The numbers are daunting: the cost of a private college education can run over six figures - and that's for tuition and fees alone, no room and board. As parents, we all want a better future for our kids, and a college education seems like a mandatory expense these days. But should you really be footing the bill for Junior's college education? Here are some reasons you may want to think twice.

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The Hidden Costs of Paying the Bill

Student loans used to be considered "good" debt, but that assumption is proving false in today's economy. Just like mortgages have ballooned because of hiked rates, many of today's college grads are sitting on six-figures worth of debt, growing monthly with compounding interest charges.

Parents often co-sign these student loans, meaning they're responsible if their kid doesn't pay - a costly ding to credit scores and finances at a time when parents should be preparing for retirement, or might be (financially) caring for an elderly parent.

And how about that retirement: are you deferring savings from your retirement nest egg to pay for your kids' college? That monthly tuition or housing payment you're forking over to put Junior through college shouldn't come at the expense of financial security in your golden years. Imagine your son or daughter in the future, having to take out a loan to pay for your expenses.

Too often, parents put their children's college expenses above saving for retirement - a costly mistake. The best way to ensure your child's financial security is to make sure your retirement is taken care of, so you're not a financial burden. (For more, see Five Retirement Questions Everyone Must Answer.)

Exploding Debt

College away from home is often seen as a sign of success, with parents proudly declaring the top-notch school their kids were accepted to. Meanwhile, student loans balloon, and your kid is struggling to pay for groceries. The average undergraduate's debt runs $20,000, but variable interest on loans can make it inflate until the payments are impossible to make on an entry-level salary.

Graduate students in medical or law-related careers often graduate with over $100,000 in student loans. Add to this an average of $2,864 in credit card debt by graduation and Junior is bogged down by debt and moving back home. Families often assume that just because it's college-related debt, it's okay - but it's still debt that will be a ball and chain for years (and years and years) to come. (For more college financing tips, check out Paying For College In An Economic Downturn.)


A college education is still the best chance at a lucrative career. The Department of Labor shows that employees with a bachelor's degree out-earn their high school graduate counterparts by almost 77%. The best way to limit your child's debt is to look at alternatives to the conventional scenario, where your son or daughter moves away for four years to finish a degree. Start while your child is still in high school, and look for local community college classes he or she may be able to take before graduation. Consider your in-state public college; tuition will be much lower, and your college student can continue to live at home instead of paying for room, board and other expenses somewhere else.

Together with your child's school counselor, look for grants, jobs, work-study programs and other ways to pay for college - this is a great opportunity to teach him or her about money, and how to graduate with the least amount of debt. Look at all alternatives; it's easy to be wooed by a private school's catalogue, but consider the debt you may be incurring.

The Bottom Line

Neglecting retirement savings or cosigning for large student loans isn't just dangerous for parents; it's a noose around the neck of their college graduated children too. Finding smart alternatives is the key to securing a strong financial future - for the whole family.

Catch up on your financial news; read Water Cooler Finance: The Unrelenting Claw Of Bernie Madoff.

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