For Parents

Parent’s Guide to Paying for College

Unsure how you’re going to help your child pay for college? Here are all your options.


It feels like just yesterday you were dropping your little one off at Kindergarten. You’ve come a long way together, and now, your child is preparing for their college years. You’re excited for them. You’re sad to see them go. And, quite frankly, you’re worried about the cost of college tuition.

Though the cost of attending college goes up every year, it’s possible to make this expense more affordable through some basic planning. As you approach crunch time, the following guide can help answer your questions, explore the options available to pay for higher education, and make the best choices for your family.

Should Parents Pay for College?

This is one of the most common questions parents of college-bound students ask themselves. With the rising costs of college tuition, many parents want to contribute as a way to help their children avoid student debt. 

As parents, we often put our children first and ourselves second. But when it comes to paying for your child’s college, it’s important to step back and consider the full picture. Rather than wondering if you should pay the tuition bill, the real question is: Can I afford to pay for my child’s college education?

If you’re not sure, the following follow-up questions can help you decide if your family finances can cover the cost of a college education:

  • Can I budget for tuition payments? It’s important to analyze your cash flow and monthly expenses to determine if you can cover recurring tuition payments without sacrificing your lifestyle, emergency fund, or other financial goals.
  • How does this decision affect my retirement? Remember that saving for your financial future helps prevent money burdens down the road.
  • Do I still have loans to pay? If your financial obligations include high-interest debt, it could be in your best interest to pay them off as soon as possible to avoid accruing interest.
  • Are there more affordable alternatives? Often, students have a list of colleges where they’d like to attend. Keeping the tuition cost in mind can help you choose one school over another.

What Percentage of U.S. Parents Pay for Their Kids’ College?

According to Sallie Mae’s 2022 report on How America Pays for College, families pay for the largest portion of college costs out of pocket. But this doesn’t mean that parents are covering most of the bill.

With an average annual college spending of $25,313, here is a breakdown of funding sources for the 2021-2022 school year:

  • 2% of costs are covered by relatives and friends
  • 18% comes from borrowed funds
  • 26% is financed by scholarships and grants
  • 54% is paid for with family income and savings

Options for Paying for College

There isn’t one right or wrong way to finance your child’s higher education. As we’ve already seen, most families choose a combination of funding sources to make the college dream happen for their kids. 

Below are a few of the options to consider when deciding which is the right approach for you:

Paying Upfront

Some families are fortunate enough to be able to pay for their children’s college education upfront. While most parents cannot afford to pay the full tuition at once, there may be certain costs you can cover with your savings. Remember that the more you pay out of pocket, the less debt your child will have after graduation.

Financial Aid

Financial aid is a combination of grants, scholarships, and work-study that your child can receive to help pay for their college education. This need-based assistance depends on your income levels and ability to pay out of pocket, as determined by your Free Application for Federal Student Aid (FAFSA). Filling out the FAFSA form early lets you know how much aid your child can receive and how much needs to come from other sources.


From academic to athletic scholarships, thousands of funding opportunities are available to help pay for your child’s college education. Experts suggest that you and your child start by researching the scholarships that match your student’s qualifications and interests. Once you’ve identified them, create a schedule of deadlines and apply to as many scholarships as possible. This will increase your child’s chances of receiving free money to help cover their college costs.

Federal Student Loans

Subsidized and unsubsidized federal student loans are funds the government directly lends to students. With a current interest rate of 4.99% for loans disbursed between July 2022 and July 2023, this is often a more affordable option for families to finance their kids’ college education. However, please note that these loans are made directly to the student instead of the parent.

Parent PLUS Loans

Parent PLUS loans are federal student loans you can take out to help pay for your child’s college education. The current fixed interest rate for Parent PLUS loans disbursed between July 2022 and July 2023 is 7.54%. Eligibility for these loans depends on your financial history. However, it’s also important to keep your budget in mind when deciding if this is an affordable solution.

Private Loans

Private student loans can be a good way to supplement other funding sources. In some cases, parents take these loans out themselves. In other situations, families may take out the loan in the student’s name with the parent as the co-signer.

Depending on the borrower’s credit history, private loans may offer lower interest rates than PLUS loans. However, it’s important to remember that private loans are not forgivable or eligible for federal subsidies. Again, the key to deciding if this is a viable option for you is to determine if your family can afford this additional debt.

How to Choose the Right Strategy for Your Family

Now that you’ve explored some options to pay for college, it’s time to uncover the best path for your family. Remember that everyone’s financial situation is different, so what worked for your neighbor may not be the right choice for you.

The following factors are the most important to consider when figuring out how much you can contribute to your child’s college costs:

  • If you’ve been setting money aside for your child’s college education, download your most recent statement to know exactly how much you have saved
  • Take a look at your family budget to determine how much college tuition you can afford to pay every month
  • Fill out the FAFSA as soon as possible to see how much financial aid your child is eligible to receive
  • Submit as many scholarship applications as possible
  • Talk to your child about the possibility of finding a job while in school to help cover their expenses

With this information, you can analyze the combination of savings, out-of-pocket payments, financial aid, and scholarships that are just right for your family’s financial situation. 

After your child’s first semester in college, you’ll have a better sense of the true cost and how that reflects in your monthly budget. Remember to review and adjust your strategy as needed to ensure that college is still affordable and works with your other financial goals. 

How to Set Yourself Up for Success Early

The following tips can help you set up your family finances to support your child’s college education. The earlier you start preparing, the easier it will be to afford this important milestone. However

  • Start with a 529 college savings plan
  • Talk to your financial advisor about alternatives such as a Roth IRA or Zero-Coupon Muni Bonds
  • Take advantage of the tax benefits of college savings accounts
  • Make college savings part of your financial plan
  • Put money away consistently

College, Here We Go!

With a game plan in place, it’s easier to take the next step in your parenting journey and decide how to finance your child’s college education. By following these guidelines, you and your family can work together to make smart decisions about paying for college and reduce the impact that education costs will have on your household over time.

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