Have you ever tried to use an online college-savings calculator?  Even for parents with the best of intentions, such tools can be a frustrating and demoralizing experience.

The problem is that most of these calculators are based on an unrealistic assumption:  That the typical family simply can modify their monthly budget and set aside enough money to cover the entire cost of an expensive four-year school.

To see why this assumption is problematic, let’s start by looking at how a college savings calculator works.  First, most Web calculators have you answer a few questions about your college savings time frame.  This includes your child’s age (let’s say 4) and how many years remain until he or she enters college (in this case, 14 years).

Next, you are asked to help project future college costs, by entering both the present-day college price tag ($30,367 per year for the average private college) as well as the school’s annual tuition rate increase (7 percent is a good guess).

Finally, the calculator asks you to enter the rate of return you expect to earn on your college savings (5 percent is conservative) as well as the frequency of your contributions (monthly contributions are ideal).

Once you have input this personal data, the real “fun” begins:  According to the calculator, you would need to save more than $347,000—around $1,400 per month for the next 14 years at a 5 percent rate of return—to afford the typical private school.

It’s at this point in the process that many parents start to get a little worried, to say the least.  If the calculator tells you that your family needs to save far more per month than it could ever afford, then why even bother?

And for a family with multiple kids—say, children who are ages 2, 4 and 6—the results are even more alarming.  Using the above data, this larger family would need to save more than $1 million—upwards of $4,300 per month—to cover their children’s college costs.

Anyone need some Pepto-Bismol?

Before you run off to the medicine cabinet, however, let’s take a closer look at why such college savings calculations can be misleading.  First, note that most families don’t actually pay the full college “sticker price”—the cost of a college advertised in the school’s glossy catalogs. 

According to a recent study by the College Board, the average tuition discount rate—the amount the sticker price is reduced due to need-based grants and institutional merit-based scholarships—averages more than 33 percent at private four-year colleges and nearly 15 percent at public ones.  The average cost of attending a private college, therefore, is actually one-third less expensive than advertised.

And there’s more hopeful news:  In both of the above examples, nearly one-third of the total amount saved actually resulted from interest compounding over time.  The message:  The earlier you start saving, the more that compound interest can work powerfully in your favor.

So I’d like to recommend a different approach:  Instead of relying on these clunky college savings calculators, follow the example of those who are experts on making college payments—namely, the student loan industry.  General industry consensus suggests that the typical borrower can afford to pay around 10 percent of gross monthly income toward student loans without feeling a heavy burden or having to make drastic lifestyle changes.

So instead of being forced to make such loan payments in the future, why not start today, by making equivalent 10 percent payments to your family’s college savings account?  Additionally, because such payments would be pegged to a percentage of your family’s gross income, your monthly contribution amount will adjust nicely as your income changes over time. 

If you need a little extra motivation, think of each college savings contribution you make as an “anti-loan”:  Instead of paying interest, you’ll collect it.  And that, my friends, is the best deal of all.