Parents: How to keep student loans from derailing your retirement plans

By Erica Gellerman | Published on March 10, 2026

)

It seems like just yesterday you were bringing home a new baby, surviving those sleepless nights, and dreaming about who they would become in the future. You blinked, and somehow eighteen years have gone by. Now those dreams about sending your child to college are becoming a reality — one you might not be completely financially prepared for.

As you explore financing options you might soon learn that your student isn’t the only one who can take out loans. The government offers Parent PLUS loans, a type of federal student loan that allows parents of dependent undergraduates to borrow up to the cost of attendance (minus any financial aid received). Parents can also turn to private parent loans, where the borrowing limits vary by lender.

The average loan amount for a parent borrower is nearly $30,000. Right now, American parents owe more than $100 billion on their children’s education. That kind of debt can affect your credit score, damage your eligibility for mortgage loans and other lines of credit, and keep you from reaching your own financial goals.

So, is taking out loans to help your child pay for school the right move? And how can you ease your own financial burden if you’ve already taken on debt? Here are some things to consider.

Before you take out loans

If you haven’t taken out loans for your child’s education, you’ll want to consider these things before you do.

Check-in on retirement

Before you sign up to take on debt, think about how it will affect your retirement. According to a Bankrate study, about 43% of parents say they’ve cut into their retirement savings to financially help their adult children.

Are you on track with your retirement savings? Will taking out a loan for college mean that you’ll need to work for a longer period of time to retire? Talk to a financial professional, like a Certified Financial Planner, to answer these questions. Or do your own retirement estimation with online retirement calculators like CalcXML.

It can be hard to stomach the idea of your student taking on debt. However, keep in mind that if you’re unprepared for retirement because of your student’s education debt, that could also be a burden on them. It may fall to your child to cover your retirement home or end-of-life care costs later if you don’t prioritize saving now.

Fill out the FAFSA annually

Navigating the paperwork that comes with college can be confusing. But filling out the Free Application for Federal Student Aid, or FAFSA, should be at the top of your to-do list, even if you are not sure if you will qualify for aid.

Students should file a FAFSA annually—the application generally opens on October 1st for the following year. Money is awarded on a rolling basis, meaning the earlier you submit the FAFSA, the better.

Understand your liability

Before you decide on any loan options, it’s important to understand who is responsible for repayment. If you take out a student loan for your child’s education, whether that be a parent PLUS loan or a private student loan, you’ll be on the hook for repayment. Your child won’t be required to make those payments.

If your child asks you to cosign on a private student loan, you’ll be legally responsible for paying the loan if your student is unable to. Understanding your loan responsibility before borrowing money will hopefully mean there are fewer surprises during the repayment process.

Consider alternatives

If your student needs help covering the cost of college but you don’t want to take out loans in your name, consider helping them apply for federal loans. Federal student loans must be taken out in your child’s name, but they tend to offer generous borrower protections, including deferment or forbearance. Federal loans are also eligible for student loan forgiveness programs like Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness.

If federal student loans aren’t enough to cover the full cost of attendance, consider encouraging your child to research private lenders. If you act as a cosigner on your child’s private loan, you could potentially help them qualify for better repayment terms. You could also help them secure a lower interest rate if you have decent credit and meet your lender’s eligibility requirements.

If college is still a few years out, also consider opening up a 529 college savings account. These tax-advantaged accounts can help you save for their education in a thoughtful, sustainable way that won’t cut into your retirement savings.

If you’ve already taken out loans

If you’ve already made the decision to take out loans for your child’s education, you still have options. Here’s how to manage your loan payments without sacrificing your financial future.

Graduated or extended repayment plans

If you’re struggling to make payments on a Parent PLUS loan, you have the option of choosing a different repayment plan. The federal government currently offers two ways to extend your loan term:

• Graduated repayment plan: With a graduated repayment plan, your payments will start off lower and will gradually increase over a 10 year repayment period.

• Extended repayment plan: With an extended repayment plan, you can take up to 25 years to repay the loan. This can decrease your monthly payments.

Keep in mind that with both of these repayment options you may find yourself paying more in interest over the long run.

Refinance parent student loans

Interest charges are a huge component of your loan’s overall cost. Fortunately, there’s a way to reduce that interest rate: student loan refinancing.

Refinancing is a financial tool you can use to swap out your current student loans for a new loan with a new loan term. If you meet your lender’s eligibility requirements—usually a good credit score and a history of on-time payments—you could also qualify for a lower interest rate. That can drastically reduce the amount of money you’ll pay in interest, saving you money over the life of the loan. If you keep your loan term the same, a lower interest rate can also help you reduce your monthly payment amount. As a parent, you may be a prime candidate to refinance your parent loans: lenders often look for a long and well-established credit history when making a refinancing decision.

Student loan refinancing is available for both private parent loans and federal Parent PLUS Loans. Just keep in mind that if you refinance Parent PLUS loans, you’ll lose access to federal repayment options like income-driven repayment (IDR) and graduated repayment plans. Refinancing Parent PLUS loans can help you escape the higher interest rates this type of federal loan usually carries. But, it takes some careful consideration.

Talk to your child

Another option you’ll want to consider is talking to your child about your student loans. While you are the one legally responsible for repaying the loan, if your child is able to, they may want to help you repay the debt you incurred to finance their education. Talk to them honestly about your debt and whether it’s affecting your ability to adequately save for retirement.

College is expensive, but so is retirement. While you may want to help your child pay for their bachelor’s degree, you should avoid doing so at the detriment of your own financial health.