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With list prices that can be more than $50,000 a year, college can be a huge financial sinkhole for families that don't plan and shop wisely.

Case in point: Nearly 1 in 5 people who take a hardship withdrawal from their 401(k) retirement plan do so to pay college tuition or other school expenses, according to the Transamerica Center for Retirement Studies.

Well-intentioned parents want the best for their kids. But raiding their retirement today means they may not have enough to support themselves through retirement. Which means their kids may eventually need to step in and help. Which is no parent's goal.

To avoid trouble and get the best deal on a quality education, follow these rules:

  • Don't touch retirement savings. Period. No withdrawals. And no 401(k) loans either. The big risk is opportunity cost. Pull out a chunk of money, and those are dollars that stop compounding for you.
  • Don't slow down on retirement savings. For all the reasons just explained there is never a good time to slow down on contributing to your 401(k) or IRA. That must remain a priority.
  • Don't start eyeing the home equity. For homeowners, chances are your home's value has been on a tear of late. A national index of home values is up 18% in the 12 months through June. The five-year national gain is more than 40%. That makes a home equity line of credit (HELOC) viable, right? Be very careful. In the extreme event that you can't repay the line, you could lose your home.
  • Don't borrow first. The federal PLUS loan program for parents to use to pay for college is not nearly as good a deal as federal student loans your kid can qualify for. (All students can qualify for federal loans regardless of family income.) Moreover, there are safety guardrails on how much an undergrad can borrow through the federal loan program.
  • Seriously consider if a four-year degree is necessary for what your child wants. There are plenty of solid careers that require a two-year associate degree, and getting one from a community college can be a financial win for the entire family.
  • Look for schools that will pony up an affordable net price. All schools are required to publish their net price, the typical out-of-pocket costs to attend. For four-year private schools, the average net price is 45% less than the list price.
  • Scour a financial aid offer for trickery. Some schools like to play fast and loose by including parent PLUS loans as part of the aid package. If after bargaining with the aid office, the college looks unaffordable, decline and consider another college.

Fried writes for, a provider of personal finance news and guides.