Nov 20, 2025
While we adhere to strict editorial guidelines, partners on this page may provide us earnings.
As a parent, it’s natural to want to try to help your child pay for college.
In a 2024 Northwestern Mutual survey, 95% of parents said they expect to pay for more than half of their kids' college education costs, and 36% said they plan to cover the entire cost. (1)
Advertisement
But no matter how much you expect to contribute, it’s important to understand what your child is studying and what their long-term goals look like. It’s equally important to set expectations about how much financial help you can realistically provide.
Recently, Jay from Charlotte, North Carolina, called into The Ramsey Show (2) with a dilemma. He and his wife initially gave their son about $10,000 to help cover his college abroad. Now, his son is asking for more money — and Jay isn’t sure what to do since he’s in the dark about his son’s studies and plans.
Co-hosts Jade Warshaw and John Delony told Jay not to send another dollar until he knows what his son is studying, how his grades look and what his long-term plans entail. That’s good advice for any parent helping to finance a child’s higher education.
The upside of minimizing student debt
Many young adults graduate from college saddled with student debt. Helping your child avoid that can ease a huge financial burden early in life.
According to the Education Data Initiative, the average person with federal student loans owes $39,075, while borrowers with private loans owe an average of $42,673. Worse yet, 11.3% of federal student loan borrowers were delinquent as of the second quarter of 2025, showing that many struggle to keep up with their payments. (3)
Federal student loans typically have lower interest rates than private ones, so they’re easier to manage. For loans issued between July 1, 2025 and July 1, 2026, interest rates range from 6.39% to 8.94%, depending on loan type.
Advertisement
Private loan rates can start around 3.19% but climb as high as 17.95%. (4) They also lack the protections that federal student loans offer, such as income-based repayment plans, deferment, forbearance and in some cases, forgiveness.
It's possible to use federal loans to finance a semester or year abroad. In some cases, you can even take out federal loans for an entire degree overseas, depending on whether the school participates in the Direct Loan Program. Still, even federal student debt can weigh heavily early in life. Borrow carefully. And if you’re a parent helping your child minimize loans, make sure you know exactly what your money is paying for.
The Education Data Initiative puts the average monthly student loan payment at $536. (5) The median U.S. wage is $62,192. That means someone earning that salary would spend more than 10% of their income on student debt alone.
Since many graduates start out earning less, large loan payments could eat up an even bigger share of their income unless they qualify for income-based repayment. But while those plans can lower monthly payments, they often extend repayment timeliness — so they’re not always the best solution either.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Don't invest in something you don't understand
As a general rule, you shouldn’t invest money in something you don’t understand. That applies to stocks, cryptocurrency and your child’s education.
Warshaw and Delony didn’t take issue with Jay helping his son pay for college. Their concern was that Jay had no idea what his son was studying, hadn’t seen grades in a long time and was completely out of the loop about his son’s plans abroad.
Advertisement
They urged him to get more information before sending another dime, including details about his son's studies and the type of job his degree might lead to.
Warshaw also emphasized that parents should have these conversations before giving their kids money for college. During those talks, it’s important to set clear expectations — how much you’ll pay, how much your child will contribute and what accountability they’ll have in choosing a major and maintaining good grades.
You’ll also want to think about return on investment. If your child’s degree costs $50,000 a year and their expected salary after graduation is $30,000 to $40,000, it may not make sense to spend $200,000 when a more affordable path could lead to the same career.
At the end of the day, a college education is an investment like any other. Having honest conversations early on can help you avoid wasting money — and help your child avoid taking on debt they’ll regret later.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Northwestern Mutual (1); The Ramsey Show (2); Education Data (3, 4, 5).
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Maurie Backman has been writing professionally for well over a decade. Since becoming a full-time writer, she's produced thousands of articles on topics ranging from Social Security to investing to real estate.
