3 Ways to Help Your Child Pay for College If You Started Saving Late

In a recent article, we talked about ways to find money to save for college, specifically through lifestyle changes such as living in a smaller house and driving a used car for 10 years or more.  However, life happens.  Maybe you didn’t have any extra money to save, or you thought you wanted your children to pay for college entirely themselves, but now that you have seen the sticker price, you are not so sure.

If you are coming to the college savings game late, there are still ways you can help your child pay for college.

1.  Teach your children about college expenses before their junior year.  Kids begin looking at colleges their junior year of high school.  Before that happens, sit down with your child and speak honestly about what you are able to afford.  Make sure your child understands the repercussions of paying back excessive student loans.  With this knowledge, perhaps your child will decide to look at a cheaper college option such as a local community college or a local university or a state university to save on costs.

2.  Let your child take out student loans and pay them off if you are able.  Regardless of what school your child attends, she may have to still take out student loans.  Go ahead and let her.  Then, when she graduates, if you are financially able, you can help your child pay off the loans.  Maybe you will pay the first 5 years of the loan while your child obtains a secure job and a good salary.  Maybe you will pay off one loan entirely and leave another for your child.  The choice is yours, but this option helps you wait a few more years to determine if you are financially able to help your child.

3.  Raid your Roth IRA.  If you choose this option, proceed with extreme caution as you don’t want to help your child at the expense of your own retirement.  However, Roth IRA rules allow you to pull out the principal (the money you have deposited over the years, but not the interest you have earned) to pay for your child’s qualifying educational expenses without paying any penalties for withdrawing the money.

If you use this option, there are a few things to keep in mind–you can only put $5,000 a year (to be bumped up to $5,500 in 2013) in your Roth every year if you are under 50.  You can’t add the money back in after you withdraw it, so you are minimizing the amount of tax free money you will have available in retirement.

Also, check with the college financial aid office to see how paying for your child’s education for one year will impact next year’s financial aid award.  In some cases, you will be expected to pay more in subsequent years.

College tuition is not getting any cheaper, and as parents, we should do what we can to minimize the next generation’s college loan burden.  That may mean helping our kids make smarter decisions about which colleges to attend and how much they can reasonably pay back in student loans as well as helping them pay for college if we are able.

If you started late saving for your child’s college education, what strategies did you use to help them?

The following two tabs change content below.
Melissa works from home as a freelance writer, virtual assistant and blogger. Her blog, Mom's Plans, reflects her desire to plan life one step at a time while caring for and homeschooling her children (ages 9, 5 and 3) as well as paying down debt and saving for a house.


  1. says

    My wife and I are going to face a similar problem in the coming years. Our oldest is heading out to college sooner than we would like and we aren’t done paying off our own student loans. Our children are still in grade school but we have already started to explain how much college costs. We have also taught them that there are opportunities for them to go to college at little cost or no cost if they have exceptional grades (like my wife did) or excel in athletics (like me). They understand that mom and dad are not going to pay for their tuition they will have to figure that out on their own. We hope we can help out with living expenses when the time comes and, in our dreams, give them a nice graduation gift (like paying off any outstanding loans they might have). One thought I had was that if you plan on letting your child take out loans with the idea that you can pay them off later, I would suggest they accept only the subsidized loans if possible.

    • says

      Many people will be faced with the difficult dilemma of helping their kids pay for college or saving for their own retirement. Helping pay off their loans is a nice thing to do, but having them in your name could be risky.

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge