Can we discuss a parenting topic that is sometimes a stress trigger for me? College savings for kids.
I would say the standard thinking in an average American family is that parents want to, and intend to, pay for their child’s college education. But for many (or most) families, having a fully funded college savings account when little Jimmy or Janey turns 18, isn’t realistic. (Raising my hand here.) And oh man. Those “college calculators” on savings sites and bank sites are so depressing. They basically tell you you’ll need a quarter of a million dollars to pay for child to go to a university. (In my family’s case, times that by 6. Yikes.) And if you’re like me, when you see that number, and feel like you can’t hit it, you just want to ignore it altogether.
For sure, a part of me wishes I could say we dutifully set aside $1500 each month per child, the moment they were born. But it’s not true, and frankly, it was never in the cards for us — we already had 5 kids as Ben Blair finished up his PhD (about 5 years ago). We were still paying for our own education while we should have started saving for our kids’ education. Hah! In fact, we didn’t make room in our financial life for college savings until our oldest was about 11 or 12. Obviously that is not ideal. But it is what it is. And we’re not the only ones. Life rarely works out the way anyone expects.
Then, even when we were finally in a position to start saving for college, I found I was feeling paralyzed about starting, knowing we were so late to the game. I had to consciously let go of my regret at not doing it perfectly from the beginning, and I just had to start. Just start.
On Wednesday night, I was invited to a dinner in the city hosted by ScholarShare. ScholarShare is California’s 529 college savings plan, and it’s managed by non-profit, TIAA-CREF. You know how a 401(k) plan is for retirement savings? Well, a 529 is similar, but intended for college savings, and they give you an important tax advantage — there is no income tax or capital gains tax on the earnings as long as it is used for education. Even though the topic can stress me out, I totally get how important it is, so I made sure to attend, and I’m glad I did.
At the dinner, I asked the head of ScholarsShare what are the top 3 pieces of advice she would give to people like me, who felt (or are feeling) like they didn’t do it right from the beginning, and have ignored saving for college for one reason or another. She said:
1) Don’t be intimidated. Don’t get overwhelmed by the calculators. Think of college expenses in chunks. Tuition. Dorm. Books. Semesters. Maybe you’ll start saving now and have enough saved for books. Or maybe you’ll save enough for housing — and you’ll pay for tuition some other way, perhaps a combination of scholarship and financial aid. Maybe you’ll save enough for tuition, and Grandma will help with housing — or your child will live with relatives nearby the college. You might not be able to save up the whole cost, because it’s massive! But perhaps you can save a year’s worth. Or a semester. It all helps.
2) Anything is better than nothing. Try $25 per month per kid. When you feel like that seems normal in your monthly expenses, say, maybe six months later, try increasing it to $50 per month per kid. And slowly go up from there, if and when your budget allows. If windfalls or bonuses come your way, you’ll have a ready spot to put the funds.
3) Let people help. There may be people in your life that want to help with this. Maybe grandparents or aunts or uncles or close family friends. But they don’t really know how to get started or get involved. You can make it happen. You set up the account and let people know it’s there and that they are more than welcome to contribute to it. It’s an awesome place to put gift money! In fact, after they’ve made a contribution, they can download a “Gift of Education Certificate” to place in a card or wrap with a bow. When grandparents or relatives don’t know what to send for a birthday or holiday gift, this is perfect.
At the beginning of the post, I mentioned this topic can be a stress trigger for me. If you’re the same, I can tell you, that one of the things that helped me let go of the regret at getting started saving so late, is that I paid my own way through college. My parents were hugely supportive, but simply didn’t have the funds. So, I earned some scholarships. I received some pell grants (that’s the student financial aid you don’t have to pay back). I kept a part time job during school. I worked summers. And I supplemented with student loans, graduating with about $10,000 in debt, which I quickly paid off.
Would it have been easier to have my college paid for? Sure. But I managed to figure it out, and if you can’t fully fund your own kids’ college, you’ll help them figure it out too. My current thoughts on paying for my kids’ college education is that yes, I’m planning on it and saving for it. But, if life surprises us and it’s not working out, we’ll figure out other options.
Bottom line: if this topic throws your guilt meter into high gear because you haven’t started a college savings fund for your child, let that guilt go. Being able to pay for your child’s college education is not a measure of how good a person or parent you are.
Your turn. Do you have a philosophy regarding paying for college or grad school for your kids? Do you feel responsible for paying for your child’s college education? Did you pay for your own way at university? Or contribute funds for your housing or food? I’m always curious about this sort of thing because families handle it a million different ways, and I feel like I learn so much from the comments and discussions. I remember hearing from my brother-in-law, that his father was willing to pay for any university he could get into. But for grad school (my brother-in-law is a lawyer) he was on his own. How did your parents handle it? And how do you plan to handle it?
