How Do Parents Pay for College?

MoneyIllustration by Barry Falls

Now that my son is a college freshman, I see everything in terms of tuition payments. I know that our monthly mortgage is less than our monthly college bill. That a certain freelance assignment will or will not cover a month at school. That the anemic levels of our 529 accounts have rebounded enough to pay for a few months more.

When I was in college, tuition reached $10,000, a number so shocking that we ran it as the headline across the front page of the school newspaper. Now the numbers are several times that, outpacing inflation. They almost don’t seem real.

I got an e-mail message from a reader asking how the average, hard-working, middle-class parent can possibly “make” these numbers with only an 18-year head start.

I passed the question along to Jean Chatzky, a financial journalist and the author of “Money 911: Your Most Pressing Money Questions Answered, Your Money Emergencies Solved.” The reader’s original question and Jean’s answer are below. Please use the comments to add your own questions and advice about how parents can manage this.


My husband and I both grew up in high-middle-income families (whatever that means) and our parents made it work and paid for our undergraduate education. They saved well and spent carefully. My sons are 2 ½ yrs old and 9 months and we are barely making ends meet with our mortgage payment, car payment, daycare costs, etc. We have no “extras” left to cut out! I’m a social worker and my husband is a research professor; we’re educated professionals who make, what I think is a normal amount of money. How are people doing this?


The answer is, they’re not. At least not in the way our parents did. I, like you, grew up in a middle-class family. For most of my childhood, my father was a college professor and my mother substitute-taught. They paid my college tuition by subdividing the property our house stood on and selling half the lot (for which I’ve always been grateful).

But so much has changed since then — most importantly tuition prices, which in recent decades have been going up at two to three times the rate of inflation. That’s the reason that two-thirds of students receive at least some financial aid today.

So, here’s my suggestion: Don’t aim to pay the entire bill. If you can come up with a third of the money your kids need for college before they go, you are doing a good job. Think about paying another third out of your then-cash flow. And have them borrow the final third.

How do you do that in your current situation?

First, make sure that you are saving and investing for your own retirement. I assume you’re contributing to your workplace retirement plans — that is a must!

Then work off two things, salary increases and windfalls. Open a 529 college-savings account (go to to find the best one for you).

Then, the next time you or your spouse gets a raise, figure out how much your take-home pay will increase and schedule automatic transfers to that 529 in that amount the day you get paid. Move windfalls to your 529 as well. If you get a tax refund, deposit that money. (Then change your withholding to boost your take-home pay and increase your automatic contributions so that you’re no longer giving Uncle Sam an interest-free loan.) Birthday and holiday checks can go into the account as well.

As soon as you see you’re making progress, you’ll start feeling — as a parent — like you’re doing a better job.