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Don’t Pay Your Children’s College Education

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This is a Devil's Advocate post.

You should not sacrifice your retirement, your savings, or your future financial stability in order for your children to attend college. They are fully capable of supporting themselves, just as generations have before them.

The average cost of a year at a private four-year college institution in 2007-2008 was $23,712. The cost of a year at a public four-year college institution was $6,185. Both were increases of over 6% from the prior year and don’t even include room and board! [CollegeBoard.com]

Bottom line (a surprise to no one): College is expensive.

With the college costs soaring, parents are increasingly feeling the pressure to borrow money against their homes (if they can) or raiding nest eggs in order to help their children get the best education available. Children are our future, not some numbers on a statement, so it’s natural that parents feel that “parenting instinct” kick in when it comes to their needs. However, sacrificing your retirement or taking on more debt to help pay for your children’s education is a financial mistake.

It’s Not About Love, Sacrifice, Devotion

Before we get into the financial reasons you shouldn’t take on debt for your children, let me be clear that this has nothing to do with whether you love your kids, whether you’re willing to sacrifice more on their behalf, or whether you’re good parents. It’s strictly a financial thing. Michael Jackson has all the money in the world and he was dangling his kid off a balcony, that dude is a terrible parent. I have no doubt you love and care deeply for your children, otherwise you probably wouldn’t be interested in this article, but this involves thinking with your head and not with your heart.

They Have Time, You Don’t

Even though student loans may be increasingly difficult to get, they are still available and should be your first choice when it comes to taking on debt for education. Your children will have decades upon decades of working years that can pay off that debt, the same can’t be said for you. By putting the debt burden on their shoulders, you can enjoy a peaceful retirement while they can handle the responsibilities of managing that debt. (plus, they may be eligible for one of these education loan forgiveness programs)

Also, your retirement savings should be left for your retirement. This is a maxim that applies whether you’re considering buying a new house, a new car, or a new education for your children. Retirement assets are for retirement. Let your children take out Perkins’ and Stafford loans, let them take out private loans, let them take on the burden of debt to pay for their own education – your retirement shouldn’t even be in the discussion.

Student Loan Tax Deductions

When your child takes out a student loan and begins paying it back, they can get a student loan tax deduction for the interest payments. If you pay for their education or take out a loan yourself, you may or may not be eligible for that tax deduction. Letting them take out the debt makes it that much more affordable. Of course, if you were to fund the education with a home equity loan, you would be able to deduct those interest payments but that’s less than optimal. Also, because it’s not a student loan, you lose the favorable interest rates that many student loans receive.

Improves Credit & Responsibility

Establishing a credit history and improving your score is always a struggle for a young professional. It’s the classic chicken vs. egg scenario where credit cards won’t approve you without a history and how you can’t build a history without debt. Student loan debt is a great way to establish and build a solid credit history. It’s a revolving debt and one that you’ll likely be paying for quite some time, so it gives you ample time to prove you’re a responsible creditor capable of making your payments on-time. It’s also usually a low interest loan, low relative to credit cards and other consumer debts, with a favorable tax deduction so you aren’t paying out the nose for this “feature.” While it’s always better to be debt free, if given a choice you’d always want student loan debt to be the one you’re carrying.

Those are three solid reasons why you shouldn’t raid the nest egg and let your children pay their own way. If you’re set on helping your children pay for college, consider opening an education investment fund like a 529 plan or a Coverdell ESA rather than pilfering the 401(k).

{ 55 comments, please add your thoughts now! }

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55 Responses to “Don’t Pay Your Children’s College Education”

  1. cccgreer says:

    My husband is a professor at a large state university, and his experience is that too many students work way too many hours and don’t have the time they need to put toward their classes. He’s even been told by students that they don’t have time to do all the reading because they have to work.

    If you can afford it, I think you should by all means help or even pay all college expenses with a very clear understanding that all financial help stops after 4 years or whatever deadline the parents see as appropriate.

    i inherited some money from my parents and that will pay my kids tuition. It will not impact our retirement much and will reduce their inheritance only slightly.

    My son turned down a full scholarship to the university where his dad works to go to a more prestigious university out of state with very little aid. We told him how much he had in his college account and that he could spend it on his education or have the money for himself after graduating. He wanted the experience of getting away from home, and we supported that, but he knows that graduated school will be on his own. He is a dedicated student and frugal, and I know he will be fine.

    My daughter will be given the same choice when she graduates.

    Save for retirement and education from the beginning every month and you will be able to help your kids avoid starting out saddle with debt and still retire comfortably. I know one family that devoted all raises to education rather than constantly increase their standard of living.

