Harvard or Bust. Or Both.

Families are spending thousands on private counselors, SAT prep and other extras to get their kid into a top college. Maybe it's time to just say no.

By Ellyn Spragins, Money Magazine

(Money Magazine) -- Plenty of parents fantasize about their child going to Harvard. But Paula and Gary Goldberg of Boca Raton, Fla. aspire instead to get their daughter Rachael, a high school junior, interested in schools other than Harvard.

Why, when the 17-year-old honors student is so clearly Ivy League material?

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First, of course, there's the price tag: Room, board and tuition at Harvard will cost about $44,000 this year. Then there's the strain on Rachael, who's pushing herself relentlessly to pursue academic and extracurricular activities she believes will give her a competitive edge.

"The admissions process is out of control," says Paula, who, despite her misgivings, pays for as many of those extras as she can. "It's very hard on these kids who are all trying to stand out."

It's also very hard on their family's budget. Consider:

  • For three summers, the Goldbergs paid about $3,000 to send Rachael to a three-week Duke University program for gifted students.
  • They've hired a private college counselor ($1,500 fee) to advise them about specific steps she can take to give her a leg up in the admissions process and strategies to get financial aid.
  • A PSAT review course ran another $850.
  • And Rachael plans to spend $4,500 of her bat mitzvah money to go to Thailand this summer to perform community service.
  • Total so far: more than $15,500.

The Goldbergs are definitely feeling the pinch. Over the past four years, their income (Gary, 42, is a real estate agent; Paula, 43, a nurse) has fluctuated dramatically, from $50,000 to $200,000 a year, along with changes in the property market. This year is one of the leaner ones.

They've got expenses for their younger kids (sons Jacob, 13, and Joshua, 9) to think about too. And they feel like they're seriously behind on saving for retirement, although Paula has contributed to her 401(k) for the past 10 years.

Still, Paula believes that Rachael, an academic superstar who is ranked second in her class, deserves whatever help they can give her: "When you have a kid who is above average, you want to open doors because she makes the most of the opportunities."

But is all this spending to help a child gain entry to the best possible college really worth the investment? And even if they do help your child get into a better school, where do you draw the line, ethically and financially?

One thing is certain: As competition has heated up for the limited slots at elite schools across the country and the admissions process has become more frenzied, the college prep business has grown into a $2-billion-a-year industry.

And the more spending that's devoted to "packaging" children for college, the more pressure parents feel to keep up. How do you stop the madness? Try these strategies.

Get some perspective

Just because your neighbors are paying $5,000 to send their daughter on an "ambassadorship" to China or $25,000 for a nationally acclaimed college coach doesn't mean that you have to go there too.

Take a deep breath and remember the college that your child attends is not likely to be the key factor in her future success. Research by Alan Krueger, a Princeton economics and public policy professor, found that students with equivalent credentials earned the same amount, whether they went to the most selective colleges or less selective ones.

His advice to students: "Recognize that your own motivation, ambition and talents will determine your success more than the college name on your diploma."

Start with a budget

So what is a reasonable amount to spend? First consider expenses that are practically unavoidable: Simply taking the SATs twice and applying to 10 colleges will run you several hundred bucks.

If you fly on three college scouting trips and drive to the rest, you might spend another $4,000 or more.

Once you've figured out the "must" costs, think about how much more you can really afford to spend, then focus those dollars on the enrichment activities that will have the greatest impact.

Topping the list: test prep courses, tutoring sessions and other kinds of academic support, as needed. Remember that grades and SAT scores still count the most in the admissions process.

Make your kid a standout

Next, sit down with your child and make a list of his strengths and shortcomings, interests and points of indifference. Many parents work on shoring up weak areas, but a better approach is to enhance existing strengths.

If your son's most enduring interest is skateboarding, don't try to remake him into a star player of a team sport; instead, harness that interest by, say, sending him to skateboarding camp or having him teach skateboarding to little kids.

Colleges these days put less emphasis on being a well-rounded individual than they do on truly excelling at one heartfelt passion.

Find cheaper paths to the same goal

You might shell out $50 to $100 an hour for a private tutor to help raise a B to an A in honors chemistry. Or you can see whether free help is available from a peer tutor through the National Honor Society.

Instead of paying thousands to send your kid to help the poor in Belize, let her serve closer to home at, say, the local children's hospital or soup kitchen. The point, after all, is for your child to do work that is personally meaningful to her, not for her to go on an exotic vacation with a bit of community service thrown in - and admissions officers know the deal.

Rachael Goldberg, for example, might be better off saving the $4,500 it will cost her to go to Thailand and focusing instead on the foundation that she's set up with her visually impaired brother Jacob. Called Together We See, it will raise money to help kids accompany a visually impaired sibling to camp.

Look at the big picture

Don't let the process of getting into college and paying for it derail your family's other financial goals. How many other children will need college funds? Are you helping to pay for graduate school too? Their weddings?

Above all, think about the Big Kahuna of expenses: funding your retirement. Is it on track? Failing to properly provide for your own needs would prove only one thing: that your kids aren't the only ones who need more education. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.