PAYING FOR COLLEGE: Myth #1

No matter how much you earn, your children's college education is a staggering expense on your horizon. The closer you get, the more daunting it looks. No wonder paying for college has been called the Matterhorn of personal finance. The misconceptions about paying for college are outsize, too. In fact, these myths, often promulgated by educational and financial institutions, make the task seem even more of a challenge than it is. You can scale this mountain -- and the firmer your grip on reality, the easier it will be.

Myth #1 The higher the price, the better the education. (Corollary: All good colleges are expensive.)

Price is a marketing tool. It is not a measure of quality. Colleges know that the more they cost, the more desirable they look. Most schools in the same general category -- private liberal arts colleges, state universities, and so on -- have official prices almost indistinguishable from one another. The tuition, fees, room, and board listed at Harvard are virtually identical to those listed at Skidmore, for example. No offense to Skidmore, but either the laws of supply and demand don't apply to education, or there is something missing in this picture.

In fact, something is missing. "Colleges know darn well that they can't fill their classrooms if everyone has to pay the sticker price," says Kalman Chany, president of Campus Consultants in New York City, and the author of Paying for College Without Going Broke (Princeton Review), a first-rate guide through the financial aid maze. So they routinely offer discounts to make themselves affordable to the students they need in order to remain attractive to students who can pay the full tuition. The upshot: A high percentage of students at expensive schools are shelling out considerably less than the official cost.

"College is big business, and an uneducated consumer is its best customer," says Chany.