3 parents explain how they’re covering rising education costs

Ashley Mclauchlan never expected to pay more for preschool than on her mortgage. But Mclauchlan and her husband, who pay almost $20,000 a year for daycare, are making it work — just like parents around the country. 

“Whenever I was concerned about the costs of raising a kid, my parents always told me, ‘You’ll figure it out. You just make it work,'” says Mclauchlan, “And that’s what we did — because you have to. You have to make it work.”

For some parents, that may mean sacrificing income. For others, it could mean sacrificing their jobs. 

“I literally don’t know how I would do it without the job I have now,” says the former teacher turned corporate trainer. “If I was still a traditional teacher in a classroom, I just can’t imagine. I know a lot of people who left the teaching profession because their entire paycheck was going to childcare.”

Like millions of parents, Mclauchlan is at the start of an education journey that spans more than a decade and can cost hundreds of thousands of dollars. Luckily, parents can find assistance along the way — and it doesn’t always have to be from credit cards, student loans or other types of debt.

From school district support to savings plans and subsidies, parents have financial tools to help with educational expenses without taking on additional debt. Three parents in different stages of schooling share how much they’re paying for their children’s education and the financial tools they’re using to do so.

Estimated cost of daycare: $11,431+ per child, per year

Mclauchlan and her husband pay $372 weekly for their daughter’s preschool. Once her daughter starts kindergarten, she has plans for that money. “There are different things we could do with [the extra money] — pay off debt, do home updates, maybe even buy a new home. In a year, we’ll have twice as much money for a mortgage.”

However, preschool graduation won’t eliminate all education costs. Learning comes in many forms, including through extracurriculars. Mclauchlan’s daughter participates in soccer, dance and swimming lessons, which adds about $3,000 in additional costs per year.

That comes to about $22,344 in annual daycare and extracurricular activity costs for the Mclauchlans.

How to pay for preschool costs

Daycare is one of the most expensive parts of parenthood — especially for parents who work or attend school. These parents can find support from several organizations to help cover costs.

Dependant care FSAs

Many employers offer a dependent care account, a type of flexible savings account (FSA) for childcare expenses. Parents can put up to $5,000 pre-tax every year. This money is not subject to taxes, potentially saving you thousands. The account doesn’t roll over, so you must use the funds by the end of each year. Mclauchlan and her husband use her dependent care account at the end of the year, withdrawing the money and using it to “reimburse themselves” for the daycare costs they paid in cash throughout the year.

Since you can only spend the money on eligible expenses, it’s important to keep documentation, including receipts, statements or invoices from the care provider. These documents should feature your child’s name, the name of the provider, the total amount paid, the date of service and a description of the service provided.

Daycare subsidies

Mclauchlan’s employer offers a daycare subsidy for certain daycares, though she doesn’t use it since her daycare is not one of the eligible programs. Daycare subsidies may come in the form of tax breaks, grants, discounts or direct payments. Government-, corporate-, community- and school-sponsored subsidies are available based on your income, religion, ethnicity, residence, military service and even employment.

To find more information on daycare subsidies, talk to your:

• Human resources department.
• Day care center.
• Community and religious organizations.
• Local nonprofits.
• State public health department.

Estimated cost of K-12: $1,168+ per child, per year

She still has to pay for the $1,000 DC trip her son will be taking with his class later in the school year, and once her daughter enters her junior and senior year, there will be additional costs to take AP classes. And then there are high school dances, which can cost hundreds of dollars.

“Homecoming just cost me $300,” says Guilbault.

However, the costs for her children’s extracurriculars, which include travel soccer and varsity cheer, may be more expensive. Her son’s travel soccer costs about $3,000 for the entire year. That doesn’t include uniforms, shoes, hotels, travel and food expenses. For her daughter’s cheerleading, Guilbault pays around $350 per season ($175 for sideline and $175 for competition).

“That’s just for her to participate,” says Guilbault, who lives in a “pay to play” school district. “On top of that, I pay $900 for sideline season, which includes camp, tumbling class and practice clothes. Then, I pay around $200 to $300 for competition season.”

The only things Guilbault doesn’t pay for are the cheer uniforms and warmups, which the school lends out.

The grand total for Guilbault for the 2024-2025 school season? About $7,000 — so far.

How to pay for K-12 costs

Guilbault works two jobs, totaling 80 hours each week, to help pay for the costs of her kids’ schooling and extracurriculars. As an enrollment specialist for a Michigan school district and secretary for two schools, she says there are programs and people who can help ensure kids’ participation despite parents’ financial limitations.

“If you struggle, always reach out to the school district. There are always things a school district can do to help,” she says.

Financial assistance programs

Guilbault’s school district offers scholarships that can be used for school, sports, camps and other skill-building experiences. She qualifies for $300 for each child, which is paid directly to the program of choice, not to the parent.

