A college education has, for a large percentage of society, become the de rigueur entry-level degree. “Should parents pay for college education” is a question where the answer is always, “it depends.” In today’s economic climate, I imagine that many parents are having the difficult talk with their kids as tuition savings have fallen or parents have lost jobs. The Wall Street Journal reports that because of recession, many parents are deferring saving for their children’s college educational expenses.
Because of the economic crisis, 47% of parents are saving less or aren’t saving at all for their kids’ education, according to a Gallup survey released in May by student-loan provider Sallie Mae.
No, parents shouldn’t pay for college education:
Some say that paying for one’s own education through scholarships, jobs, or loans instills a true appreciation for the education and gives the kid the satisfaction of “making it on his/her own”. Parental financial responsibility doesn’t extend to college. Parents should focus on their retirement first.
Yes, parents should pay for college education:
Others argue that colleges and the government expect a certain level of family contributions. The cost of attending college dramatically outpaced inflation in the past 20 years. Too much work during college may delay graduation and a heavy debt load is crippling after graduation. Parents have a responsibility to prepare to contribute to tuition.
My thoughts:
My parents experienced the Tech Bust of the early 2000s right before I went to college. They still paid for the bulk of my college education, but I knew they made huge sacrifices to do so. Mom has also indicated willingness to give me some money for graduate school when the time comes. Education is one of the ways that my parents show they show their support, and I’m so grateful for that.
So it is with that background that I would like to (and plan to) pay for a large portion of my kid’s college education (educational costs is one reason why I’m strongly considering having a single child, if I do have children). Of course, I expect he/she to work hard, apply to scholarships, and take out loans, but I would also expect that as a parent, especially one who has received so much educational support from her parents, to offer substantial financial assistance to my child’s education.
I don’t see kids in my future for a long time, but by the time I become a parent, I want to be financially prepared. I definitely think that retirement should come before kids’ educational expenses, but with proper planning, I hope to save for both goals.
Some personal finance bloggers have opened 529 plans for their children. Overachievers that they are, some (such as Jonathan of MyMoney Blog) even open 529s BEFORE they have kids. That’s my plan of action as well. I’m going to focus on saving for my future and investing in myself, so that once I decide to have a child, I can appropriately divert some resources to the Grand Enterprise of Kid-Raising (which will probably be more expensive than I can fathom. But I’m NOT going to start saving for my kids’ diapers right now).
Are you planning to contribute to your kid’s college education? How does your experience with your parents influence your thoughts on the subject?
You May Also Want To Read :
I'll be graduating soon. I can't believe that four years have gone by, just like that. Mom can b ...
Have you heard of the boomerang phenomenon? Boomerang kids refers to young adults who return hom ...
Personal finance, as we pf bloggers like to say, is just as much "personal" as it is "finance." ...
{ 2 trackbacks }
{ 18 comments… read them below or add one }
Yes, I am planning on paying for my children’s education. My personal experience? I am one of 4 children. My parents couldn’t afford to pay for everyone. So they chose their only son and their oldest daughter because they had the most “potential”. This left me and my younger sister with no funds, therefore, we paid our own way. The two my parents paid for? The two who were supposed to take care of them in their old age? Yeah, they live far away in other states and NEVER visit! They also married spouses who refuse to work. My younger sister and I? We visit and take care of them and we married spouses who are willing to work. Karma?
Your parents must be grateful that you and your sister have stepped up to the plate and take care of them now. I know that parents don’t always treat their kids equally, but to exclude some kids from support because they don’t see “potential”… just seems to rub me the wrong way. [WellHeeledBlog]
I’m a long way off from having kids, but I want to pay for as much of their education as is possible. My parents did that for me and it is so nice to not have any college debt and be able to start my grown-up life free and clear. It’s certainly not a right that your parents will pay for college, but it is a wonderful gift that I hope to give to my future children.
it's all about planning ahead these days… you can set-up an RESP which is a great way to invest in your children's future
MTHIRTY has just shared a widget with you on behalf of CIBC http://www.mthirty.com/transparency
I was fortunate enough to get a full-tuition scholarship to a private school and then my parents paid for my room and board. I also had other funding which covered books and then I worked from my second year of undergrad on to help with other living costs. Had I not received that full-tuition scholarship, I would have passed on private school and gone to a public school instead. I really didn’t want to be saddled with almost $100K in school loans after undergrad.
