A Money Talks News reader named Karen was facing $72,000 a year for her daughter's private college tuition. She and her husband had $400,000 in retirement savings. Her question: 'Are we crazy to take out Parent PLUS loans?' The answer was a blunt 'Yes.'
Here's the hard truth financial expert Stacy Johnson has shared for decades: Your child has 40 years to earn money and pay off debt. You don't. At 53, every dollar not saved for retirement is a dollar you may never recover.
The Six Rules for Parents in Their 50s
Run the Retirement Number First. Before spending on college, calculate your retirement needs. If you're behind, borrowing for school is like a drowning person handing their life jacket to someone on shore.
Have the Honest Conversation. Tell your child exactly what you can contribute. If it's $15,000 a year, say so. Kids respect honesty more than parents who drain their retirement and become a financial burden.
Understand Parent PLUS Loans. These federal loans carry a 9.08% interest rate for the 2025-26 academic year-higher than most mortgages. There's no income-based forgiveness for the parent. Average borrowing is $55,000 for a bachelor's degree.
Optimize 529 Plans, But Don't Over-Fund Them. Prioritize: get the 401(k) match, fund retirement, build an emergency fund, then fund the 529. Leftover 529 funds can trigger taxes and penalties.
Push Your Kid Toward Smart School Choices. A $30,000-a-year state school with no debt beats a $75,000 private school with $120,000 in loans. Community college transfers, merit aid, and AP credits all help.
Let Your Kid Borrow-Within Reason. Federal student loans offer income-driven repayment and deferment. Parent PLUS loans don't. Rule of thumb: total student debt shouldn't exceed the expected first-year salary.
Karen's daughter chose a state school with merit aid. Total parental contribution: $20,000 over four years. Daughter graduated debt-free. Retirement is intact.