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Are you planning to help your kids pay for college?

Categories: Money, Parenting & Family


We met with a financial advisor the other day to get our finances organized. Nothing fancy, but we wanted to make sure we had enough (and the right kind) of life insurance, were maximizing our savings and had a solid plan to save for our daughter’s college.

According to our financial advisor, a year at a private college is projected to cost almost $100,000 by the time our daughter turns 18, which is in 13 years. (I’ll just pause a bit here as we all stare at this INSANE number. My husband and I both went to the same liberal arts college, which seemed insanely expensive at $30,000 per year. Wow.)

This means that a four year private college education will cost nearly $400,000 for one child. (And this is on top of the $200,000+ that it costs to raise a child during his or her first 18 years of life.) The only question that comes to mind when I see this number is how in the world will most non-ultra-rich families be able to cover this? Of course there are scholarships and loans and work study jobs, all of which can reduce this number, but what remains will likely still be scary.

As we were going through our various numbers and goals, our financial advisor asked if it was important for us to save for our daughter’s college education. My husband and I both paused because it was an unexpected question — of course were want to save for her college education. It’s never entered our minds not to. I went to college just four years after my family immigrated here from the former Soviet Union and my parents cobbled together enough money to pay for what I couldn’t cover with loans, scholarships, work-study and working at Friendly’s in the summer. It was tremendously difficult for them and I am eternally grateful. I’ve always planned to do the same for our daughter (although I’m hoping it will be easier given that we’re starting to save early.)

We told the financial advisor that yes, of course, it’s one of our big financial goals. He then reminded us that we need to prioritize saving for our retirement above saving for our daughter’s college. “She can get scholarships and you and she can take out loans to pay for it, but there are no loans for retirement,” he told us. This mades sense, actually, but we’re still going to be putting aside quite a bit of money every month into our daughter’s 529 college fund. Helping her pay for college is one of our responsibilities as parents, in my opinion, but I’ve recently had conversations with several people who think about it differently. “If I can help my son, great, but it’s not something I want him to plan on,” an acquaintance recently told me.

Don’t get me wrong: I think it’s essential that our daughter carry some of the burden of paying for college on her own. Both my husband and I graduated with a lot of student loans, which helped each of us be much more focused and responsible with money, quickly. I think having a huge stake in my college education also helped me get a lot more out of it — I didn’t want to waste this very expensive experience, one that I was going to be paying for as well as my parents. But my husband and I want to be ready, financially, to cover a lot of our daughter’s college costs and we’re being diligent about saving for it, which is neither fun nor easy.

Do you plan to help your kids pay for college or do you think it’s their responsibility to figure it out? Is saving for college a core part of your monthly budget?


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17 comments so far...

  • I have taken advantage of a new Reserve GI Bill program that allows us to name our children as recipients of the GI Bill instead of using it ourselves.

    That is, frankly, all we’ll be able to do. 529s are too unstable and frankly, we don’t have any leftover income for any real savings plan. The cost of this GI Bill will come straight out of my pay and the cost vs. return is far and away better than any college plan out there.

    We’re fortunate to have this opportunity for her and even though the payout increases with the cost of education increases across the board, it will not pay for a private college and we know we’ll still have to find a way to cover what this will not.

    But we do need to look to our retirements. Right now, all we have is my military reserve retirement when the time comes. My 401K died last year in the market crash. We’ll start that again soon too…

    And long term life insurance. A MUST - and the younger you are when you start the plan, the better. This way, you can be assured of not draining all of your income resources should you require long-term care (such as a nursing home) down the line, nor will you leave your children with a heap of debt.

    We’re covering all of it, but there will always be gaps.