Many school districts have youth assistance programs to help families struggling with educational and extracurricular costs. These programs are typically based on income and require you to apply. These community programs may offer financial assistance, like scholarships and direct payments, and free academic support including tutoring and mentoring.

Extra credit

Parents who need money for smaller purchases throughout the school year could choose to use credit cards or a buy now pay later (BNPL) app. Bankrate’s 2024 Back-to-School Survey found that 24 percent of back-to-school shoppers plan to carry a credit card balance and 13% are using BNPL to purchase school supplies.

To succeed with either method, you should understand the terms before signing. Make on-time payments to avoid negatively impacting your credit and owing extra fees. Consider only using this option for back-to-school school expenses, rather than year-round.

You can choose a zero-interest credit card to give yourself time to repay the balance without owing interest, but remember that the 0 APR period is an introductory offer, so the strategy won’t work every school year. And make sure to pay off the debt during the intro period to avoid high interest rates later.

Estimated cost of college: $9,750+ per student, per year

Bankrate senior writer Denny Ceizyk has a daughter attending Belmont University, a private college with the songwriting program she wanted. Her tuition is about $38,000 per year, though tuition and fees at Belmont can be as high as $42,540. There are also course fees and costs for books and supplies, which Belmont estimates at $1,500, depending on the student’s major and minor.

Ciezyk’s daughter, a senior, saves about $21,000 on room and board by living at home.

Had Ceizyk and his wife paid for their daughter’s schooling all on their own, the total annual cost would be nearly $40,000.

How to pay for college costs

Parents and their adult children often share college costs, with many children receiving scholarships and grants and taking out federal and private student loans. Ceizyk’s daughter received grants and scholarships that covered her first year. She only needed to take out $8,000 in student loans for her entire college career. The rest of the costs are covered by a 529 plan, a tax-advantaged education savings account Ceizyk and his wife set up years ago.

529 plan

A 529 plan allows you to contribute up to $18,000 (or $36,000 if filing jointly) per year on a tax-deferred basis. There are two ways to use a 529 plan: prepaying college tuition at current prices or using the plan as an education savings account you can tap at any point. Withdrawals for qualified education expenses aren’t taxed.

To get the most out of your plan, Ceizyk, a financial expert, recommends starting them as early as possible. If he and his wife hadn’t had to spend the first four years of his daughter’s life paying off $70,000 in fertility treatment costs, and then the next few years paying private school tuition, they would’ve started contributing to a 529 plan much sooner.

“We didn’t start the plan until she was in sixth grade,” he says regretfully. “Her college would’ve been completely covered if [the plan] had that extra six years of growth.”

Even with the later start, the Ceizyks had a good amount saved by the time their daughter went to school. Part of that success came from Ceizyk paying attention to the market and his risk tolerance as her graduation date neared. About six months before his daughter’s acceptance into Belmont, he reallocated the funds from a growth fund to a money market fund. This helped prevent the fund from losing money when the market had a minor correction soon after. He and his wife also treated the contribution like a monthly bill, making it part of their budget — even today.

529 plans can also be used for costs throughout your child’s education, including K-12 tuition at private schools. However, they may be best used for college since their balances have time to grow with compound interest as long as you start them early in your child’s life. You could also use the 529 plan to repay up to $10,000 of your child’s student loans — or even a Parent PLUS loan.

Parent loans

While Ceizyk didn’t need to take out a loan to help pay for his daughter’s schooling, many parents do. College attendees aren’t the only ones who can take out student loans. There are federal and private student loans for parents as well. Depending on the loan, you can get a fixed or variable interest rate that’s typically higher than loans taken out by the actual student but may be lower than personal loans.

You can borrow up to the full cost of attendance and choose a repayment term of up to 25 years — which may start right away or six months after your child graduates. Federal Parent PLUS borrowers are eligible for the standard, graduated and extended repayment plans and may be eligible for an income-contingent repayment plan if they consolidate their loans into a Direct Consolidation Loan.

Tuition-free programs

Many colleges and universities have programs to cover the tuition of eligible students with financial needs. However, there are maximum household income requirements, and students typically need to be in-state residents. There’s usually no application needed; students qualify based on information they share in the Free Application for Federal Student Aid. They can lose the aid if they do not uphold the required minimum GPA throughout their schooling.

Bottom line

Education is essential but can be the most expensive part of a parent’s budget. There are ways to save on costs and get financial assistance to help cover the rest. Seek out income-based programs, savings plans and subsidies before opting for BNPL programs, credit cards and parent loans. Before borrowing, review your budget to see what monthly payment fits and have a repayment plan in place.

Most importantly, know you’re not the only parent trying to figure it out. Find support from other parents and share finance tips and strategies that can make the academic years a little more affordable.