The cost of a college education has become genuinely staggering. The debt burden students carry is, in large part, a product of overly abundant government grants and loans operating through a well-documented economic mechanism called the passthrough rate.
According to the Federal Reserve Bank of New York, for every $1 increase in the maximum amount of federally subsidized student loans, college tuition rises $0.60. The mechanism is straightforward: more federal money flowing into higher education allows colleges to raise prices, because students can borrow more to pay them.
Today, Americans owe $1.87 trillion in federal and private student loan debt, a figure that climbed 3.3% in just one year and now ranks as the second-largest category of consumer debt in the country, behind only mortgages. That weight saps the financial security of students and parents alike, and more families are now asking whether it still makes sense for parents to foot the bill for a child’s education at all.
That question was front and center for a Redditor on r/DaveRamsey, a community built around the personal finance principles of Dave Ramsey. The poster did not want to undermine his child’s opportunities, but he also could not ignore the damage that more debt would do to his own already precarious finances.
24/7 Wall St. Key Points:
- The ever-rising cost of college tuition has bankrupted the future of children and parents alike, with national student loan debt climbing to $1.83 trillion.
- Parents often find themselves choosing between paying for college and financing their retirement, a dilemma compounded by strict new borrowing caps.
- Prioritizing college over retirement planning can foster a child’s sense of entitlement while potentially ruining the chance for a secure financial future for both.
The 2026 Reality: Gen X Is Bearing the Brunt
The standard advice to start saving for a child’s college education at birth, typically through a 529 plan, deserves more scrutiny than it usually gets. At a minimum, contributions to a child’s education fund should never come before maximizing your own retirement savings. Department of Education data through December 2025 shows that borrowers aged 35 to 49 now hold $681.5 billion in federal student loan debt, the largest share of any age group, a burden that hits precisely during the years when wealth accumulation matters most.
If you have not fully maximized every retirement option available to you, a child’s education savings should come second. Footing the entire college bill is an increasingly costly choice, and one that can be actively harmful to the child’s own sense of financial responsibility.
The Redditor in question was divorced, paying alimony, carrying significant debt, and still working to stabilize his own finances. He wanted a bright future for his child, and that impulse is admirable. But the most valuable conversation he could have had would have started years earlier, with an honest discussion about the real cost of college and the limits of what parental support can cover. Shifting the focus from parental funding to individual responsibility is not abandonment. It is preparation.
The Parent PLUS Trap Just Got Tighter
For parents weighing whether to borrow on a child’s behalf, the regulatory landscape shifted dramatically when President Trump signed the One Big Beautiful Bill Act into law on July 4, 2025. Under that legislation, Parent PLUS loans taken out on or after July 1, 2026, are capped at $20,000 per year per dependent student and $65,000 in total per dependent student. Previously, parents could borrow up to a school’s full cost of attendance with no hard cap. Those new borrowers are also ineligible for income-driven repayment options, leaving them with only a rigid tiered standard repayment plan.
The opportunity cost of carrying that debt is worth spelling out. A $100,000 parent loan balance on a 25-year standard repayment schedule runs roughly $770 a month in cash outflows. That same $770 a month invested over 25 years at a historically average 8% market return would grow to more than $730,000 in a retirement portfolio. The math alone should give any parent pause before signing on the dotted line.
Better Alternatives to Sacrificing Your Retirement
Breaking this cycle starts with expanding the menu of options students explore. Scholarships, grants, work-study arrangements, and part-time employment can meaningfully reduce the gap between what a family can afford and what a school costs. Employers are increasingly adopting the SECURE 2.0 provision that allows them to match an employee’s qualified student loan payments with contributions directly into that employee’s 401(k), giving borrowers a path to build retirement savings even while paying down debt. For households with compressed cash flow, such as those carrying alimony obligations, a well-constructed FAFSA financial aid appeal letter can also unlock additional institutional aid.
If a parent decides to help, a cleaner approach is to have the student take on federal student loans directly, which carry more flexible income-driven repayment options than Parent PLUS, while the parent contributes to the monthly payment as a third party. The parent never owns the primary debt. Beyond the loan question itself, a four-year private university is not the only path to a quality credential. Community college followed by a transfer to a four-year institution can cut total borrowing sharply, and the financial headroom that creates gives a young graduate a meaningful head start on their own retirement savings.
Do Not Sacrifice Your Financial Future
Investing in a child’s future ultimately means raising a financially capable adult. Vocational training, apprenticeships, and trade certifications all offer documented wage premiums and, critically, far less debt than a four-year degree. A parent who helps their child find that path is doing something more valuable than writing a tuition check.
The conversation about college costs should begin long before a college application is filed. When children grow up understanding that college is an investment with a real price tag and real consequences, they approach it more seriously and more strategically. Parents who choose not to go into debt for a child’s education are not failing their kids. They are modeling exactly the financial discipline they want their children to develop.
Editor’s note: This article updates the total U.S. student loan debt figure to $1.87 trillion, reflecting Federal Reserve and LendingTree data through Q1 2026, and confirms the Parent PLUS loan annual and lifetime borrowing caps introduced by the One Big Beautiful Bill Act, signed into law July 4, 2025.
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