  2. LL says:

    So I’m supposed to make a decision that profoundly affects my childs future based on one guys opinion and the fact that college is expensive. – Don’t think so- Yes there are immature, bratty and entitled kids that waste their parents money at college. Their problems run much deeper than who wrote their tuition check. I’m not about to punish my own kids for someone else’s stupidity. If you don’t raise your kid to understand the value of hard work, and money, and what it takes to feed, shelter, clothe and educate them, its your problem.

    Lets approach this with a little balance here. Not every kid is a scholarship level student, that does not mean they don’t deserve a college education, or deserve to come out of college up to their neck in debt. Having kids means you are responsible for caring for them. In this day and age that means providing for, or assisting them with education beyond high school. That does not have to mean a full perk ride to wherever they think is a interesting school. Sit down with your kid around the eigth or ninth grade and show them how much public and private schools cost per year, and what the benefits of each are. Tell them how much you can put toward their education, how much you are saving and encourage them to save something too. Make them a partner with you in securing their future. Let them decide how much living away, or a private school means to them and how much extra effort they want to put into getting it. Show them what a high student loan payment will mean when trying to budget rent, car, utilities and food on an average salary right out of college, so they know what they are getting themselves into if they take out alot of loans. I worked alot during school, worked in the summers, and started work right after finishing. I’m proud of what I did, but sometimes I wished I’d had a bit more freedom during school to enjoy myself a bit more, and maybe try a few more things, or studied abroad for a semester or a year. I wish I’d had the chance to learn for the sake of learning a bit more. Making a kid work alot during school, or saddling them with excessive student loan debt to handle right afterward takes more away from them than you think.

  3. turdferguson says:

    If you have the resources, then pay you could choose to pay. If you don’t have those resources, then let your child choose a state university or college where the debt will not be crushing. A frugal college student who chooses a public (in-state) institution, will likely be able to leave college with limited debt.

    Some doors may be closed by not getting an elite private degree, but it’s impractical for parents who have to mortgage their future for a child to pay for 30-40k a year (tuition alone) private undergrad.

  4. cardinal2007 says:

    You claim that the student once graduated can claim student loan tax deduction for the interest payments. I can tell you that would only be the case the 1st year out of school, since there is a cap of $50k or so on how much you can earn and still deduct the interest. At CMU undergrads graduate getting at least a 60k starting salary, so they can forget about deducting that money. Because debt is tax-deductible is not a good idea to get into debt, people do that with HELOCs, and mortgages, but in many cases it doesn’t raise their incomes and they still have to pay interest. The amount of Stafford loans one can get is capped, after that students have to seek private loans with really harsh terms, especially now that the credit crisis is going on.

    Lifetime Limits
    Undergraduate Dependent $31,000 (Up to $23,000 may be subsidized)
    Undergraduate Independent $57,500

    If you go to a state school with $9k tuition, 6k housing that is 60k for 4 years.

    If you aren’t going to help pay for undergrad college you could at least have to admit that the student is the one paying the majority of their costs and allow them to claim themselves independent at least, being a dependent severely limits how much financial aid one can get. But I really doubt you’re advocating letting the student be independent.

  5. Jennifer says:

    I absolutely agree that parents should not feel obligated to pay their children’s college expenses. As a freshman in college, I was lucky enough to have recieved a generous merit-based scholarship that covers all my expenses, including room and board since incidentally my father is a faculty member and my tuition is waived almost 75%. My actual Tuition bill each semester is around $500. Although I realize that I got sort of ‘hooked up’, so to speak, with the discount I got from my father’s employment at the University, there are literally millions of dollars of unclaimed scholarship dollars out there every year! Even if your student does not recieve a large lump-sum scholarship from the university itself, there are many other private organizations and companies that offer scholarships. If you encourage your high-school age student to begin looking for scholarships and applying for as many as possible in conjunction with achieving high grades in school and participating in extra-curricular activities, there is no reason why they should have to pay much at all. An hour of effort a few nights a week looking for scholarships will be well worth it to your children when they realize that they will not have crippling student loans upon graduation. Also, as previously mentioned, I think that having a student pay for his or her own education builds character and is a life lesson that college-age young adults need to learn. Mommy and Daddy aren’t going to pay for you in the ‘real world’ – so grow up and take some initiative and responsibility.

