Help Center
How do I pay for my child’s college without hurting my retirement?
Bella and Mark always dreamed of sending their two kids to college. But as their oldest approached junior year, reality set in: tuition costs had skyrocketed, and their savings weren’t quite where they hoped. They started wondering—can we help our kids graduate debt-free and still retire on time? Is it too late to make a plan?
At A&I Wealth Management, we meet families like Bella and Mark all the time. Whether your child is 3 or 16, navigating the rising costs of education can feel overwhelming. The good news? It’s never too early—or too late—to get smart about college planning.
Let’s be real: college isn’t getting any cheaper. But with thoughtful planning, the right tools, and a bit of mindset shift, you can help your child pursue higher education without sacrificing your financial future.
Why “We’ll Figure It Out” Isn’t a Strategy
Too many parents fall into the trap of telling their kids, “Get into the best school you can—we’ll figure it out.” Those words can be some of the most dangerous. College planning isn’t something you want to leave to chance, especially when the average student loan debt has tripled in the past decade.
Instead of reacting emotionally, approach paying for college with the same care you’d apply to any major financial goal. This starts with understanding the three key fits:
- Academic Fit: Does the school offer the right programs?
- Social Fit: Will your child thrive in the environment?
- Financial Fit: Can your family afford it without derailing other goals?
That last one—financial fit—is where we can help you make a real difference.
The “Four-Year Budget” Mindset
One of the most powerful shifts you can make is to stop thinking year-to-year and start thinking about the full cost over four years. It’s not just about getting through freshman year—it’s about having a plan that holds up through graduation. Your plan might include:
Build a full picture that combines:
- Parent resources – This includes college savings accounts like 529 plans, regular savings, and tax credits such as the American Opportunity Tax Credit (AOTC), which provides up to $2,500 per year in tax savings for eligible families.
- Student resources – Think savings from summer jobs, part-time work during the school year, and any other income your child may contribute.
- Scholarships and grants – These are forms of financial aid that don’t need to be repaid. They can come from the federal government, the college itself, or private organizations.
- Limited, intentional borrowing – If loans are needed, they should be manageable and ideally aligned with your child’s expected starting salary after graduation.
A good rule of thumb? A student should avoid borrowing more than they expect to earn in their first year after college—about $35K for education majors, and up to $75K for engineering or computer science grads. Anything more could lead to years of unnecessary financial stress.
Getting the Most Out of 529 Plans
529 savings plans are one of the best tools families can use to save for college. What makes 529 plans special? In Colorado, contributions to a CollegeInvest 529 plan are fully deductible from your state income taxes, with no annual cap on deductions. That’s a big tax break many families miss out on.
Better yet, even if your child is already in college, you can still contribute and receive the tax benefit—as long as the contribution is made before the expense. For instance, you can deposit funds in July, then use them for a tuition payment in August. Same deduction, same tax-free growth.
Qualified 529 expenses include:
- Tuition and fees
- Room and board (on- or off-campus, within school cost-of-attendance limits)
- Required textbooks and supplies
- Computers and necessary software
- Study abroad programs through eligible institutions
Just make sure your withdrawals match up with actual expenses and are well-documented.
The Truth About College Discounts
Here’s a fact most families don’t know: the average college student pays far less than the sticker price. The average tuition discount at private schools last year was around 56%.*
If your student has a strong GPA or test scores, consider schools that may offer generous merit aid—even if they aren’t top-tier name brands. A slightly less selective school might offer thousands in aid (or even a full ride), while a more prestigious school could offer very little if you don’t qualify for need-based help.
Late-Stage College Planning: What If My Kid Is Already 16?
If you’re starting to plan later in the game, don’t panic. It’s not too late—you just need to prioritize. The first step is making sure your own retirement plan is on track. Remember: you can borrow for college, but not for retirement.
Once retirement is secured, we can help you build a tailored college funding plan that includes:
- Strategic use of 529 plan savings – If you’ve already started a 529 plan, we’ll help you decide how and when to use those funds for maximum impact across all four years of college.
- Roth IRAs for working students – If your teen has part-time income, contributing to a Roth IRA can be a great savings tool that doesn’t count against them on the FAFSA (Free Application for Federal Student Aid). Plus, contributions can be withdrawn for qualified education expenses.
- Smart timing of grandparent contributions – Did you know that money from grandparents can affect financial aid eligibility? A smart strategy is to have them pay for junior and senior years, when FAFSA no longer looks at those gifts.
- A clear year-by-year budget – We’ll map out how much will be needed each year, what resources will be available, and where any gaps exist—so you’re not scrambling when tuition bills arrive.
Teaching Kids Financial Responsibility
This process isn’t just about how you pay for college—it’s also about helping your child grow into a financially responsible adult. We recommend starting early, giving kids a sense of ownership over their spending and saving.
Having students work part-time in school or over the summer doesn’t just help cover costs—it helps them value the opportunity they’re being given. Plus, it gives them real-world budgeting experience they’ll carry long after graduation.
Ideal Planning Timeline
If your child is still young—fantastic! The earlier you start, the more flexibility you’ll have. A solid long-term strategy often includes the classic “save a third, cashflow a third, borrow a third” model. Here’s how to begin:
- Estimate future costs based on the type of school – Research the total cost of attendance for the type of college you’re aiming for, including tuition, room and board, and additional expenses like books and transportation.
- Open a 529 account and contribute consistently – A 529 plan helps your savings grow tax-free for college expenses. Set up automatic contributions to stay on track and benefit from compound growth.
- Adjust your plan as your financial situation changes – Review your plan regularly to ensure it aligns with changes in your income, expenses, or life circumstances, and adjust contributions as needed.
Let’s Make a Plan Together
Paying for college is a big milestone—not just for your child, but for your entire family. With the right plan, you can help your student access an education they’re proud of without sacrificing your peace of mind or long-term goals.
At A&I Wealth Management, we’re here to help you build a college funding strategy that fits your family’s unique circumstances. Whether you’re years ahead or already facing tuition deadlines, we’ll walk alongside you with practical tools and personal guidance.
Interested in learning more?
Check out our podcast episodes on Paying For College for deeper insights:
- 🎧 Listen to Part 1: https://expertnetworkteam.simplecast.com/episodes/episode-23-paying-for-college-part-1-of-2
- 🎧 Listen to Part 2: https://expertnetworkteam.simplecast.com/episodes/episode-24-paying-for-college-part-2-of-2
Ready to take the next step? Let’s build a college funding plan that fits your family—and your future. Contact us today to get started.
1 National Association of Student Financial Aid Administrators, “Average Tuition Discounting Rates at Private Institutions Hit New Record High, NACUBO Report Finds,” NASFAA, April 25, 2023. See source links here.
Disclaimer: The information provided in this blog post is for general informational purposes only and should not be construed as financial or legal advice. Please consult with a qualified professional for advice regarding your specific situation.
The information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of any topics discussed. All expressions of opinion reflect the judgment of the authors on the date of the post and are subject to change. A professional adviser should be consulted before making any investment decisions. Content should not be viewed as personalized investment advice, as an offer to buy or sell any securities, or as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
DISCLOSURE: Client stories included in this blog reflect hypothetical client situations that represent those commonly encountered by AIWM representatives.
