A few years ago, a Money Talks news reader named Karen wrote. Her eldest son was recently admitted to a private college with an annual fee of $72,000. Sticker price, no assistance. She and her husband, both 53, had about $400,000 in retirement savings between them.
“Stacey, our daughter worked so hard for this. We told her we’d make it happen. We’re going to take out a Parent Plus loan to make up for the financial aid that doesn’t cover that. Are we crazy?”
I wrote back saying the same thing I’ve said to dozens of parents in similar places over the years. Yes, you are crazy. Don’t do this.
Here’s the line I’ve been using for 30 years and still believe: Your child has 40 years to earn money, refinance the loan or get help from an employer. You don’t do that. You are 53 years old. Every dollar you don’t save for retirement now is a dollar you’ll never get back.
It’s not about loving your child less. It’s about mathematics.
Here are six rules I would give to anyone in their 40s, 50s, or early 60s who is waiting for a tuition bill.
1. Run the retirement number first
Before you decide how much you can spend on college, you need to know what you have to deal with. Increase your retirement projections – Social Security projections, current savings, what you’re on track to have at retirement age, and what you need.
If you’re already behind on retirement, the answer to “should I borrow for college” is almost always no. Borrowing for college when your own savings are low is like handing your life jacket to a drowning person on the shore.
For more information, see “5 Steps to Making Your Money Last Until Retirement.” Do that math first.
2. Have an honest conversation with your child
This is the conversation that many parents avoid, and it is the most important one.
Make your child sit. Tell them exactly what you can contribute, what you can’t and why. If the dream school costs $80,000 a year and you can comfortably contribute $15,000, say so. If you can’t contribute anything, say that too.
Children respect honesty. They do not respect parents who quietly finish their retirement and then become a financial burden on them at the age of 75. Your child’s college choice should reflect what your family can afford, not what you wish you could afford.
3. Understand what Parent PLUS loans are
Parent PLUS loans are federal loans that parents take out for a child’s undergraduate education. They seem friendly. Especially they aren’t.
According to data from the U.S. Department of Education, the federal interest rate on PLUS loans is 9.08% for the 2025-26 academic year. world data. That’s more than most mortgages, most car loans and most home equity lines.
And there is no income-based forgiveness for parents. The child may have all the financial trouble in the world, but you’re in trouble.
According to , the average Parent PLUS borrowing for a bachelor’s degree comes to approximately $55,000. Education Data InitiativePrivate nonprofit programs average closer to $70,000.
60 to 70 parents owe billions of dollars on Parent PLUS loans they took out 10 or 20 years ago. Many people will take that debt to Social Security and deposit it with their checks. Don’t become that statistic.
4. Customize 529 plans, but don’t put more funds in them than necessary
If you’re saving in a 529 plan, that’s great. Tax-free growth and tax-free withdrawals for qualified education expenses are a powerful combination, and many states add a state tax deduction or credit on top.
However, two cautions. First, the money in a 529 account only works its tax magic if it is spent on qualified education expenses. If your child drops out of college, goes away altogether, or finishes early, the leftover funds may be subject to taxes and penalties unless you transfer them to a sibling, convert a portion to a Roth IRA (within current limits), or use one of the other escape hatches.
Second, don’t finance a 529 at the expense of your retirement. The order should be like this: Get any 401(k) employer match, fund retirement to the recommended level, build an emergency fund, then fund the 529. not vice versa.
Quit immediately – Most internet financial advice comes from people who weren’t alive during the last recession. I’ve been writing about money for over 40 years. Do you want concrete advice? Sign up for the free Money Talks newsletter. It takes 10 seconds. No sparkles. no spam.
5. Encourage your child to choose a smart school
The cost gap between schools is huge, and the outcome gap is much smaller than people expect. A child who graduates from a $30,000-a-year public school with no debt is dramatically better off than a child who graduates from a $75,000-a-year private school with $120,000 in debt.
Some smart moves to move forward:
- Two years at a community college, then transfer to a state university. The diploma reads the same.
- In-state public schools, where tuition is often one-third of out-of-state private.
- Aggressive merit aid hunting – Many private schools will offer steep discounts for strong students.
- AP and dual enrollment credits shorten the time it takes to graduate.
- A gap year of work or a co-op program that defrays the costs.
The name of the school on the diploma matters less than getting a diploma without debt. This is true of your child, and it is true of you too.
6. Allow your child to borrow within reasonable limits
Federal student loans for students (not Parent Plus) come with some real protections: income-driven repayment, deferment options, and partial forgiveness in some businesses. Parent PLUS loans do not have those guardrails.
A reasonable rule: A student should not borrow more than the salary he earns in his first year of work. A nursing student who wants to start with $65,000 can probably handle $50,000 in total student debt. An English major who wants a $40,000 first job shouldn’t borrow $90,000.
If your child wants a dream school and you can’t afford it, the question isn’t whether you’ll borrow for them or not. The question is whether they will borrow for themselves – and whether that level of debt is appropriate given their career path.
By the way, Karen had a tough conversation with her daughter, who chose a government school where she received significant merit aid. The total contribution from parents over four years was about $20,000. Karen and her husband continued to fully fund their retirement. The daughter graduated debt free. Mother’s retirement continues.
Sometimes the best thing you can do for your child is to refuse to ruin your future for theirs. They’ll thank you later, when they’re no longer helping you make ends meet.