  6. J says:

    Financial Aid $ is based on the parents incomes… And a student can’t be declared as an independent until he’s 24 (in most cases)…So why hold him to a standard that the government doesn’t even hold him/her to ? You are the one who chose to bring children into this world, and if you have a salary that can afford to pay a portion or all of college, you are obligated to do so. The problem with our society is that it is a greedy one. Some parents would rather stash their money away then use it on their children. Same with the government, rather than provide a free education it would rather pour money into the bloated military budget (which many private companies profit from) or other endeavors. Parents who make the it’ll make them work harder speech or the I had it 10X harder speech, I feel sorry for and notice how all of the arguments start off with ‘I’… shouldn’t have too… with that frame in mind maybe you shouldn’t have had kids to begin with. That way you could afford a better quality life (that could fully support the I lifestyle).

  7. JF says:

    I didn’t go to college and find myself lost when it comes to helping or understanding the whole college funding process. I thought after a 25 yr marriage “we” would be financially fine to “help” our two go to college. Oops! He found someone new (with four kids). Now, I have -0- to help, my children have moved back home, unemployed, going back to college, 24 and 21 yrs old. I have a mid range income and too much debt from divorce/lifestyle change etc. this debt/income keeps them in a very poor range for loans and grants. Out of luck for $ help from me. Dad is off with his new family. They are looking for work and one is on unemployment. I want to help, but at this point concerned about how I will keep a roof over our heads, food on the table, car insurance paid….school counselors are a joke. I’ve been looking for help and all I find are books for sell with a bunch of promises I know better than to buy. Is there anyone “real” out there to help honest hardworking young adults who don’t need to be taught a lesson in life. We have a real grasp on hard work, honesty, gratitude… We’re not waiting for a handout, I don’t know how to help them help themselves. They need real answers, information, resources.

  8. Knine says:

    I think it is the parents responsibility to pay for their kid’s education. Parents should save money to help start them off in life. I don’t agree that parenting ends at 18. It is a life long commitment.

    • Sean Terrell says:

      Not a single comment on this post includes the simplest of methods of funding college in the US. there are 2 extremely simple routes that I intend to present to my son.

      1) Enlist. the post 911 Montgomery GI bill is crazy. 100% of tuition paid, plus E-5 housing allowance for living expenses. Are you kidding me?
      Lets not forget that 47 states offer free tuition at state schools for National Guard Members. That means your kid has to work 1 weekend per month and travel 2 weeks per year, and their school is FREE. This way they make a little cash, have some responsibility, earn college credit while they are at boot camp and in training, get free medical care, and GO TO SCHOOL FOR FREE!!!!! all while working in the field and giving them experience to put on a resume?

      2) Go to a Military Academy. YOU GET PAID TO BE IN CLASS?? and then upon graduation you are an OFFICER in the military for 6 years? imagine that get out at 27 with 6 years as a managing officer with a college degree? thats a kid that not EVER going to be worried about getting a good job after getting out.

      I am not a recruiter or anything but i did 5 years in the submarine service. I got out with 168 credits, now i am working full time and going to school on my MGIB. I will complete school for a BS in 12 Mos. Its also way easier to actually get paid for the MGIB. you earned it, its not based on need.

      • kim says:

        LOVE IT! Great post

      • SB says:

        Haha, I’ve always said the same thing. Very good advice. My husband is in the army and when I learned all the great benefits you get in the military (there’s downsides too but most of them are worth it) I automatically decided I’d be preaching military (any branch they like) to my kids from day one, when I have them. If I had it to do over again, that’s what I’d have done.

        Unfortunately, there are some people that for whatever reason, physical or mental, that may not be able to join the military. In that case, there’s always scholarships.

        I never even thought about military academies. Very good advice! And thank you for your service. :)

  9. Megumi says:

    i am a 20 yr old woman and i find it disgusting and appalling that parents snub their children desire for them to finance their endeavor in going to college. We all know that college is expensive but the acquisition of knowledge is an inalienable right of every human. You can not work anywhere(worth working) without a college degree and that parent should feel obliged to aid the being that they brought into the world become a knowledgeable and successful individual. Animals in the lowest form exhibit altruism, that is they give up their existence to further their genetic lineage ( and species), it is sad that they can innately comprehend the visceral need for your progeny and species to succeed but us, so evolved humans, take such a selfish unawe inspiring position on the matter. If you lived your financial life correctly you wouldn’t have to choose between retirement and your children’s future. I am saving for my nephews college fund as they are little and when i have children i will save for them too; as it is an awful unnecessary burden to have to deal with where your next semester tuition is coming from due to the ineptitude of your parents. As far as people saying that children whose parents finance their education lack some sort desired attribute that children who pay for their own college have that again is on a case to case basis on how that child grew up not some kind of generic overview of the populous.

    • kim says:

      Why do you act like you can’t do this on your own? There are multiple programs you can qualify for without breaking your parents. Trust me you can…I did! Parents can help with some expenses but college should be out of the question. You are on your way to adulthood and debt is a reality.

