The simple answer it NO, no matter how much you love your child, trading in retirement savings for the cost of your children’s tuition is a pretty bad idea, especially when there are alternatives. This is usually the case when one of the child’s parents works for a university. So today, I am going to focus on the financial aspect of getting your child a college degree[1].

Here is a real story. This weekend someone came to me for a financial decision analysis. Let’s call her Julie. Julie has a daughter who would like to go to the University of Arizona[2] next fall as a freshman. The out-of-state tuition is a little over $30k per year. Alternatively, Julie’s daughter could also attend a school in the Cal State system (she is a professor here) and use the fee waiver benefit. For anyone who is not current on the Cal State costs, the academic year is about $6,500 including fees, but if you are a Cal State employee, you can pass on up to 6 credit hours to your child for almost nothing. This means the academic year will cost you around $3,400. So Julie came to me to ask what the impact of sending her daughter to Tucson would have on her life.

Let’s do a quick calculation. Let’s say Emily will be at Arizona for 4 years. I will assume the cost of living is the same as it would be if she went somewhere in the system, say Bakersfield. If mom, who is in her mid-fifties, has about 15 years to retirement and can earn a conservative 5% return, we are looking at about $190k in additional retirement savings over the next 15 years. Is Emily’s desire to go to Arizona worth $190k? Absolutely not (at least not in my eyes). This is where we might differ, but I am pretty sure that the undergrad education from Arizona is not that different from Cal State and is probably not worth the price of a house (or two) somewhere in the state of Texas.

On a different topic, a great resource to look into all things college is the College Solution. There are a number of rankings and lists of schools that are generous and not so generous with financial aid. If you have children who will be going to college in the next few years, it is a good resource to check out:

Finally, let’s look at the other parents, the ones who take the opposite view.  Look, I am not going to tell you what to do but I have seen parents going the two extremes. Some want to pay the out of state Arizona tuition (for no good reason) and others insist the children need to learn the value of money and to finance their studies by taking student loans.

But the other extreme is as bad as the first. This time it is bad for the students rather than the parents. Student loans are bad. Forget about the “investment” in yourself argument, especially if your child will most likely be going to grad school. I constantly work with people who have way too many student loans because it is so easy to take those without realizing what you are doing. Most 18-year-olds are not equipped with the skills to calculate the impact of those loans on their post-graduation life.  $50k of student loans is detrimental to the life of your child for years to come. And although a 17-year-old may not comprehend the true gravity of those student loans, we know better, so let’s help the child out.

[1] I adopted this from my latest post on If you happen to work in the Cal State system, refer to this link. It explains the fee waiver benefit available to Cal State employees in detail.

[2] If you are wondering what’s expensive, here is the list of the most expensive in-state colleges in the US.