Memo to Parents: How NOT to Pay for College

Times like these are forcing parents and kids to make some heavy financial decisions when it comes to school. But there are two decisions that I wish I could stop: leveraging yourself like crazy to pay for school and cutting out going to school all together.

Whether it’s taking all the equity out of your home with a HELOC or second mortgage or putting all the student loans in your name, I want to hold the pen of every parent about to jeopardize their future and say, “Who’s going to take care of you?”

Not that parents shouldn’t help—I’ve been saving for our daughter’s education every month almost since she was born and my mother took to waiting tables to help put me through school (I did, too). But too many parents are risking their own retirements to get the next generation an education. Remember, if you take on the debt or drain your equity and savings, will your child help you pay your bills in retirement? Are they ready to take you in? I graduated with a nice five figures of student loans and then years later went to grad school to the tune of another five figures. Money well spent and I’ve had years to pay it down. (Note I didn’t say “off” – I’m still paying. Though at four percent, I’m in little rush.)


Don’t be afraid to saddle your kids with some loans. They have many years to pay them off and the return is great. However, you have to loan shop right. Go public, not private (see And when it comes to pulling Junior out completely ... just don’t. I’ve known many people who started their college life by doing two years at a community college for little cost (and no debt) and then transfer to a four-year school to grab that four-year degree. Same degree, half the cost. Get creative and never stop learning.