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Should Parents Pay for College?
You should only pay for your child's college education if you can afford it.
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
Updated · 3 min read
How is this page expert verified?
NerdWallet's content is fact-checked for accuracy, timeliness and relevance. It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible.
Anna Helhoski is a senior writer covering economic news and trends in consumer finance at NerdWallet. She cohosts and produces Money News segments of NerdWallet's Smart Money podcast. She is also an authority on student loans. She joined NerdWallet in 2014. Her work has been syndicated in news outlets nationwide including The Associated Press, The New York Times, The Washington Post and USA Today. She previously covered local news in the New York metro area for the Daily Voice and New York state politics for The Legislative Gazette. She holds a bachelor's degree in journalism from Purchase College, State University of New York.
Des Toups Lead Assigning Editor | Student loans, repaying college debt, paying for college
Des Toups was a lead assigning editor who supported the student loans and auto loans teams. He had decades of experience in personal finance journalism, exploring everything from car insurance to bankruptcy to couponing to side hustles.
Parents, you may want to pay for your child’s college education, but it’s only a good idea if you can afford it.
Whether you decide to take on the entire financial responsibility or split the cost with your child, first answer these questions to determine if you should pay for college:
Will it put your retirement at risk? Your child can always borrow to pay for college, but you can’t borrow for your retirement. Make sure you’re on track to save enough for retirement; use this calculator if you’re unsure.
Do you have other debts to pay off? If you’re deep in credit card debt or have other high-interest debt, you shouldn’t add to your burden.
Can you afford the payments? Add the tuition or parent loan payments you’d make to your existing debts to make sure you can fit both into your budget.
Will you have an emergency cushion? You don’t want to choose between fixing the car and paying a student loan bill.
Can you accept the risk? Taking on a parent loan could jeopardize your credit or ability to borrow for something else. Co-signing also leaves you on the hook for your child’s behavior.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.47-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. (2)As certified by your school and less any other financial aid you might receive. Minimum $1,000. (3)This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 12/2/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
Variable APR
4.99-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. (2)As certified by your school and less any other financial aid you might receive. Minimum $1,000. (3)This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 12/2/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.49-15.49%
Lowest rates shown include the auto debit. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 11/25/2024. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Variable APR
4.92-15.08%
Lowest rates shown include the auto debit. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 11/25/2024. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Credible lets you check with multiple student loan lenders to get rates with no impact to your credit score. Visit their website to take the next steps.
About half of families — 53% — have a plan to pay for all four years of college, according to How America Pays for College 2023, a study by Sallie Mae and market research firm Ipsos.
If your own finances are solid and you can afford to help pay for college, you may decide to take on a parent loan. Before you borrow, consider these tips to avoid taking unnecessary risks with your own finances.
Turn to private loans only after your family has exhausted grants, scholarships, savings earmarked for school, work-study and federal student loans.
The higher your income, the less free aid your child will receive. If you opt not to help pay for school, less free aid means your child may have to take on more loans to fill the gap. Free aid such as grants and scholarships, along with work-study, is largely determined by the family income reported on the Free Application for Federal Student Aid, or FAFSA.
If there’s a gap to close after all financial aid is considered, your child may need a private loan. Private loans tend to carry higher interest rates than federal loans and don’t offer the federal protections, loan forgiveness and flexible repayment options that federal student loans do.
And if your child is under 21, he or she will likely need a co-signer — only a few lenders make loans to borrowers with no credit history and no co-signer. If you co-sign a private loan for your child, you’ll be legally responsible for the debt if your child can’t pay. Co-signing a loan will also impact your credit history, and may make it more challenging for you to take on other loans or lines of credit.
The only way to get your name off a co-signed loan would be paying off the debt; taking advantage of co-signer release after a period of time if your lender offers it; or by refinancing.
Your best option is to exhaust all other financial resources before borrowing a private loan. If you co-sign a loan, discuss the seriousness of the debt with your child. If you do co-sign a loan, make sure there is a co-signer release policy.
Don't overborrow Parent PLUS loans
The annual and overall limits on federal direct subsidized and unsubsidized loans can keep students from taking on too much student debt. But the lack of a similar limit for direct PLUS loans can lead to overborrowing by parents. Direct PLUS loans are federal loans that parents of undergraduates can take out to pay for their child's college education; they're also available to graduate students. PLUS loans are similar to private loans in that they require a credit check. Parent borrowers can take on up to the total cost of attendance annually in federal direct PLUS loans.
Among those who borrow to pay for college, parents borrow, on average, about $1,219 less than the average amount students borrowed in federal student loans, according to the Sallie Mae study. In the 2021-22 academic year, parents borrowed an average $5,225 in PLUS loans, while students borrowed an average $6,444 in federal student loans.
Taking on loans is especially costly for parents because interest rates on PLUS loans are significantly higher than those of federal direct loans available to undergrads: 7.54% compared with 4.99% for the 2022-23 academic year, effective July 1. For parents with good credit scores and solid finances, private loans could be cheaper.
PLUS loan borrowers who run into trouble making payments also have fewer options than federal direct loan borrowers: PLUS borrowers can qualify for only one of the four income-driven repayment plans available to federal loan borrowers.
Make sure your child completes the FAFSA to get free aid first before turning to loans.
If your family needs to borrow, make sure your child maxes out subsidized and unsubsidized federal loans before borrowing money yourself.
Choose a fixed interest rate
When borrowing a student loan for your child’s education, consider the type of interest rate a loan carries. PLUS loans have fixed interest rates, which will stay the same through the life of the loan, but many private loans do not. A variable interest rate may initially be lower than a fixed one, but it could fluctuate over time.
Stick with loans that have fixed interest rates so you can lock in lower rates before another increase.
If you have existing federal loans with a variable interest rate, which were last issued in 2006, you can consolidate them through a federal direct consolidation loan to lock in a fixed rate.
If you have a private loan with a variable rate, you could refinance through a lender to get a fixed-rate loan. If you don’t opt to consolidate federal loans or refinance private ones, then make a plan to pay off your loans quickly.
