A frequent topic of discussion among baby boomers is whether to save for retirement or pay for their kids’ college education.

You worked hard to raise your kids. You made sure that they had the right clothes, the cool shoes, and all the other "chachkas" they needed to fit in. You hope you did all the right things. Now, as your kids prepare to head off to college, you find yourself looking at anywhere from $20,000 to $45,000 a year (per kid) for tuition, room and board. Do you cash out your 401K to pay for their college? Or do you ask them to take out a loan?

Part of the problem has to do with the fact that many Americans have negative savings. Not only did they fail to plan for their retirement, they also didn’t put away money for their children’s college, and they have no little or no personal savings. Another part has to do with the escalating cost of higher education.

It used to be that only those who went on to years of graduate school ended up with hefty student loans to pay off. However, it is not uncommon for today’s kids to graduate from college with a bachelor’s degree and a hundred thousand dollars of debt. This debt sits like a huge anchor on our children as they struggle to make the transition to fully independent adults.

For example, young adults in a serious relationship or engaged to be married must now consider how they will pay for their combined astronomical debt. And couples that have already married face a similar dilemma -- if only one partner has a loan, should they be paying off that bill together?

There are no right or wrong answers for these issues, and every family has a different set of circumstances. However, the decisions you make will have far-reaching consequences for your lives and the lives of your children.

Think "In-State"

By no means do I claim to be an expert in this area, but my husband and I have embarked on a strategy that seems to be working well for our children and us.

Having four kids puts a real burden on any family’s finances. Having those kids very close in age is a recipe for financial disaster. As young parents, we couldn’t afford to save money for our kids’ college education, so we gambled on the idea that maybe two out of them would earn a scholarship of some sort.

By 8th grade, however, it became painfully evident that the scholarship strategy was not likely to pan out. Our kids were all loveable and smart, yet none had the innate drive, determination or IQ to attend Harvard or even a state college on a scholarship. As a result, we had to make some tough choices, and make them relatively quickly.

After studying our lifestyle and finances, we determined that with some sacrifices on our part and some help from our kids, we could put them through college without them having to obtain huge loans and mortgage their future. However, this required adopting some fairly stringent rules in regards to where they could attend college.

We started by explaining to our children that who they wanted to be and what they wanted to study was their choice. However, since mom and dad would be paying for the college education, the choice of school was ours.

Based on this rule, out-of-state schools were out of the question. We saw no reason to pay $30K a year more so our children could ski the Colorado Mountains. State schools in California were widely available and much more affordable.

Another option was to graduate high school at age 16 by taking a proficiency test and attend community college for two years. This would save at least $20K a year in tuition (even at a state school), and give them the ability to easily transfer to any state university of their choice. If they got accepted at a good university right after high school, we would have no problem paying the bill. Otherwise, it made more sense to attend community college for two years and then transfer rather than attend a mediocre college right out of high school.

Responsible Choices

The results are as follows.

Our oldest daughter applied and was accepted to UC Irvine right out of high school. She lived on campus for the first year and commuted the second year. For her third year, she transferred to UC San Diego, and will be a junior next year in her hometown. Our middle daughter, who recently turned 18, took the proficiency test at 16, completed her AA in a community college, and received an acceptance letter from all of the schools she applied to.

The fact is, in-state schools cost half as much as out-of-state. If you can’t afford the higher tuition and extra room, board and travel expenses, it is prudent to encourage your child to apply to a school nearby. Unless money isn’t an issue, it doesn’t make sense to send your kids out of state just because their friends are going along for the ride. Plus, the transition will be less stressful on their bodies and souls.

The moral of the story?

Our job is to raise responsible adults and show them how to live their lives to the fullest while being practical at the same time. While our children’s education is extremely important, attending their party school of choice is not. If your financial situation doesn’t allow you to put your kids through school, help them make the right choices by choosing affordable yet credible schools while borrowing as little money as possible. Help them make responsible choices so they don’t begin their journey into adulthood burdened with a mountain of debt.

And while we’re at it, let’s all do a better job of planning for our retirement. After all, we want to be an asset and not a liability to our kids.

For my husband and I, it’s two down and two to go. Good luck with your own children!