How to Help Kids Pay for College Without Going Into Debt



You’d love to save your kids from student loan debt, but how can you help them pay for college without sinking your own financial ship?

After all, the average in-state tuition at four-year public colleges reached $10,440 this year — and that doesn’t include room and board, books or personal expenses. So it’s understandable that you’re not sure how to help your kids pay for college.

But of the $1.5 trillion in student loan debt, people age 50 and older owe 20% of it — $289.5 billion. You could end up having to delay your retirement if you’re still paying off your kid’s tuition.

Strategizing how to pay for college doesn’t have to be a solo decision, though. Here’s what to discuss with your kids in order to help them pay for college.

How to Help Your Kids Pay for College Without Going Into Debt Yourself

Parenting isn’t always fun — but if you have a nearly college-age kid, you already knew that, right?

So breaking it to them that you won’t be able to completely pay for college may not be the most pleasant conversation you’ve had with them. But surprising them with that news as they’re moving into their dorm room isn’t a suggested alternative. 

By helping them understand what you can contribute, you can both plan accordingly and graduate with as little debt as possible — if any. 

1. Be a Realist

If you went used car shopping and your kid fell for a Tesla they really wanted to drive to their part-time job bussing tables, would you blow your budget and fork over the extra $40,000?

No.

The same goes for your child’s choice of school.

If your kid dreams of an Ivy League school but you’re just scraping by, it might be time for a reality check.

“Don’t go broke to put your kid into a name school,” said Jamie Dickenson, Certified Educational Planner. “Check your ego at the door and get serious about what’s a good fit for your student academically, socially, emotionally and financially.”

She related the story of a West Virginia family she counseled when their daughter wanted to go to Clemson University in South Carolina to major in elementary education.

“This was a family that made $80,000 a year,” Dickenson said. “Out-of-state tuition at Clemson is nearly $35,000 year — or $140,000 total bill — for a job that starts at $36,000.”

Don’t go broke to put your kid into a name school.

By starting the college budget discussion early in the search process — like, before junior year of high school — you can help your children develop realistic expectations about school and expenses. 

Then help them choose where they can get the best education for the least amount of money. 

You might even convince them to consider saving money by starting out closer to home — a community college transfer could save $12,000 or more on a bachelor’s degree.

2. Go on the College Tour With Your Kids

Yes, you may have to walk six steps behind them (because, ugh, it’s so embarrassing being seen with your parents), but when your kids are ready to tour colleges, don’t let them go alone.

Why? Consider the thought and research you put into major purchases, like a house or car. Your kid could potentially spend that much money on college.

Having a second pair of eyes and ears during the college tour can let them focus on what’s important to them without forgetting to ask the practical questions. 

Before you go on a tour, set up an appointment with the financial aid office for the same day so you can connect with a real person and have a contact for follow-ups. Bring along these financial aid questions to the appointment to guide you when asking about scholarships, student loans and living expenses. 

When your child receives their acceptance letters and financial aid award packages, they can reach out to that same financial aid officer to ask questions about their specific financial aid award package to help them compare the offers.

3. Avoid Paying Tuition by Investing Early 

Instead of taking out loans to pay for your kids’ college, why not invest in their education earlier (when it’s a little cheaper)?

Shelling out a few hundred dollars for ACT or SAT preparation courses now could pay off when your kids begin applying for financial assistance.

“Look at [your] kid’s grades and test scores because that’s where the majority of money for college comes from these days — merit-based aid,” Dickenson said.

If you’re concerned that your kid won’t qualify, call the college financial aid officer and ask what the cutoff is for merit-based scholarships, advised Amy Irvine, a Certified Financial Planner and founder of Rooted Planning Group.

“Maybe you’re only three points off from something, and you could re-sit for the SATs,” she said.

Another option: Advanced Placement classes. By encouraging your kids to sign up for AP classes in high school, they can take the exam for that subject and potentially receive college credit for it. 

Although the AP exam costs $94, it’s a deal compared to the $301.23 sticker price for one credit hour at a four-year institution (including tuition and applicable fees), according to a Penny Hoarder analysis of National Center for Education statistics.  

And the fewer courses they need to take, the smaller their tuition bill.

4. Understand How Your Decisions Affect Their Financial Aid

When your child fills out the FAFSA, they must include information from your tax statements from the previous year — for the 2020-21 FAFSA, you’d use your 2018 tax returns. 

So it’s important for you to consider financial-altering decisions that could decide whether they receive financial aid.

That can mean delaying a big life change — Dickenson said she advised a client to delay marrying her wealthy fiance who didn’t want to foot the bill for his stepson’s college — or a one-time income boost — Dickenson suggested you might ask your employer to defer a year-end bonus until the following year.

You should also consider how the money you already have is counted toward the Expected Family Contribution (EFC). 

The majority of the EFC is based on income, but any assets the child owns are counted against them at a higher percentage than the parents’ assets when determining financial aid awards. That means your child is more likely to qualify for financial aid if you keep the money in your name rather than building up a savings account in your child’s name. 

Helping your kids strategize ways to cover college — without either of you going into debt — could be your biggest parenting win of all.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.

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