College planning: How parents can manage the cost of tuition

As the cost of tuition rises, so does the importance of tapping resources ranging from grandparents to financial aid.

Tags: Education, Goals, Planning, Savings
Published: August 23, 2018

As your student reaches high school, the urgency in determining college funding grows. Financially, a college degree can be very important to your son or daughter. On average, college graduates earn 56 percent more than high school graduates.1  Additionally, the unemployment rate for college graduates is about half of that for people who have only a high school diploma.2

The cost of education is rising yearly. Additionally, student loan debt has consistently increased each year. It’s reached more than $37,000 for the average Class of 2016 graduate.3 And, average in-state tuition and fees for 2017-18 at public four-year colleges increased 8 percent since 2012–13.4 How do you and your student begin to pay for college?

Initial college planning

Discuss as a family what your expectations about college planning and funding are. What savings do you already have? How much are you able to help your student pay for college? What is expected of your student financially?

Also, be realistic about your son or daughter’s job prospects. It’s important to talk with your student about this, even though it may seem like a hard conversation. Think about the need for additional schooling, advanced degrees and any other possible education costs.

When everyone in the family is on the same page, you can work together to save money without hurting your finances or your student’s goals.

Choosing a college path that makes sense

Explore a range of schools that match your student’s preferred major. The all-in price for college can differ significantly for two-year technical schools, public in-state schools, public out-of-state schools and private colleges.

Most schools have college cost estimates available online. Typically, they include average scholarship awards and statistics on the percentage of freshmen who graduate in four years. 

As college approaches, look at ways to reduce college costs. That can mean having your son or daughter live at home, if possible, or take summer courses at a less expensive college. Working with your student to graduate in 4 years or less will also help.

When saving for college isn’t enough: college loans

Student loans can help fill the gap, particularly if you’re getting a late start on saving for college. However, be cautious. Your debt must be manageable and shouldn’t interfere with the money you need for daily living expenses or retirement savings.

For your student, debt can create serious issues, especially in the early years of their career when their paychecks tend to be lower. Outside of very specific forgiveness programs offered by the government, student loan debt does not go away, even with a bankruptcy filing. Finding ways to avoid excessive student loan debt can be a big help towards improving your student’s long-term financial future.

As college approaches: Explore financial aid

About two-thirds of full-time undergraduate college students receive some sort of financial aid. Once you and your student have completed the Free Application for Federal Student Aid (FAFSA), colleges and universities where your student has been accepted will contact you with details. Typically, they will send you an award letter that outlines your student’s financial aid package.

There are three common types of financial aid:

  • Grants and scholarships, which do not have to be paid back, are often viewed as the most desirable form of aid.
  • Employment programs, such as work study, let students earn money and gain job experience while in school.
  • Loans, which are often offered by the college or university through government programs, will need to be paid back with interest as soon as the student leaves school. Private loans are also available, but they typically have higher interest rates.

Other solutions: Consider your extended family

Especially if you feel overwhelmed by the cost of your student’s education, it can make sense to have a discussion with grandparents and other family members. See if they might be able to contribute a gift toward your student’s college costs. Grandparents who pay tuition directly to a college create a living legacy, which is exempt from gift and estate taxes.

College planning and saving can be stressful, but thinking through your finances and your student’s aspirations can go a long way toward helping you achieve your goals.

For questions about specific college savings plans, continue reading about funding your student's education.


1. “The Class of 2016”, Economic Policy Institute, 2016.
2. Bureau of Labor Statistics, Economic News Release, February 2017.
3. “A Look at the Shocking Student Loan Debt Statistics for 2017”, Student Loan Hero, September 13, 2017.
4. The College Board, Annual Survey of Colleges, 2017.