    • SB says:

      Here’s the thing- they shouldn’t have to pay for college. So much of your tuition money goes to utter B.S. College does not have to be as expensive as it is but the administration wastes SO much money on frivolity. I’ve seen it firsthand. Neither you, nor your parents, should pay a penny out of pocket or take out a loan to go to college when the school abuses your money and constantly wants more and more. There are options such as scholarships, military GI bills, etc. that are so much better. Military GI bills add the benefit of added experience in your future career field/MOS. Scholarships, however, are wonderful because you’re making the school pay it’s own wasteful expenses. Figure out how to use the systems, not your parents. Nobody should have to pay for an education.

    • Ron says:

      I hope you have children just like you.

    • wow says:

      Wow, a 20 year old who thinks she has the answers. Ask her again in 25 years…

    • Bonnie Sharp says:

      What a brat, grow up ! Your an adult….stop expecting some one to take care of you!!!

  10. A current student says:

    I’m 22 and trying to go to a comunity college. My parents have already made it clear that if they could afford to they would pay/help me with collage tuition. As it stands I’m greatful enough that they are letting me live rent free, and I always have food. I lived on my own before I made the choice to go back to school, so I don’t take those things for granted. I know collage cost a lot, and my parents have their own bills, debts, and life to live, so how can I even expect more then what they are currently giving me? I know they can’t afford to either.

    But unfortunaly the government does not hold the same perception. Dispite all the reasons my parents shouldn’t have to go thousands of dollars in debt for my education, or maybe couldn’t even if they wanted to, the goverment thinks they should be able to pay those thousands of dollars easily. I’m putting myself through collage, but who knows if I can get any finacial aid since my parents are still around.

    Sure it would be nice if students didn’t leave school with vast amounts of debt, but the solution isn’t footing our parents with the bill.

  11. kim says:

    AMEN to someone who wrote an article that makes complete sense to my husband and I. We are letting our son take the plunge into adulthood at 18 and we will not be paying for the choices of education he makes. Why are more parents not letting their children earn their way??? I think it will make him appreciate and really question what he wants to do and PARTYING will not be an option then…I guarantee that!!!

  12. Chris says:

    I, along with my 2 sisters and little brother, had our college tuitions paid for by our parents, including books, room and board. My father has never been very wealthy, just very good with is finances. He would never let any of us graduate college with debt, why would he do that to his children if he can help it? I was a bit easier on him since I had the GI Bill and other military benefits, though this money definitely didn’t cover everything for me. We all graduated with outstanding grades. I’m the only on who not attended graduate school. We appreciate everything our parents have done for us and it showed in our school work. My point is you should pay for your kids education if you can, if they don’t appreciate it then what kind of ungrateful kids did you raise. I have a 3 month old boy and I’ve already saved a fifth of his college tuition with money I’ve earned from a great job I got with a college education.

    - Thanks Dad, wait till you see what I got you for fathers day.

  13. Parent says:

    I agree with this article. My husband wants to bankrupt us to pay for college.

  14. Anonymous says:

    I really think its more of if you can, why not. My parents sent three of us to school – all of us became MD’s and are all earning a good living and are all appreciative of what our parents did. Our parents were not super rich, just had enough, and we were taught to prioritize what we did with our money.

  15. SB says:

    I completely agree with this article! I don’t have kids yet, and as a recent college grad, I have to say the student loan debt IS NOT WORTH IT. College doesn’t guarantee a job anymore, nor is it even all that helpful when finding a job. There are many worthless degrees students get sucked into like womens studies and philosophy. Ever seen any job postings for philosophers out there? I started out doing Accounting as my degree but I’m not a math person, I was only doing it cause my dad wanted me to. I switched to broadcasting, a very skill oriented and, I thought, practical job. Even in this field, there are NO jobs in my area, and many require years of experience that my 18-19 hours of coursework per semester for three and a half years didn’t provide.

    There is absolutely no reason to save for, take out loans for, or pay cash for college. Look at how greedy the schools are, how many worthless programs and clubs are being funded that contribute nothing to a student’s physical or mental well being, and how much money is wasted at administrative “functions” (AKA big elaborate parties for the deans and such with lots of food disguised as some conference or something), and the fact that enough is never enough, they always want more money. I’ve seen it first hand, both attending school and working a student job in their budgeting department where I saw firsthand all the wasted money that the universities just “HAVE TO HAVE” from every student every semester.

    If you can’t get a scholarship, don’t go to college. The very best option is to join the military for a few years and get experience in an MOS (career path) you think would be right for you. Then use your GI bill to go to school for that career. It pays for your tuition, books, housing, and other necessary expenses as long as you’re in school. This way, you get your degree PLUS those few years of built in experience future employers just HAVE to have.