    Phe  |  August 10th, 2009 at 8:33 am

  • I am working on the same thing. Planning the financial future for the family. Of course, retirement comes first, college fund comes second. It’s important to invest in our children to make sure as adults they can be financially independent. My father always says, “I don’t have a million dollars in the bank, but the fact that my four kids can feed themselves, is more then a million to me.”

    vera babayeva  |  August 10th, 2009 at 8:38 am

  • I paid my own way through college, with grants and loans and by working at least two jobs all while being a full time student. My parents would have loved to help me out, but their financial situation was such that they couldn’t. It was really difficult, and I graduated with about $40K in student loans (back in the early 1990s), but it was worth it. I never skipped class — once I did the math, and realized I was paying $60 for every class while earning $7.50 per hour at my highest-paying job, a blowing off class or neglecting to study never seemed worth it.

    Will I pay for my children’s college education? I’d like to help out — I want them to work, not struggle. But I don’t feel obligated to pay all the bills without question or provide them with the stereotypical American college experience (party/boozing/playing/etc.).

    Lylah  |  August 10th, 2009 at 8:51 am

  • I grew up in an evironment, where parents paying for kids education is the norm. I do not know of a single person who paid for themselves till they completed there undergraducate. Masters was as a different ball game thought.
    If we worked while we were studying, it was extra pocket money. Most kids lived with there parents and hence no room or board. It was far simpler. And yes, our parents did instill a very strong responsibility when it comes to money. Thouhg they didnt let me pay a dime even at my masters level for tutions, i did insist on working and paying for my own room and board. It was deifnitely easier for me, but the education of money and that it doesnt come free was instilled in us from a very early age.
    It definitely made me feel secure and greatful to them for this. I would like to provude for my daughters education, but at the same time instill the responsibility and the respect for money that my parents did for me.
    And hopefully we will be able to do both successfully- college fund and retirement plan

    GNSD  |  August 10th, 2009 at 9:39 am

  • I agree that a reasonable retirement savings is a higher priority than saving for your kid’s education. You will likely reach a time in your life when you do not have the ability to work enough to pay all of your expenses. You don’t know for sure what your future costs will be nor what will be the value of your assets. You don’t know that you can rely on social security, medicare, or even your dear children. Personally, when I’m 90, I don’t want to be living on a hope and a prayer if I can avoid it.

    I paid for 100% of my education. I worked while earning two graduate degrees (from a private university) and a lot of debt. I paid off my debt in about 7 years because (a) I had learned how to work my butt off and (b) I had learned how to live on a lot less than what most people think they “need.” Part of my work/study ethic goes back to long before I went to college, because I always knew that I would have to pay my way through school and through life - that if I ever wanted those things kids dream of, I wasn’t going to get them by slacking on my homework or taking time out to “find myself.” So the fact is, my parents helped me a great deal - they sent me to a challenging school a year early, to keep my brain in high gear; they gave me lots of chores and responsibilities, to teach me marketable practical skills; they said “no” to frivolous requests but gave me an allowance and encouraged me to go find paying jobs; and they always encouraged me to look to the future and act accordingly. It is hard to say whether I would be as successful if my parents had resolved upon my birth to pay my way through school.

    My parents did not have the means whatsoever to save for my education. I was #3 of 6 kids and we were a working class family. Now, I will probably have the means to help my girls (though it’s hard to say what the future holds nowadays). So this is something I struggle with - is it better to pay or not pay? What is the right message to send them - that they will surely go to college / grad school? That they must exert themselves if they don’t want to flip burgers all their lives? Or something in-between?

    I have saved some money and I don’t have to decide “today” what I will use it for. What I am currently thinking is that I will be willing to give my kids loans (at interest) if they can’t meet their educational goals through scholarships, work, etc. Judging from our current situation, they are unlikely to qualify for subsidized student loans or other government subsidies, which were available to me up to a point. So it wouldn’t be fair to say “you can do it, the same way I did.” But if I do loan them the money, there will be prerequisites and strings attached, such as not violating laws (drinking age, etc.), not spending “my” money on stuff I don’t approve of (cigarettes etc.), working some minimum number of hours, meeting realistic academic goals, etc. The interest would go into a fund and it could eventually go toward a house down payment, wedding gift, charitable donation, or even a fund for their own kids’ education. That’s my current thinking, anyway.

