I asked a friend for a blog post idea, and she suggested I write about funding your child’s college education – do I feel that we “owe” our children an education and is it financially responsible to save for your child’s college costs at the expense of your retirement account.
I was blessed to have family members help out with my undergraduate education at a time when there was no such thing as online colleges. I know that’s a rarity, and I know how lucky I am for it. It was part of the reason that I could afford to look into law school. I think I may have taken it for granted at first, but after realizing the debt my friends were incurring, I realized just how lucky I was to be in my situation.
Because of that, I do feel that I owe a college education to my children (or at least education assistance), but it’s not something I owe to my (hypothetical) children. It’s more that I feel that I owe it to those generous family members to pay it forward.
Of course, doing the math, this is easier said than done. I played around with some tuition calculators, and to give one child the same college education I had (undergraduate, not grad school) in 20 years may cost over $120,000 per year. I can’t even comprehend that. And that’s just for one kid. Ouch.
I know that there’s an argument that children learn more from having to pay for their own education. They are more cautious about choosing where to go, and they better learn to manage their money. That may be true, but I would like to be able to give my kids at least a little boost to help them out. I learned to manage money, though going to grad school and figuring out how to pay for that may have played a part. Either way, I think I can try to teach my children about money in other ways.
Of course, I absolutely don’t feel that I should pay for an education for my children at the expense of my retirement accounts. I would be doing a disservice to my kids in that instance. The last thing I want to do is have to rely on them to take care of me in my old age because I can’t afford it.
A friend of mine is currently dealing with this. His parents spent a lot of money while their kids were young in order to give the kids a good life and good grade school and high school education (they all funded their own college educations in various ways). Now his parents are struggling to make ends meet, and while he is in a position to help them out with a few hundred bucks each month, they refuse to take it, because they don’t want to take money from their kids. He hates to see them like this and knows that it’s inevitable that they’re going to end up needing their help in a big way. I don’t ever want to put my children through that.
So that’s where I stand. I’m sure others have a different view – I know that my desire to pay forward the generosity I received is the biggest reason why I want to be able to pay as much as I can for my children’s education. Where do you stand? Do you plan to/want to help your kids out?
Megan is a 30-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.
1. Retirement first and foremost so that my kids never have to worry about me
2. Education plans second.
I have this idea to fund only 50% or less up front (maybe none at all), and at the end, if they worked hard, did what they wanted and were overall good kids.. and they came up with a financial plan to pay off their debt, I’d make them do the debt repayment for a year to see if they could pay off their debt on a schedule, and then after seeing papers of what they have left to pay or just observing, I’d gift them with the remainder of the money if I had it, to clear their debts.
And I’d gift equally. If I give $20k to one child, the other gets $20k, even if their loans were less/more.
Just an idea kicking around in my head on how to give them the best possible education, coupled with financial smarts/discipline without making them do what I did for the first couple of years and live as a debt-obsessed woman.
I’d like to help my hypothetical kids as well, but I also don’t want them to feel entitled to a free college education. Like you, I will likely help, but not at the expense of retirement.
Regarding gifting equally. I have heard this before and it sounds nice, and ideally that is what would happen. But my parents most certainly have not gifted me and my sisters equally, and I don’t resent it. My little sister has received much much more help, because she has needed it. And that’s ok. I’d rather be in my shoes.
We started paying for our daughter’s college education the first year and since then, my father has given us $10,000 each Christmas to be used for our kids’ education. If there is a grandparent reading this just remember that your kids probably need financial help more when they are raising their children than later in life when the money can be inherited. My daughter works part time during the school year and more in the summer in order to pay a $385.00 rent plus utilities on her apt. That helps a lot. Get your kids working and saving early.
I feel that I owe my (hypothetical) children a free college education. My education was covered by scholarships. I did work part time, but not my first year….I had a lot of fun in college, and I would like to give my children that 4 year period of growing up (don’t have to deal with money too much, but have to deal with living on your own).