I won’t be having kids for a while (knock on wood), but I’m hoping to at least help them pay partially for school. I’m hoping I’d be able to pay for a public university education in its entirety if need be but if any of my kids wanted to go to private school, I would only commit to paying for room and board and they would have to work on getting funding for tuition themselves.
I would like to help my kids (when I have them) through school, but I think that it’s a joint effort. I will expect my children to help pay for their own education. I think I would like to pay for most of their first year, then 75%, 50%, 25% of each year following (assuming a four year program).
If I have more money – great! I can pay for more, if I don’t, then maybe the above won’t work. We’ll see when we get there.
I think it would depend on my financial situation and the career I choose to pursue. If I decide to climb the corporate ladder, then I’d likely be able to save enough money to pay for an expensive private college. If I opt for a more creative career, then it’s probably going to be a state school or a private school with generous financial aid.
While I went to a top private school (paid mostly with financial aid from my generous school and $16k in loans), I definitely do not believe it’s a right. It makes a difference for getting your foot in the door sometimes and sometimes gives you opportunities a lot of people don’t have the chance to experience, but as long as you’re smart and work hard, a state school works just as well in the long run. At any rate, I picked this school because it gave me the most money and would cost my parents the least.
My older brother, on the other hand, also went to a top private school even though he applied to a few good state schools and received scholarships. My parents took out $100k of their retirement money to pay for it. (This was in the mid 90s.) He also decided to stay an extra year for a Masters and has continuously complained about the $40k in loans he came out with as if it’s his right to have parents pay for an expensive education. So now my parents are screwed for retirement partially because of this, yet they insist that he wouldn’t have the high paying job that he has now without his degree. We’ll see who ends up taking care of/making time for them in old age…
I wrote a post a few months ago that said parents should be prepared to cough up some cash for college simply because our system is based on parental support. The financial aid forms figure out the “family contribution” and the college will then help to close the gap, but won’t necessarily cover the family’s expected portion even if the family refuses to help. This could mean the difference between expensive private loans or not going.
Personally, our financial goals will limit what college savings we can accomplish. It’s simply too many goals between retirement, paying off the mortgage, savings etc. But we won’t neglect college completely, we definitely will put some money aside and encourage the rest of the family (ie grandparents) to aid in that quest.
My parents didn’t pay for my education, and I don’t expect to pay for my future children’s education either. I think that it will teach them the value of education, and they might be less likely to slack off if they’re using their own money to pay for their degree. That’s just my opinion though.
I am half in agreement with you on this one. My parents did not pay for my college either and I worked through school and in the summers to be able to graduate. I applied for my loans and grants and did everything I could to be able to afford tuition. I took advantage of every second in school since it was so darn difficult for me to be there.
I'll be honest, it was hard. Seriously. But I did it and survived. I fully believe it has had a huge positive impact on my development as a person and I know that my children could survive through it as well.
With that said, I do want to be in a financial position that I can put my children through college. I am not sure how I will handle the conflict but for the most part, I would still expect them to apply for loans and grants. I will have to work out some sort system where, let's say I pay for their full tuition, but supply absolutely no living expenses. They would be expected to work for all living expenses and entertainment money. I might be okay with that.
Clearly I have more thinking to do about this but I know that it is completely feasible for a person to fund their way through school.
I think paying for tuition and letting them handle living expenses is a good compromise. Or, you can give your kid a certain amount and let them decide. One of my friend's father saved $100K for her grad school education. The deal he gave her was: here's $100K to spend on your education – whatever you don't spend on school is yours to keep. She was deciding between a highly-ranked school several hundred miles away and another school where her father taught (and so she qualified for 1/2 tuition or something), and she went to her father's school, paid $40K total for 2 years, and pocketed the $60K to start her professional life. If I can do something similar for my kid (and my kid is smart enough to do a cost-benefit analysis and use the money for a good purpose), I'd be very happy.
I love this topic! I recently saw an episode of the Suze Orman show where a caller talked about the panic she felt upon being told by some online education costs calculator that she needs to save $630k over the next 18 years in order to pay for her child’s college education. SIX HUNDRED AND THIRTY THOUSAND! Panic, indeed.
It got me thinking, I really wish Suze would feature a caller in her ‘Can I afford it?’ segment who is questioning whether or not they can afford to have a child, period.