    SKL  |  August 10th, 2009 at 11:10 am

  • My parents paid for my education and the education of my brother and two sisters. Wellesley, Tufts and USC, though there were many scholarships to help pay for our colleges. My parents both worked and we lived comfortably but we were far from rich. Culturally for me it is the norm for a parent to pay for the child’s education and I fully expected to pay for my child’s college. My wife and I started planning for college YEARS before my son was born. It was one of the reasons we were going to limit ourselves to two kids (we ended up with one due to unforseen circumstances).

    I NEVER had a doubt in my mind that one day I’d be paying for my children’s education. When you grow up knowing that you’re college education is taken care of, you have certain expectations of yourself and future. And you understand the responsibility of educating your own children as well.

    Glenn  |  August 10th, 2009 at 12:41 pm

  • The $100,000 figure was for private universities — did he give you a figure for public universities? They will be much less, so it doesn’t have to be an all or nothing proposition.

    The GI Bill paid for my grandfather’s education. My grandparents paid for my parents to go to college, and my parents paid 100% of my college expenses, and I intend to do everything I can to do the same for my children.

    SoftwareMom  |  August 10th, 2009 at 2:26 pm

  • I paid my own way, but my parents were both divorced a couple of times over so hey had no means to help me.

    We are saving money for our kids’ education. We also don’t plan on telling them about that until they are probably ready to go; we want them to do their part as well :)

    Angella  |  August 10th, 2009 at 8:00 pm

  • My younger sister found a smart solution to this problem, she got her business degree at the University of New South Wales, and yes this is Australia. One year of full time study including all living expenses equals one year of tuiton fees in the US. My sister got her degree without any debts which my parents liked a lot, she also hooked up with an Australian guy and lives in Sydney now, something my parents didn’t like a lot as they hate the long flights. What I try to say is if your college fund isn’t gonna make it all the way through college, then look for alternatives, there are many highly regarded overseas universities at half the costs of its American counterparts.

    12 Weeks Pregnant  |  August 11th, 2009 at 5:42 am

  • When I saw that we need to save $800 PER MONTH starting now (I have a one-year-old) to send 2 kids to college, my eyes just sort of glazed over…

    My parents paid my full tuition, room & board, but the deal was that anything above and beyond state school tuition was my responsibility (I went in-state). While I wish I could give the same to my kids, I just don’t think it’s possible. A family friend (with 4 kids) told me that their goal was to have each of them graduate with no more than $15K in debt, which seems much more manageable. I guess our kids will have to meet us partway, but I do believe that being partly financially responsible will encourage them to take their studies more seriously.

    slm924  |  August 11th, 2009 at 11:16 am

  • My husband got a football scholarship to Ohio State, I joined Air Force ROTC at Tennessee State Univ. We both had full rides, and we both worked our butts off for them. We are very well rounded and appreciative individuals. My parents had saved up some college funds but since I didn’t need it they used some of it to buy me a car my Sophomore year. My husbands parents didn’t have the means to pay for his tuition. We plan to save as much money for college as possilbe but won’t tell our children and will stress that they NEED to get scholarships for school. Whether it be Academic, Athletic or the Air Force there are many opportunities for free education. First and foremost though is saving for our retirement because assisted living is expensive (if it comes to that).

    Acl  |  August 11th, 2009 at 12:06 pm

  • I’d like to, but my parents were not in a position to help me and frankly I’ll still be paying off MY student loans when my kids go to college. And paying $400K for an undergraduate degree is not, to my mind, worth it–I have two graduate degrees and ended with over 100K in loans myself, which SERIOUSLY hampered my choices in life.
    Better they should get a practical trade skill and pay for college themselves while working.
    Plus, I think that “traditional” college experiences will become vary rare as internet options and other alternatives become more common. Sad, perhaps, but perhaps much more “real world”.

