10 Alarming Signs You Can't Afford Your Child's Dream College

Getting ready to send your child off to college can be an exciting and nerve-wracking time for a parent or caregiver. And while there’s a lot of emotion tied up in the experience of sending your “big kids” off into the world, there’s also the added responsibility of figuring out how to afford it all, especially if they have their hearts set on a far away or expensive school.

It’s important to tally up the full cost of attendance and check up on your financial health before promising to pay for your child’s dream school.

Here are a few indicators that you might not be able to afford the price tag of your child’s first pick college.

If you’ve been saving for your child’s education, chances are you have a sizable chunk of change set aside. But, the rising cost of education may mean that those dollars may not stretch as far as you thought they would when you originally started tucking them away.

If the price tag of your child’s dream school is more than you anticipated, you may not be able to afford to get them through all four years of school.

If your child is looking to go away to school, you’ll have to incorporate the cost of housing into your budget. While dorms and on-campus options tend to be more affordable — and can sometimes even get rolled into student loans — the added expense could make attending a long-distance school impractical.

If you can cover the price of tuition but not the cost of housing, you and your child may need to have a frank discussion about your options.

Experts recommend budgeting about $1,111 a month for college living expenses outside of housing and tuition, which includes things like transportation and insurance. That number can increase your child’s college costs by $10,000 a year, which may be a lot if you haven’t been planning for it as you’ve been setting money aside.

If you cannot cover the costs of attending your child’s dream university after scholarships, financial aid, savings, and student loans, parent PLUS loans are one of the few remaining options.

However, this puts you the parent on the hook for repaying the loan, even if your child does not pay back the loan or complete their education. While you and your child may feel disappointed at the prospect of selecting their second (or third) choice school to attend, it may well be worth preserving the parent-child bond by not opening the door for angst over unpaid parent PLUS loans.

There are plenty of options for student loans and scholarships to cover your child’s college costs, but the same can’t be said for covering your expenses during retirement. This is a “put your own oxygen mask on before assisting others” type situation.

While it can be painful to tell your child you can’t afford to send them to an expensive, private university, it’s better than having them resent you because they have to support you financially during retirement.

Again, you need to take care of your own finances — even ahead of funding education for your adult child. If you’re eating into your emergency savings, or you don’t have enough to pay for the inevitable financial challenges you will face, you may have to pull back on your contributions to your child’s college.

While schools don’t charge different tuition amounts based on the major, the return on investment can differ greatly based on what your child elects to study.

As a rule of thumb, students shouldn’t borrow more in student loans than their expected first-year salary once they graduate. If your child’s diploma doesn’t earn them enough to warrant the cost of the education, the investment may not be worth it — for them or for you.

Even if you can support your first child through a few years of college, this may be difficult when siblings follow suit. If each of your children wants to go to expensive schools, you may get caught paying more than you can afford to keep things even between your kids.

If Junior has a full-ride scholarship to an in-state school but has his heart set on going to a private, out-of-state school, it may be appropriate to discuss why he really wants to go there.

Is the education that much better, or is the reputation or vibe of the school really attractive? Your 18-year-old college student might feel bummed to opt for a state school over a prestigious college, but the 22-year-old graduate might be thankful that neither you nor they shelled out thousands extra for a similar education closer to home.

Even if you can technically afford the costs of your child’s ideal university, if the margins of doing so are so razor-thin that it is detrimental to your mental health, it might be time to rethink your choice. It’s hard to put a price tag on peace of mind.

Funding college is doable, but before you commit a blank check to fund your child’s education, have a frank discussion with them about how much you can afford to help and for how long. Run the numbers with them to see how much they’d earn after graduation, and whether it’s enough to justify hefty student loans at a prestigious school.

If you’re both in agreement, you may want to come up with some creative ways to cover the costs, which might also include finding a side hustle to earn extra money to contribute to college expenses. Your child may also be able to find an on-campus job, take fewer credits, or take a break to work and save up more money.