Wealth Wise: Should We Bankroll Our Son's $180K Law School Tuition Even Though We're Retired?
In our retirement advice column, Wealth Wise, we help a couple weigh whether to support their son's public-interest law career or protect their savings.
Ellen B. Kennedy
Dear Wealth Wise: We retired at 57 due to a quick succession of inheritances and tax consequences, but are still too young to access our own retirement savings. We did manage to leave our children with no debt from college or graduate school. Now our 25-year-old wants to attend law school to do public interest law, but the changes to federal loan programs and the loan rates would leave over $180,000 in student loans at graduation. Should we consider providing a low-interest personal loan? What implications for our retirement should we consider?
— Retired But Still Parenting
Dear "Retired But Still Parenting": It's not always easy for young adults to know what professional path they want to follow off the bat. And it's pretty common for college students to major in something that ends up having little to nothing to do with their careers.
There's nothing wrong with being 25 years old and realizing you want to pursue a law degree. And the return on investment could end up being outstanding.
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Georgetown University reports that median earnings, net of debt payments, are $72,000 four years after graduation for all law school graduates. And for graduates of top schools, they can exceed $200,000.
But financing a law degree can be daunting, especially in light of student loan changes under the One Big Beautiful Bill Act. Now, law students are generally limited to $50,000 per year in federal loans and $200,000 in total. (While the average cost of law school is about $50,000 per year, elite schools may charge over $80,000 per year, bringing the total cost of a three-year law degree to over $240,000.) Even if these new caps cover all costs, it can still be a lot of debt to graduate with, despite the strong earnings potential.
Of course, for people going into public interest law, the earnings potential may be more capped. On the plus side, public interest lawyers may be eligible for student loan forgiveness down the line.
The Public Service Loan Forgiveness (PSLF) program forgives federal student loan balances for qualifying professionals after 120 monthly payments. Also, almost all law schools offer a Loan Repayment Assistance Program (LRAP), which provides grants or forgivable loans to help qualifying lawyers make their 120 loan payments toward forgiveness.
The catch? A private family loan is not eligible for the PSLF program, and in some cases, a parental loan might also disqualify a student from LRAP support. The result is that the family might saddle their son with a $180,000 private loan when getting a qualifying loan would yield lower out-of-pocket costs through school grants and federal debt forgiveness.
Still, incoming law students should not bank on forgiveness; they may have a change of heart on their career path, or the rules on forgiveness may change. That means the daunting math of financing a law degree may largely stay the same.
Here, we have a couple who retired at 57 due to a series of windfalls. They're still a few years away from accessing their retirement savings penalty-free, and they're wondering whether it makes sense to write their son a low-interest $180,000 loan rather than have him borrow at higher rates.
Given that the going rate for federal Direct Unsubsidized Loans is 7.94%, a parent loan with an interest rate in the 3%-4% range, consistent with applicable federal rates, could yield significant savings. But will granting that loan introduce complications? Here's what the experts have to say.
Figure out where the money is going to come from
It's certainly noble to want to help your son finance a law degree more affordably. But before you start handing out money in any shape or form, make sure you know where it's going to come from, says Patrick Simasko, estate planning attorney at Simasko Law.
"Any assistance you provide should be structured so it protects your retirement," he says. "Since you retired at 57, tapping your own 401(k) could trigger a 10% early withdrawal penalty."
Simasko also points out that there are more affordable borrowing options for law school than for retirement expenses. So before you give out so much as a dime, make sure your retirement plan can handle it, and that you won't be compromising your ability to pay your bills.
Also, don't count on an IOU from your son to make up for the money you hand over today.
"While your child may promise to help you financially once they become a lawyer, they might find other ways to spend their money," Simasko cautions. Instead, make the loan official so your son is obligated to repay it.
Seth Friedman, Sr. Managing Director at Abacus Finance, has similar guidance.
"Retiring at 57 means that you might go a number of years without total access to certain retirement assets, so the preservation of liquidity during that window becomes an important question," he says. "I suggest that you stress-test your retirement plan as though [the loan] will never be paid off. If that does not diminish your long-term financial security, then helping may be justifiable."
Understand the pros and cons of writing a loan versus paying tuition directly
If you're trying to help make law school more affordable for your son, paying tuition directly could be a more tax-efficient way to go about it. When you pay tuition directly, it doesn't count toward your annual gift tax limit (which is $19,000 in 2026) or your lifetime exemption.
That said, Simasko says there's a big benefit to giving your son a loan rather than covering tuition bills: He'll have some skin in the game.
"I've seen situations where parents pay the entire cost of professional school only to have the child decide halfway through — or shortly after graduation — that they no longer want to practice in that profession," he says. "Having some financial responsibility helps ensure everyone remains committed to the plan."
Friedman says that if you're going to lend your son money, it's important to make it a part of your estate plan.
"In the event that you choose to lend out the cash, be sure to document it, charge a realistic interest rate, and set up an appropriate repayment schedule according to your kid's career plans," he says. "One of the most frequent errors I see is parents unofficially loaning money, which slowly morphs into an impromptu gift."
Make sure to keep things equitable for your other children
The fact that you've managed to give all your children debt-free educations thus far is commendable. But if you're now considering $180,000 in aid for your son, it's important to make sure you're being fair to your other children, Simasko says.
"If this child receives substantial financial help from you for law school, will their other siblings expect the same assistance in return? Many families either document the assistance as a loan or treat it as an advance on that child's future inheritance to avoid misunderstandings later," he explains.
If you decide not to lend out the money and instead pay your son's tuition directly for the tax advantages, make sure to document that and be transparent with your other children about it. If you talk things through and make it clear that you're willing to offer similar assistance to your remaining children, there should be no need for resentment.
A word from Wealth Wise
There are additional reasons the couple may want to tread carefully as they consider how to support their child's law school ambitions.
First, they should estimate their son's actual earnings and ability to repay a loan after law school. Georgetown University provides a searchable database of median earnings of graduates of over 100 U.S. law schools. Then they should take into account their son's desire to go into public-interest law, which typically pays less than private practice.
Finally, the job market for law school graduates is in flux, so there's no way to predict whether or how quickly their son might secure a public-interest legal position. With rising applications to law school and AI disrupting entry-level positions for new graduates, their son may find fewer entry-level legal jobs just as he starts his career. In that case, the parents may have to accept that the $180,000 loan is really a family gift.
Read More
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