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Avoid the mistake of using retirement savings to pay for your kid’s college
Help paying for college is a wonderful gift to help your child get launched in life. Even while you give your child the best chance of an affordable education and a successful start to their future career, you can stay the course toward your own financial goals. With careful planning, you can navigate the journey of helping your kid pay for college while also saving for your own retirement and paying off debt.
Freedom Debt Relief took a look at the big picture of what helping your kid pay for college might mean for your money—and how you can help your whole family have a brighter financial future.
Key Takeaways:
- According to Sallie Mae, parents pay an average of 49% of their kids’ college costs.
- Helping your child pay for college doesn’t have to hurt your retirement savings or credit score—or force you to take on credit card debt.
- It’s possible to help your kid pay for college while keeping up with your other financial goals.
Parents Pay 49% of College Costs—Is That Too Much?
You don’t have to cover 100% of your child’s college costs by yourself. According to the 2025 How America Pays for College survey from Sallie Mae, parents paid 49% of the average student’s college costs. That includes money paid out of parents’ income, savings, or parent loans. Grants and scholarships covered about 27% of college costs, and most of the remaining portion was paid for by the students themselves—with income or student loans.
If you can afford it, helping your child pay for college is great. But paying for college shouldn’t damage your financial stability. Some parents have to stretch a little too far to pay for their kids’ college costs and end up making big sacrifices in other areas. About 17% of Sallie Mae survey respondents said they took money out of their own retirement accounts to help pay their children’s college expenses.
It’s okay if you can’t afford to pay for all of your child’s college costs—many families can’t. Take the pressure off yourself and don’t overspend or overborrow to help your kid pay for college.
Your child doesn’t want you to get financially overstretched for their sake. You shouldn’t have to take on credit card debt or fall behind on other bills to help pay for your kid’s college education. It won’t help your children or you in the long run.
How to Reduce College Costs
Instead of overborrowing and getting financially stressed by college costs, parents do better by planning ahead and having some honest, open conversations with their child about paying for college.
Here are a few ideas for how to make college more affordable for you and your child.
Go public instead of private
You might save significant money with in-state tuition at a public university. According to the Education Data Initiative, the average cost of attendance (including tuition, room and board) for in-state tuition at a four-year public university is about $27,146 per year. That’s less than half the price of attending a four-year private (nonprofit) university: $58,628 per year.
Shave off some college time with free summer classes
Not everyone knows this, but it’s sometimes possible to take summer classes for free if you’re an undergraduate student and meet certain eligibility requirements, particularly regarding financial aid. The most common way is through the Year-Round Pell Grant (or similar state programs), which can provide additional funds for summer enrollment.
Summer classes could shorten the time your child spends attending college. Additionally, earning extra credits during the summer could free up some time during the academic year for a part-time job.
Look beyond private tuition sticker price
If your child has their heart set on a private school, that can be a fine choice. Be sure to apply for lots of financial aid and try to negotiate a discount based on your family’s financial need. Some private colleges offer generous financial aid packages in the form of grants and scholarships that make their actual costs closer to what you’d get at a public university. You may have better results with scholarships and merit aid if your child’s high school grades are high. Start the conversation early about how your child can do their part to bring costs down.
Search for grants and scholarships
Don’t assume that college scholarships are only for top students or star athletes. The survey How America Pays for College found that 34% of families who didn’t apply for scholarships simply didn’t know about them. And more than one-fourth didn’t apply because they didn’t think they’d win. One place to start is your child’s high school guidance counselor. They should be able to point you to local scholarship opportunities or help you identify websites where you can search.
Have your child earn college credits while still in high school
If your child is just getting started in high school, it’s the perfect time to start thinking about college. Have your child plan ahead to earn college credit by taking Advanced Placement (AP) classes and the College Board CLEP exams. Your child should take advantage of any options in your school district to earn college credit while still in high school. Every requirement your child satisfies during high school is a class you won’t have to pay for.
Start with community college
If your child is not 100% sure where they want to go to school or what major they’re interested in, they could start at a two-year community college. This is a great way to earn college credits at a lower cost. Another bonus: If the school is near your home, you can save on room and board costs by having your child live at home.
Think strategically about your child’s career path
This might be the most important part of helping your kid pay for college: Understand how college will connect your child to their future career. Does your child know what they want to be? Not every kid does, and that’s fine. And people’s plans and career paths can change over time. Ideally, before you borrow money or ask how to pay for college, you and your child need to have conversations about the larger plan for why they want to go to college.
Ask your child:
- Are you responsible enough to take on a college-level academic workload?
- Can you get work experience in your chosen career field while taking classes?
- Are you highly motivated to earn a college degree and get launched in a specific career?
- How much money can you realistically expect to earn after college? Use the U.S. Department of Education College Scorecard to look up and compare different colleges, as well as the typical income of students at each college within 10 years of starting classes there.
If your child isn’t ready for college, they might wait to enroll. There’s nothing wrong with taking a gap year to work, save money, travel, and experience life before starting a college degree. All these ideas can help your child minimize student loans, boost their chances of college success, and make sure that your investment in a college education is money well spent.
Helping Your Kid Pay for College Doesn’t Have to Hurt Your Finances
The bottom line for parents in today’s high-cost world of college tuition is simple: Yes, it’s great to help pay for college. If you can afford to save for college in advance, consider using a 529 plan to invest your college savings—you might even get a state income tax break. (Before you choose a 529, learn about the restrictions. You’ll lose the tax advantages if you use the money for something other than qualified education expenses.)
Don’t get overextended. If your kid’s college costs are driving you into credit card debt, reevaluate how much you’re paying.
Learning how to let go of some of the things we want in life, like a more prestigious school, is part of growing up. A great time to practice this kind of moderation is while your child still lives with you. Then when they’re grown and gone, they might be better equipped to make hard choices that help them avoid debt as independent adults.
Choose the right college for your family. Get savvy about comparing private college costs versus in-state public university costs. Apply for scholarships, even if you think your kid won’t qualify. You won’t know until you try.
And if your family is struggling with high balances on private student loans and other unpaid debts, you might want to consider seeking debt relief. Some private student loans can be negotiated down with debt settlement programs.
This story was produced by Freedom Debt Relief and reviewed and distributed by Stacker.
