is almost always economically useless if the student doesn't earn a degree. Drive that point home. The Public Agenda study found most parents told their kids that a college education was important. But those who finished college were more likely to say their parents strongly stressed the point, while those who dropped out said their parents were less emphatic.

Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.