I sure as hell feel as though I can’t!
My parents did not contribute to my college costs. I received some grants, some scholarships and took out some loans. Today, my student loan is in excess of my parents’ mortgage and can only be described as “paralyzing.” I honestly feel as though it is something that will be with me for the rest of my life.
If we did have a child, I would love to be able to pay for at least part of their education so they can enter the professional world with as much of a clean slate as possible. However, I can’t even get my head around how we could go about saving $630 for my child’s education costs, while I’m still paying off my own!
So I’m pretty sure that if I asked Suze if we could afford to have a child, she’d give me a big, fat DENIED!
And she’d be right.
$630,000?! I’m glad I didn’t bump into that calculator. It would be interesting if Suze took on the question of “can I afford a child”, but I think that’d be too inflammatory a topic. [WellHeeledBlog]
Yes, I will help pay for my kid’s education (both undergrad and grad). But part of the deal is that they’ll have to be actively looking for scholarships and getting a part-time job.
I am the only child of two working parents who didn’t pay for my college. However, the FAFSA is based on what your parents make so I didn’t get any money that wasn’t scholarships. So I paid for school by myself. I will not be paying for my children’s college. Among the people that I know, the people whose parents paid for their college, they are frivolous with money and don’t have much sense of responsibility. The ones who had to pay for themselves, tend to be more responsible have a better sense of the future and how to handle financial responsibility.
The FAFSA set-up is one reason why I want to contribute to my kid’s education – he/she would be penalized under the system if I didn’t give anything. I agree that “having a stake” in one’s own education is useful, but I don’t think that a 100% stake will be necessarily anymore helpful than a 25% stake in teaching them financial responsibility. [WellHeeledBlog]
My parents paid for rent/food for all of their children (four) through their first degree. Their logic was that that was what they would pay for if we lived at home. We paid for tuition/books/spending money. I was fortunate enough to borrow money from my parents to pay my upfront costs when I couldn’t afford them and pay them back with my part-time job as the semester progressed. For the two of us that went on to post-grad (med and law), they co-signed our loans and paid our interest for the first two years (and all three of my years). My partner’s parents paid for everything for him through his undergrad and law degree, encouraging him and teaching him to save and invest any money he made on co-op terms and part-time jobs. But he was an only child. Their thought was that they could afford it, so why put him into debt unnecessarily. Now I have over $45,000 in debt and he has over $10,000 in the bank.
I think there’s definitely pluses and minuses to any set-up. The fact that parental income is always counted in government loans and many bursaries (even when you get to post-grad!) is motivation for me to try and contribute at least as much to my child(ren)’s education as my parents did to mine. My partner also wants to contribute if we have kids and they want to go to university and maybe beyond. Our feelings on this have definitely influenced the number of kids we plan to have, if any.
I plan on paying as much as I can for my daughter’s college education…only after she has graduated. I paid my own way and I watched many friends screw around on their parents dime. If she does well in college then I will pay as much as I can. If she does poorly it’s on her dime.
I’m a hypocrite on this topic. I’m still going to college, but I’ve turned down my parents’ offers for help many a time because I like the feeling of doing this on my own and knowing I’m making it on my own. I’m prideful, I know.
But if I ever had children, I would want to pay for most of their education. I know the hardships that come with making it on your own, and I wouldn’t want them to even think twice about going to school without working. Hopefully my children don’t inherit my pride!
Opening 529s before having kids? Great idea. I need to start doing that!
I sort of hate this topic. not because it is unimportant or even overdone, but because you can arrive at such different answers and they all seem to make sense, and it is just confusing.
I plan to help some, assuming I am able to. Maybe not “most” and I’m sorry, a B.S. is all you get help with. But I will also help them make good financial decisions. It is not required to have crippling student loans in order to get a good degree, even with very minimal parental help — just don’t go to a school that is financially out of reach. There is just no need.
But it is so far away that who knows what higher education will be like when the time comes.
You’re absolutely right – it’s hard to tell what higher ed will be like in 25 years, but that doesn’t mean you can’t prepare to the best of your abilities and expectations. After all, who knows what retirement will be like? If I want and expect a good retirement, I have to make saving for retirement a priority.
It’s personal finance, so all answers probably is the right answer in certain situations.
I think the most important part is just to get the expectations and communications clear between the parent and children. [WellHeeledBlog]