When developing financial plans for parents, we discuss their priorities on what they want for their children.

While providing basic needs is a given, most parents want their children to have more.

They want to send their children to private schools.

They want to enroll their children in educational summer camps.

They want frequent family vacations – a ski trip and a beach trip.

They want their children to excel in sports.

They want their children to wear fashionable clothing.

They want their children to attend the best college.

They want ….

The list of what they want for their children goes on and on.

Maybe some of these things you want for your children also.

There is nothing wrong with wanting the best for your children … but “best” is subjective.

You have the ability to define it.

One of the hot topics is paying for college education. While many parents envision paying 100% of college expenses, reality may limit how much they can afford.

According to CollegeBoard.org, the national average cost for a public four-year in-state on-campus college amounts to $27,940.

This estimate includes tuition and fees, room and board, books and supplies, transportation, and other expenses.

Many parents are caught in the sandwich generation. This term means parents are paying for their children’s college and paying for long-term care for their elderly parents.

During this stage of life, they are also saving for their own retirement.

As a result, parents need to reframe their definition of the “best” college. Since “best” is subjective, they can redefine it to mean the college they can afford.

A key thing to remember is that there are loans for college education but no loans exist to pay for retirement.

Before deciding on the “best” college follow these six guidelines.

1- Determine how much you can afford to pay without sabotaging your retirement savings.

If you’re ten years away from retirement, this step is vital for your retirement readiness.

Work with a Certified Financial Planner™ professional who will share saving strategies to reduce a retirement shortfall.

2- Set clear financial expectations with your soon-to-be college student.

Use this opportunity as a learning experience for your young adult child. Let them know how much money you can contribute to their college education.

If they want to attend a more expensive school, they would need to apply for scholarships or financial aid. Another option is for them to work while attending school.

3 – File your Free Application for Federal Student Aid (FAFSA) even if you don’t think you will qualify.

Many colleges use this information to assess your eligibility for scholarships or grants. Treat the “published” college cost similar to the “list” price of a new vehicle.

4 – Research available scholarships and grants.

Ideally, begin this research when your child is in middle school to allow adequate time to meet eligibility requirements.

5 – Encourage your college student to explore Federal loans instead of private loans.

Federal loans have options for repayment, deferment, or forgiveness.

In comparison, private loans do not offer these options. Additionally, private loans may change their terms if the lender merges with another entity.

Before co-signing on any educational loan, understand your liability and impact on your finances.

6- Help your college student develop a spending plan (aka budget).

A spending plan will ensure you will not be bombarded with requests for money. By including your college student in the development of it, they will learn how to establish financial limits.

Help them find an app to monitor their spending easily.

Paying for college tends to be a priority for many parents. While we may want our children to attend the “best” college, we need to balance that expectation with saving for retirement.

Follow the six guidelines to begin the planning process and manage expectations. Work with a Certified Financial Planner™ professional to help you achieve what you want for your children.

(Update to original post from May 9, 2017)


Niv Persaud, CFP®, CDFA®, RICP®, is a Managing Director at Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life, and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter, and financial advisor. Her services include developing  comprehensive financial plans, divorce financial reviews, and retirement plans. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me.’”