Comments on: Don’t Pay Your Children’s College Education

By: JF

JF — Tue, 15 Sep 2009 04:27:13 +0000

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.

By: J

Wed, 09 Sep 2009 08:55:04 +0000

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).

By: Jennifer

Jennifer — Wed, 03 Dec 2008 23:28:20 +0000

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.

By: cardinal2007

cardinal2007 — Thu, 23 Oct 2008 18:47:17 +0000

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.

By: turdferguson

turdferguson — Mon, 06 Oct 2008 15:47:37 +0000

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.

By: LL

LL — Tue, 19 Aug 2008 19:31:01 +0000

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.

By: cccgreer

cccgreer — Sat, 09 Aug 2008 15:54:30 +0000

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.

By: Mr Credit Card

Mr Credit Card — Sat, 09 Aug 2008 01:34:10 +0000

Not paying for your kids college education is equivalent to giving them a handicap (in the form of debt the moment they start working). This is not the best example to use but the folks from Drexel use the same argument when they loaded up companies with debt. It forces you to be efficient, focused because you “have to pay your interest!”

However, Warren Buffet said that the advice from LBO guys are absurd because it is like saying we should have a knife sticking out of your steering wheel pointing at you when you are driving. It forces you to be careful. But it only takes one accident??

Contrast this to companies with excessive cash on their balance sheet. When prices are cheap, they can take advantage of opportunities and ride out storms better.

I think the same analogy applies to your kids education. When you don’t have to work part time simply to pay your bills, it means more study time, more time to start a company in your dorm! Obviously, if your kid could take things for granted as well.

But if I have not made a convincing argument, why even bother estate planning and leave your spouse with nothing. Makes him or her not take life for granted, give him or her incentive to work. Don’t buy life insurance then. Hey – so what if you he or she has to look after 4 kids! and has no savings.

Mr Credit Card

By: pidgeon92

pidgeon92 — Fri, 08 Aug 2008 21:06:17 +0000

I don’t understand why you have to sacrifice one for another. My father, a blue-collar worker all his life, an immigrant without even a high school education, completely funded my degree, and still retired at 55 and is very well off financially. To him, a college education was the best thing you could achieve, and he was adamant that I would do so. I am thankful that I received my degree without being swallowed by debt. I don’t have children, but I have begun college savings plans for my nieces and nephew, and contribute to those of other children I know. I’d much rather contribute to that than buy them toys.

By: jim

jim — Fri, 08 Aug 2008 20:01:14 +0000

This isn’t a true Devil’s Advocate post because it’s not the prevailing opinion that you should sacrifice your retirement for your kids, though it’s the one I identify as my “right” way. I could have argued either side and labeled it the Devil’s Advocate, right?

Ultimately this is also very cultural. I was raised in a Chinese culture where parents sacrificed for their children because the children were expected to care for the parents when they retired. There was no Social Security or pension, the children were Social Security and pensions.

By: Sassy

Sassy — Fri, 08 Aug 2008 15:11:20 +0000

Can I agree with both sides? We have given our now high school children a budget of what we’ll pay: they are extremely fortunate in that we sold a house in California 8 years ago and mentally earmarked some of the proceeds for their college expenses. It’s all still in our names and they know that if we need to use it ourselves, we will. But otherwise the rules are “here’s what you get, regardless of what the schools tell you we will give you. If there is money leftover when you present your four year degree, it’s yours for graduate school, travel, moving, whatever. If you run out before that degree, good luck, we’ll be cheering for you.” I spent 16 years paying off my law school loans and if my kids can avoid that, I would like to see that happen. But they get that money only because we got lucky on the housing side; if we hadn’t, they would be getting a minimal amount.

By: pfnut

pfnut — Thu, 07 Aug 2008 03:50:59 +0000

Thanks for the reminder. I have 2 kids in college. We want to pay for our kids to attend college, I had a CFP give the same advice you just gave. We will do what we can do. They will have to take out student loans to fund the rest.

By: Monkey Monk

Monkey Monk — Wed, 06 Aug 2008 17:19:51 +0000

We’re somewhere in the middle of this discussion. We have begun funding our child’s 529 plan but our current plans are to pay for only 1/2 to 2/3 of our child’s education. I think at least a little personal responsibility is good for the child to feel at least a partial responsibility for their own education.

I’d be curious to know who paid for yours and your wife’s college education. CMU isn’t cheap.

By: Dan Raymond

Dan Raymond — Wed, 06 Aug 2008 15:30:58 +0000

My wife and I both paid for our college educations, and spent 8 years or so paying off our loans. Moreover, I had to pay for all my car, gas, insurance, food, housing, everything. I worked 30+ hours a week and went to school full-time with an 3.25 GPA. I have no problems with my daughters doing the same.

However, I understand a lot more about saving and investing now than I did when I was 20, and I want my girls to learn these lessons much sooner than I did. So, we have started teaching our daughters early. Right now, half of their allowance gets automatically invested in mutual funds. Usually, most of the rest goes to a savings account at a bank. Sometimes they get a little more for extra things they do. They also put a lot of their Christmas/birthday money into their mutual funds. By the time they go to college these accounts will be worth several thousand dollars. So, yes, in a way we’re helping them to save for school. From their perspective, they will be spending their own money, and not be getting a free ride.

For anyone that’s interested, Homestead Funds has very low initial investment requirements, and you can make additional investments of almost anything. They are no load funds and you can get started with just $500. My daughters are invested in the Value Fund. Over the last year, their one fund has been kicking the snot out of almost all of my investments. (I am not affiliated with Homestead Funds in any way, I just think they’re a great place for new/young investors to start.

As far as raiding your IRA or 401K to pay for school, that’s just plain stupid in my opinion.

By: Briana

Briana — Wed, 06 Aug 2008 14:50:10 +0000

I totally agree that we should not sacrifice our own personal retirement. Plus, I think that the kids who had to pay for some part of their education valued it more and work harder. I will help my children out but I will not make myself go broke doing it!

We do add some money to our children’s 529 plans and put their birthday and holiday money it. As well as use Upromise and earn a little extra with the things we buy at the grocery and online.

My parents always told me I had to study hard and get scholarships. So I did. It didn’t pay for my entire education but it did help out.