Help! My kid wants to go to college and I have no money

Wondering how you're going to help your student pay for college? You're not alone. Here is a place to start when asking the daunting question.

By Team XQ

College education can be one of life’s most significant expenses – more than the price of a house, depending where you live. Picking the right college, navigating financial aid, and negotiating loans are weighty decisions that could have lifelong repercussions. Parents can help their kids make smart choices about attaining a high-quality education without bankrupting the family. 

XQ recently asked readers on social media how student loans are affecting them personally, and we received more than 500 questions and comments on everything from compounding interest rates to loan-forgiveness programs.

So many readers responded, in fact, we’re dividing the answers into three posts. This post answers parents’ questions about paying for college and helping students make the right choice about their education. Other posts focus on the risks of student loans and options for avoiding them, and innovative proposals and legislation that could potentially give students more financial flexibility.   

What can parents do to help make college affordable?

Parents can start by encouraging their children to pick a college that’s a good fit academically, and won’t put the family in financial peril for decades to come. In short, if the family can’t afford a $70,000-per-year private school, then the student shouldn’t go to one, said Bruce McClary, spokesman for the National Foundation for Credit Counseling.

“Parents sometimes encourage their kids to follow their dreams, but sometimes the best guidance is a dose of reality,” he said. 

Likewise, parents can advise their children to carefully consider majors and careers when taking on loan debt. Majoring in poetry, for example, might not be the best choice if you’re planning to borrow $100,000. Students should research salaries and job prospects before committing to a major and a loan.

The most cost-effective way to earn a four-year college degree is to live at home, attend a community college, and then transfer to a nearby public college or university. If this is the best route for a student, parents can be supportive and flexible with living arrangements and household expectations. 

What are some options for paying for college?

Financial advisors strongly discourage parents from undertaking extreme financial hardship to pay for their children’s college education. In other words, don’t take out a home equity loan, don’t deplete your retirement account, and don’t leave yourself penniless so your kids can attend the college of their dreams.

“You’re putting your home on the line. If things don’t go well, the bank could take your house,” McClary said. “It’s a tough choice. Obviously, you want to be very careful about where you turn for funding.”

Instead, parents should chip in whatever they feel they can comfortably afford, and consider these other options:

  • 529 accounts, special savings accounts that allow parents to set aside money for a child’s future college education. Each state has different rules, but generally the contributions are tax-free. Like retirement accounts, the money in 529 accounts is invested and is likely to rise and fall.
  • Prepaid tuition plans, a kind of 529 account that’s offered in some states. These are savings accounts that allow parents to lock in tuition prices when a child is young, with certain tax advantages. 
  • Some employers and unions offer tuition assistance for family members. Check to see if yours does.

Obtain a Parent Plus loan from the U.S. Department of Education.

Read more about student loans from XQ

Student Loans Part 1.

Student Loans Part 2.