    Trust me, it’s just not worth the 20,000 or more in debt, and worrying about how you’re going to pay for books each semester. DON’T PAY PEOPLE TO MAKE YOU WRITE PAPERS AND TAKE TESTS. Go to school for free, or don’t go at all.

  16. Mick says:

    IT’S ALL ABOUT LOVE, SACRIFICE, DEVOTION (and Trust and Forgiveness). These are decisions that parents make or don’t make when it comes to their kids. Supporting or denying college opportunity for our children is a powerful message that we send to them. Being honest with them through open dialogue about what can and what can’t be supported financially can be a very powerful expression of our love.

    THEY HAVE LITTLE TIME AND SO DO I. I am not entitled to a peaceful retirement and my children should not aspire to a life of debt. I am in the world to do as much good as I can in the shortest amount of time. So are my children. Being a wage slave to unnecessary taxes and interest payments is a waste of our time and talents.

    MAKING INTEREST PAYMENTS TO LOWER TAX LIABILITY IS INSANITY. Im not sure how saving $.28 for every interest dollar paid is a good savings plan. I would rather pay the $.28 and pocket the other $.72 that I earned.

    CREDIT RATING DOES NOT DEFINE WHO WE ARE. Demonstrating a personal financial history of leveraging the future for the present does not prove responsibility. Banks and governments are slow to understand this, but are now reacting to this economic truth. Being financially frugal, generous and content is what I desire my children to understand about their money. Not how to work the system to obtain all that they can enslave themselves to.

    Your reasons for not financially helping our children through college (and life) are flawed through perspective. Putting ourselves before our children is disaster. I am not advocating college for everyone, or promoting the indebtedness of parents as an expression of love. I am suggesting that college debt is a blight on our children and us as parents.

  17. Ernest says:

    I agree fully. I decided to put myself through school in the last decade with the realization that I would have 40+ years to work and build my own nest egg. Why drain that of my father? Besides, the education is going to my benefit. A fair compromise we agreed on was that he would purchase the books and supplies, because he wanted to help in the short term, but my long-term debt shouldn’t become his until-end-of-life obligation. I worked 40+ hours per week and attended classes at night, a decision today I am still well happy with, since I was able to build a resume in parallel with an education.

  18. No college debt, myself says:

    By the third grade, I knew I was going to college (even though at the time I wanted to be a comedian). By middle school, I knew *I* was going to pay for college. Looking back I can say that I had only a dim understanding regarding what my degree choice meant, and what loan debt meant. I chose a degree that I initially did not realize would require graduate school (dumb!). I was incredibly lucky, I think, that I had an instinctive aversion to debt and chose the school that gave me a full ride; and that in my field, you can often get graduate assistantships and such. (Also, thanks Mom for the instinctive debt aversion!) So, I would say: parents, teach your children about finance so they have a better sense of what student loan debt is, and can make better choices regarding what field to enter. If you can afford it, sure, help out financially. Parents, consider making that financial help conditional on a practical degree. (Hey, if your kid REALLY wants to be a history major, maybe they can double major in business and history.) Do not go into hock for stupid decisions on the part of the kid – stupid choice of expensive private school, stupid choice of major, stupid choice of career path. I made it work for myself, graduated with no student debt, make six figures now. HOWEVER, some of my decisions were based on incomplete information, if not downright dumb, and I consider myself a pretty bright person and know I was mature for my age when I entered college. I think most high school kids are probably limited in terms of their decision making capacity and need guidance. Parents should NOT actively facilitate stupid decisionmaking by financing $100K in college and think that it’s their obligation to make sure their kids’ lives happen. Yes, it’s wonderful if you don’t have to worry about money. (For most people, this is called childhood.) But ultimately, kids should be learning to be adults even BEFORE they hit 18. Parental support for college is great but it should not be taken for granted and parents should not be considered horrible if they do not provide (assuming here that they were good parents the PRIOR 18 years, of course – parenthood is an obligation that goes way beyond simple check writing!). And if it is your kids’ choice to serve and/or additional structure is helpful, I think the military is a great path. I was considering it myself (and now that I UNDERSTAND about retirement benefits, not going that route is one of the decisions that I consider made with imperfect information, or perhaps downright dumb). College costs and degree choice should be balanced; kids frankly do not necessarily know enough to do this themselves. Parents should help them, in some cases by setting financial boundaries when they have money and letting the kids make their own way when they do not. But always, always, try to help them understand the ramifications of the choices they are making.


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