Should I Pay for My Child’s Education or Encourage Loans?

Q: When it comes to college, should I be trying to pay for it all myself — or is it okay to have my kid take out some loans? I don’t want to saddle them with debt, but I also need to protect my own future.

A: It’s one of the most emotionally charged and financially complicated questions parents face — and it’s incredibly common. You want to support your child’s dreams and give them a leg up in life, but you also need to protect your own future. So, should you foot the bill for college, or let loans carry some of the load?

Here’s the short answer: Put your retirement first. Then, do what you can to help your child make college affordable — with shared responsibility, smart planning, and yes, sometimes student loans. That’s because there are loans for college — there are no loans for retirement.

You may have heard that saying before, but it’s a critical financial reality. If you shortchange your savings (or deplete them) in order to put your child’s education first, you could jeopardize your ability to support yourself later — and possibly even become a financial burden to your child in the future.

But what if I still want to help my child pay for school?

Helping doesn’t have to mean covering every penny. In fact, aiming to save for one-third of your child’s total college costs is an ideal goal. The remaining two-thirds can come from a mix of financial aid, scholarships, income earned while they’re in school, and loans — which they can repay gradually over their career.

Let’s break that down: The average total cost of a four-year college education in the U.S. is currently around $153,000. Saving $51,000 ahead of time (one-third) is a solid target recommended by student financial aid expert Mark Kantrowitz. That still leaves $102,000, but this can realistically be covered with a mix of:

• Scholarships and grants
• Student income from part-time work or work-study
• Contributions from your current income
• Reasonable student loans 

Notice the emphasis on “reasonable.” What does that mean? According to Kantrowitz, your child should borrow no more than they expect to earn their first year out of school. So if they’re headed for a career with a starting salary of $50,000, that’s the maximum total loan amount to aim for. This keeps debt manageable and avoids years of financial struggle post-graduation.

What about parent loans? Should I take those on?

In most cases, no. While federal Parent PLUS loans and private loans are available, borrowing for your child’s education should only be a last resort — and only if you can comfortably afford the payments without cutting into your retirement savings.

So how can I support my child without overextending myself?

Here’s a roadmap:

• Open a 529 plan: These tax-advantaged education savings accounts grow tax-free and can be used for qualified expenses like tuition, room and board, books, and more. Even small monthly contributions over time can add up significantly. And bonus: You can invite family and friends to contribute for birthdays or holidays.
• Talk early and often: As your child gets older, have honest conversations about what college you can afford to help with, and what the shared expectations will be. Encourage them to apply for scholarships and grants — and treat those applications like their job.
• Explore all options: Encourage your child to apply to a broad range of schools, including those likely to offer merit aid. Also, attending community college for the first two years to knock our core classes is another cost-effective route. Your child can also explore work-study programs, and may be able to consider part-time work, depending on their course load. Remind them that their value is not defined by the price tag of the institution they attend.

The Bottom Line

Paying for college is a shared journey — not a solo mission. You’re not doing your child a disservice by expecting them to invest in their own future. On the contrary, you’re modeling smart money decisions and showing them how to balance aspirations with financial responsibility. That’s a lesson worth every penny!