Parents are sacrificing retirement, taking second jobs, and liquidating investments just to afford college for their kids

In a survey of 1,000 parents from Citizens Bank released Tuesday, respondents say they are taking on a second job (19%), borrowing against their 401(k) or liquidating personal funds (30%), pausing investing entirely (26%), and cutting back on major purchases or vacations (66%). And more than 60% of parents reported they expect to delay their retirement in order to pay for their kids’ college education.

The cost of college has ballooned: It’s 40 times higher than it was in 1963, according to the Education Data Initiative. And between 2010 and 2023 alone, tuition costs at four-year public universities jumped more than 36%, Education Data Initiative said, with the average cost of college today nearly $40,000 per year.

That’s led more than 60% of parents to need to go “above and beyond” typical financing options like 529 plans and federal loans, according to the Citizens survey data. 

“Compared to just a few years ago, the pressure has increased due to rising tuition, inflation, and greater uncertainty around future costs,” Tony Durkan, vice president and head of 529 college savings at Fidelity, told Fortune. “Many families are still underprepared, often relying on rough estimates rather than clear savings goals.”

‘Very risky’

Pam Krueger, investment advisor and founder of Wealthramp, said the phenomenon of parents taking on side gigs, pulling money out of retirement, and refinancing their homes to pay for college is incredibly common. 

“It’s coming from a place of love and a desire to protect their kids from the burden of student debt—but it’s also very risky,” Krueger warned. “These choices can set parents back in a way that’s really hard to recover from.”

Part of the problem is the disconnect between college admissions and financial planning, according to Citizens. Survey data showed one in five parents admitted they just focused on getting their child into college without thinking about how to pay for it. And it’s such a touchy and embarrassing topic for parents,  almost 50% of survey-takers said they would rather talk to their children about drugs and alcohol. 

How to prepare to pay for college

While pulling money from retirement, taking on another job, or refinancing your home may feel like the only option to come up with enough funding for college, financial advisors say there are other options. 

Of course, a 529 savings plan can help—but that has a longer runway. These tax-advantaged plans can sometimes allow you to pay for tuition ahead of time, but many people save for many, many years to fund these accounts. 

Still, “the earlier you begin saving, the more time your money has to grow through compounding,” Durkan said. “Even small, regular contributions can add up significantly over time.” Plus, any funds that aren’t used can be transferred to a sibling, cousin, or back to yourself, meaning no wasted money—and it stays in the family, Krueger said.

But if it’s too late in the process—like if your kid is already in high school—an alternate strategy is needed. Krueger said this requires open and honest communication with your child about what you can actually afford. 

“Sit down with your child and talk openly about what’s realistic. Explore schools that are generous with merit aid or have transparent pricing,” Krueger said. “And look at the full cost—not just tuition, but room and board, books, travel. Sometimes the ‘big name’ school isn’t the best financial fit—and that’s okay.”

For parents just starting to plan for college while their children are in high school, Brian Safdari, founder and CEO of College Planning Experts, also suggests moving around investments and assets and as well as applying for grants, scholarships, merit-based aid, and institutional aid starting as early as ninth or 10th grade. Even private colleges with sticker prices of $95,000 or more a year could offer generous aid that make the final cost the same as a public school or even less, he told Fortune.

Still, “the expected cost minus savings minus free money will likely still leave a gap,” Safdari said. “Once we have that number, we can start figuring out how to fund it over four years, while minimizing student debt and leaving enough money to retire.”