Sometimes, I think that my two and a half year old is going on 18. I jest, but time flies and college isn’t far behind. Realizing this, my husband and I started looking into options for saving for college. A financial adviser told us (with a straight face, no less) that given the current trends of tuition increases, we would need to save $3 million to put her through college. I found an estimate that was a little less disturbing, but not much better.
Once I stopped laughing hysterically, I started to consider what our role should be in paying for her education. Or, really, what should any parent’s role be? There seems to be two approaches to this question.
Approach 1: I Want the Best for My Kids
My hunch is that most people feel this way at least at a high level—unless you’re Corrine Dollanganger, that is. Having your kids shoulder the cost of a college education on their own at 18 sounds like a sure way to start them off for failure.
The average graduate in the class of 2013 borrowed just shy of $30,000 for college. Factor in credit cards and debt owed to family members, and that amount jumps to over $35,000. You’ve helped your kids with every obstacle that you could up to this point. Why make your child bear that burden alone?
But—You Can’t Borrow For Retirement
A two-income family theoretically should be able to pay off an education loan faster than a recent graduate just starting out, but that isn’t always the case. In fact, borrowers over 65 are growing considerably, and more than a quarter of federal student loan defaults are held by borrowers from 65 to 74 years old. Social Security payments can even be garnished if you default on federal student loans. Parents shouldn’t risk their future to borrow loans that their children may be able to borrow for themselves.
Approach 2: I Won’t Spoil My Kids
Teaching your children the value of things is important. Children should learn to be self-sufficient, and education is no different. College is expensive, and they need to earn it.
Fewer parents are paying the tuition bills, about 77% in 2014, which is down from 81% last year. Education is not tangible, and parents won’t reap its benefits. The one getting the education should make the commitment—both intellectually and monetarily.
But—Education Isn’t a Toy
It’s an investment in the future. Many parents are more stable financially than their children, and therefore, they can access funding more easily. And excessive student debt is delaying graduates’ abilities to buy homes, start their own businesses, and start families. (Parents, you want grandkids, right? I hear grandkids are awesome.) If you, the parent, can assist in any way, shouldn’t you?
Neither approach is wrong nor right; I’m not pretending that I have all the answers here.
For my family, I decided to save what I can and see where that gets me in 16 years. It’ll be shy of $3 million, but something is better than nothing. I don’t think that the entire cost of her education should fall on me. She should have a stake in her future, which should include the cost of the investment in it; however, I won’t make her do it alone. And I’d like to think that the more I do for her now, the more she’ll do for me later. (Only the best nursing home for me!)
What works best for our family may not work best for yours, but it’s very important that you have open and frank discussions about how college will be paid for. Maybe not when they’re two and a half years old, but definitely before they show up to move-in day.
Parents: which approach did you (or will you) take?