    Jen  |  August 11th, 2009 at 12:57 pm

  • YES!
    we started our 529 as soon as we found out I was PG with both.
    I am sure it still wont cover it, but whatever there is by that time is theirs to use. They will have to get student loans to cover the rest.

    We plan to have them always save 1/4 of their “work paychecks” for school too. Assuming that in 10 years our then would be 15 yr old will be babysitting, doing odd jobs, etc.
    Both our boys will also need to save for their own car.
    Or at lest ATTEMPT and contribute towards it.

    I had it too easy growing up - hubby had it too hard.
    We are hoping to raise them in the middle.

    At age 4&5 they already have too much,
    so time will tell.

    debr  |  August 13th, 2009 at 9:33 am

  • We plan to help him, absolutely, but we have no intention of footing the entire bill for many reasons:

    1– There is no reason for a college education to cost $400,000. Kids can go to state schools (which are very good) and slash that cost. Hell, they can go to a community colledge to get their AA and then go to a 4-year college to get their Bachelor’s degree and cut their costs even more.

    2– Both my husband and I worked our way through undergrad and grad school. This not only gave us exposure to the field we were hoping to work in, but it also provided lessons in how to better manage our time. As an added bonus, the place I was working at at the time nearly paid for my grad degree, so you can’t beat that.

    3 — We (nor our son) is going to go broke to pay for college. Our money - first and foremost - goes to our retirement accounts, but we definately have a college account set up for him (a traditional savings accoung; I don’t like the restrictiveness of 529s).

    I feel like we did college the ‘right’ way and we want our son to have the same experience. We also walked out of college with little to no debt because of smart decisions. So, again, we’ll help him, but we’re not handing him a blank check because that teaches kids nothing about responsibility (be it educational, financial, whatever).

    CAL  |  August 13th, 2009 at 10:02 am

  • In our family the Bachelors has always been assumed responsibility of the parents with anything after that responsibility of the kids. They didn’t want us to go into debt to the level of having to delay our lives to pay off debt. But they all had government pensions (or were TRULY wealthy) so never had to worry about retirement money.
    My daughter has a 529 and an education IRA; however I haven’t been stocking it; my mother has. And in reality, as an adult I found out my grandparents helped pay my undergrad so I guess she’s acting in the role her parents did. It is an immense help so that I don’t have to think too much yet. I suppose she’ll have some loans, but I will try to minimize them. I think how great it was to be able to go to grad school without undergrad debt already hanging over my head; being able to wait and take a job in my field rather than “any old job becuase the debt payments kicked in” and want my child to have the same options.

    Mich  |  August 13th, 2009 at 11:33 am

  • I grew up in a middle class family in which both my parents worked full time, all the time. I was able to go to a private college with the help of the state (Cal Grants), loans, and work/study. Also, lived at home and commuted 30 miles each way twice a day for 4-5 days a week.
    Needless to say, I got by with VERY little sleep but survived to tell my tale. It took me a few years to pay off my student loans AND my parents’ loans after graduating by working 2 jobs but I did it!

    I agree with you about saving for retirement first because that’s what I’ve been doing for the past 15 years, along with purchasing a house as soon as I could afford it with my husband 12 years ago, but I do plan on helping out my only child as much as I can when it comes time for her to go to college. I plan on life changes to facilitate this by changing my career and downsizing. My parents changed their careers and turned it into a small business in order for me to go to college. There will definitely be sacrifices EVERYONE will face. I intend for my child to work hard, but I guess it is ultimately her choice. Let’s hope she makes the right choices!!

    sk  |  August 14th, 2009 at 8:27 am

  • I am a single mom trying to put my daughter through fashion desing school and i dont have a clue where to start? I have filed a federal pell grant and havent heard back. Is there more help out there that someone can point me in the right direction?

    staritdove  |  August 18th, 2009 at 11:24 am

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