If the title of this blog resonated with you, you’re not alone. In fact, only one-third of parents expect to fully fund their child’s college education, and 64 percent of parents expect their child to pay something.
A big reason for that could be the continuing rising cost of a college education, with the cost of tuition at public 4-year institutions increasing 36.7% from 2010 to 2023. Combine that with the increased cost of living and the fact that many of us are helping to support other family members…that’s a bill that not many people can take on.
If you’re feeling the weight of this decision, take a deep breath. You have options.
First, Let Go of the Guilt
It’s easy to feel guilty, especially when you see other parents talking about how they’ve saved for years or when your child dreams of an expensive school. But funding 100% of your child’s education is not a requirement for being a good parent. Your financial well-being matters too. If paying for college means sacrificing your retirement savings, it’s time to rethink the plan. Remember: Your kids can take loans for school—you can’t take loans for retirement.
Explore Other Funding Options
If you’re not covering the full cost, what are your alternatives?
Scholarships & Grants
There’s free money out there! Encourage your child to start researching early. There are scholarships for everything - from academic and athletic achievements to unique talents and community involvement. And guess what? An estimated $100 million in scholarship funds go unclaimed each year, so it’s definitely worth doing some extra research. Websites like Fastweb and Scholarships.com are great places to start.
529 Plans & Education Savings
If you’ve already started saving in a 529 plan, great! If not, it’s never too late to contribute. Even if you can’t fully fund tuition, any amount helps reduce future loan debt. Some states even offer tax benefits for contributions.
If a 529 plan doesn’t fit your situation, consider these alternatives:
- Coverdell Education Savings Accounts (ESAs)
- Similar to a 529, but with more flexibility in K-12 expenses.
- Income restrictions apply, and contributions are limited to $2,000 per year per child.
- Custodial Accounts (UTMA/UGMA)
- Held in the child’s name but controlled by a parent until they reach adulthood.
- Can be used for anything, not just education, but assets count more heavily against financial aid eligibility.
- Roth IRA for Education
- Contributions can be withdrawn tax- and penalty-free anytime.
- Earnings can be used for college without the usual 10% early withdrawal penalty.
- If the money isn’t needed for education, it can stay invested for retirement.
- Prepaid Tuition Plans
- Locks in today’s tuition rates at in-state public colleges.
- Less flexible than a 529 but protects against tuition inflation.
Work-Study & Part-Time Jobs
Working during college isn’t a bad thing - in fact, it can teach financial responsibility. Many universities offer work-study programs, and part-time jobs can help cover books, transportation, or other expenses.
Community College or In-State Schools
Not every great education comes with a sky-high price tag. Community colleges can be a smart (and cost-effective) way to knock out general education credits before transferring to a four-year school. In-state universities often offer lower tuition rates, and some have special scholarship programs for residents.
It's also important to consider your child’s education plan. Are they planning on getting a master’s or PhD? Are they going to medical school? If so, plant the seed that they’re in it for the long haul and that spending all of their money on an expensive undergrad education might not be the way to go.
Parent & Student Loans (and Tax-Efficient Gifting from Grandparents)
If loans are necessary, be strategic. Federal student loans typically offer lower interest rates and better repayment options. As a parent, think carefully before taking on Parent PLUS loans - make sure they fit within your long-term financial plan.
But before you or your child take on debt, consider whether grandparents might want to help with college costs in a tax-efficient way. Here are a few options:
- Annual Gifting – Grandparents can gift up to $19,000 per year (in 2025) per recipient without triggering gift taxes. If both grandparents contribute, they can gift $38,000 annually per grandchild. This can go directly toward tuition or student loan payments.
- Direct Tuition Payments – A huge tax advantage: Grandparents can pay tuition directly to the college, and it doesn’t count toward the annual gift tax exclusion. This means they can still gift additional funds up to the exclusion limit for other expenses.
- Contributions to a 529 Plan – Grandparents can contribute to a 529 college savings plan, and some states even offer tax deductions or credits for contributions. There’s also a unique superfunding option, where they can front-load up to five years’ worth of annual gifts ($90,000 per grandparent in 2024) without triggering gift tax.
Have an Honest Conversation with Your Kids
This might be the hardest part, but it’s important to have a candid discussion about what you can contribute and what they’ll need to cover. Set realistic expectations early on so they can make informed decisions about where to apply and what aid to pursue.
Your kids will appreciate you setting them up for success - but not at the expense of your own financial future. By making thoughtful choices now, you’re not just helping them afford college; you’re modeling smart financial decision-making for the long run.
At the end of the day, remember: College is just one piece of the bigger financial picture. You’re doing your best, and that’s enough.
Let’s keep the conversation going—what concerns do you have about funding college? I’d love to hear your thoughts.
Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.