Paying for college isn’t everything: Why it’s OK to have other priorities
Put yourself before your kids. Sounds like lunacy, right?
Well, it depends. When it comes to choosing between your own retirement and your child’s college education, the answer is simple, some say. Your child can get a student loan for college and various other forms of financial aid. There is no such loan for retirement. While at first blush it may appear that you’re minimizing the value of a college degree, the opposite could likely be true.
Forcing your young adult to contribute to financing his or her college education may actually result in better performance since the student will, literally, have more invested in the process.
MSN Money’s story, “6 reasons not save for kids’ college” is to some as shocking as it is thought-provoking. Rarely is the topic broached in such bold fashion: Your kid will be just fine, if he chooses to go to college at all.
Savings plans designed to help you get a jump-start on your child’s education have proven valuable to many. Truthfully, it’s perhaps never too early to begin saving for something that could easily exceed $30,000 per year for a private school, and more than $15,000 for an in-state, public school. The idea of postponing saving in place of say, purchasing a home or saving for retirement, seems off-center.
However, when the time comes — assuming the economy will recover, along with home values — you could get a home equity loan to pay for college.
Well, that’s one reason. Read here for the others:
– Education funds have pluses and minuses
– Students can help foot the bill with a part-time job
– You can save thousands of dollars by sending your child to junior college, and by allowing them to stay at home another two years
– Your financial situation could change — for the better. You may be better able to finance college in the future than when your child is very young.
– College isn’t necessarily the preferred path for everyone
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13 comments Add your comment
R
December 18th, 2009
8:44 am
Yeah loans are the way to go….that is, if you want to be paying out the wazoo with your entry level salary. Go for it! My parents saved up for my college and I ended with a degree in less than three with NO DEBT!!! What a feeling! And yes, I did lose HOPE once during that time. That’s why you save.
K
December 18th, 2009
8:56 am
While you may not save for all of college I do think it is important to start saving some. Some kids if left with the idea that they are going to have to pay for all of college right out of the gate may choose not to go. Having at least enough saved to get them through the first year I think is important. College is hard and working and going to college could prove to be too much for alot of 18 and 19 year olds but better handled as they learn the college ropes.
Jeff in Roswell
December 18th, 2009
9:06 am
We plan to have some put away and if my son chooses to go to college, he will have to chip in. College tuition paid by your parents is not a right. My parents helped me, but the bulk of costs was taken on by me. My inlaws paid for my wife’s tuition only, she had to work while going to school for living expenses. After we married, we then paid for her first Masters and now we’re paying for her EMBA – ugh! This one is costing some serious dough! I think the key to student loans is to take out as little as possible. You have to live frugally. The longest either one of us had an outstanding balance on our student loans (after graduation) was two and a half years. Start paying them as soon as possible and pay extra.
Anna
December 18th, 2009
9:47 am
As a follower of Dave Ramsey, I completely agree. Education savings is on my list, but falls just below retirement in terms of priority. My boys both have 529s and I will continue to contribute to them, but not at the level that I contribute to my retirement. And if one of them needs to be cut, it’s the 529.
Catie
December 18th, 2009
10:04 am
Yes, there are many more ways to pay for college than for your retirement, so take care of yourself first. There is a credit card (probably more than one) that links to your 529 account. Depending on the merchant, anywhere between 1 and 4 percent of whatever is put on the card goes directly into the 529. It’s easy and painless, and we put everything on the card we can, and pay it off each month. Granted, it’s not a huge amount of money, but with college expenses every little bit will help and it can add up if you use it over several years.
Elliot Garcia
December 18th, 2009
10:11 am
I will gladly pay for my children’s college. I put myself through school and am grateful that I can now provide for my children. Without a college degree these days, you got nothing….
GD
December 18th, 2009
10:42 am
Seriously? Don’t save for your childs education? Take out a home equity line!!!!!!!!! That is the worst advice I have ever heard. You obviously don’t have any finacial sense at all.
Ozzy
December 18th, 2009
10:46 am
Me too Elliott. I put my self through and took the path of least resistance. I didn’t do what I originally wanted to do in school because it was too time consuming and I had to work. I had to go back and follow the original plan after I had been out for a while and saved some money.
If I knew then what I know now, I would have gotten some loans, but I didn’t want to do that back then. Anyway, I’m glad I can now provide for my kids college educations, and I’m happy to do it.
Blue
December 18th, 2009
12:16 pm
GD; try to read what they are saying; not that you should NOT save for their education, but that you shouldn’t do so if it means you CAN’T finance your retirement. The simple truth is, if you do NOT have money for retirement…who are you going to have to lean on or move in with? Anybody? Your kids! They have OPTIONS to fund school (scholarship, grants, loans)…you have NONE if you have no money at retirement. I would rather that my kids have some burden now (to have to find a way to fund school) then have to decide if they are going to let me live with them when I am old! YOU obviously…don’t have any “finacial” sense at all.
Rana Cash
December 18th, 2009
12:24 pm
I was fortunate enough to go to college on a full athletic scholarship. I know that I’m the exception in that way. I believe parents should help their children pay for college, but if your child is 4 years old, and you’re nearing retirement, I think it’s better to save to reach that retirement finish line and then turn your full attention to your kids’ college education. I think, if possible, parents should help their child get through school — and the child can help along the way as well.
Catie
December 18th, 2009
2:35 pm
Interesting thought, to be nearing retirement with a child that’s four years old
My parents mostly paid my tuition and room and board, but I was also responsible for some of the financing and living expenses, which I did through work-study and informal things like tutoring. With myself, and with others I saw, those who were financially contributing themselves (some the whole thing) took their education a lot more seriously. I went to a private college and it was clear that a lot, though not all, who were there on Mom and Dad’s endless money supply spent a lot more time playing and a lot less time learning. Even if you can afford to foot the whole bill, please consider having your child assume some financial responsibility. I really think it helps them “own” their education more. Also, college is a transition anyway, so it helps prepare them for the real world. JMO.
HP
December 22nd, 2009
8:20 am
I went to a very expensive school, which my parents helped pay and I footed the rest with student loans. I worked during the summers for book and “spending money” (beer, pizza) during the year.
Believe me, I think when people “put in” on their education, they take it a lot more seriously. I had a lot of spoiled, entitled classmates…and they didn’t graduate…but their parents still had to pay the loans they took out for their education, as well as the money they shelled out for living expenses, books that were never opened, etc. (these were also the kids who didn’t have any type of job on campus).
Just some food for thought.
Tara C.
December 29th, 2009
9:43 am
I don’t plan on putting my kids through college. They’ll have to get scholarships, loans or pay as they go. However I will help them pay off student loans.