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Disclosure: This is a sponsored post, shared in partnership with One2One Network and ScholarShare. All thoughts and opinions are my own.
One great option is go to community college for two years and then transfer. That is a great way to save money and not have such high stakes while you figure out what you want to do. That is what my husband and I did (in fact we met there). I lived at home and was able to work part time and really focus on my classes (take a ton of credits, get straight A’s) since I didn’t have to worry about bills, food etc… I transferred to UCBerkeley and was able to graduate early because I had taken so many classes at community college. I know I missed out on some college life experience, but I didn’t have any debt and now that I live far away from my family I am grateful for that extra time at home.
Another bonus was that because my GPA was perfect because I took almost all my non-major classes at community college I was able to get into a very competitive professional degree program while my husband was in grad school. Its hard to know where we will be financially when our kids are getting closer to that age, but there is no shame in going to community college for a year first and then transferring.
I don’t think it has to be as all-or-nothing as “pay for college for your kid” or “don’t pay for college for your kid.” I don’t have kids, but if ever I do, my plan is to save what I can, and then with that money, the kid can choose a college s/he can afford, or borrow/earn the rest. I also plan to start saving from birth, even if it’s $25 per paycheck per kid, in an investment or 529 account.
I’m a 1997 college graduate, and my parents paid for part (about 50%), I got some scholarships and grants (~25%), and I borrowed the rest (~25%), which I’m still paying. My older sister was treated the same (I chose a more expensive school, BUT I got more free money).
I worked to earn pocket money, and paid a lot of my own expenses — like, when I moved into an apartment with friends, if my rent was due and I hadn’t asked in a timely manner, well, that was too bad for me and I’d better figure out how to pay it. If I wanted pizza, that was on me. If I needed groceries, that was on me. Sometimes they’d throw me a $50, and they did things like pay for my plane tickets home for holidays. When they came to visit they’d take me grocery shopping. They definitely helped me a LOT… but most things beyond the basics were on me, and even the basics were sometimes on me if I wasn’t responsible about them.
Great topic. I didn’t know I had no money for college until my senior year of college. My parents were divorced, and my mom never saved a penny of the child support money. I was only able to go because I won a full out-of-state scholarship for my first year of tuition. I had simply assumed there was a plan, but my family and I never had the conversation… a mistake I am not making with my own family. I graduated college with no debt (scholarships, part-time job, student work study, living at home), but after we got married, we sent my husband back to school to finish his undergrad (we paid for it, yet his parents paid his brothers’ tuition for years). He is now finished with a professional degree, and the amount of student debt is sickening. Fortunately he will have a comfortable salary, and we do have small college funds for both our kids. We plan to help them with school, but it’s critical to strike that balance between supporting your kids in their education/ aspirations and planning for your own retirement – and TALKING about the options out there for both. I don’t know why my parents never talked about money & the options/ possibilities, but we are not making that mistake with my own family.
Re having the conversation with your own kids: I totally agree. I do wish my parents had had a much franker financial conversation with me. I likely would have made the same college choice (I was accepted to a school that would have ended up costing much less thanks to their financial package, but Ii did not want to go there), but I should have been more informed as I was doing it.
Here are my thoughts about paying for your kids college.
1- We had friends who had a summer job of mowing laws. They started in 9th grade. They would also go back every summer during college to mow for school expenses. So a family job, or a job of their own. I think it is good for them to work toward their own college expenses. Even if they earn a small portiom on their own.
2- i heard one story where 3 brothers supported one brother in school while he was becoming a dentist. Then when he finished he helped support the next brother, and each took their turn till everyone fnished school.
So set up a system where you support one child with the understanding that they will contribute to other siblings..this is kind of like student loans, but it stays in the family.
3- most colleges and universities lower tuition for emlpoyees dependents. So one of you could work for a university to help lower coss. Some even offer free tuition for dependents as well.
Also, your child could be a full time university empoyee and take classes for free or at a redused rate. This is a great sollution for an older college student.
These are just some alternatives that I have ponderd as well.
Great question! I paid for undergrad with a combination of scholarships, student loans in my name, loans in my parents name, and a bit from internships. I graduated with ~$17,000 in debt that I paid off over the next 6-7 years. I was “paid” to grad school (engineering) by earning a fellowship that covered all my tuition, room and board and also gave me a monthly stipend. (This is common in science & engineering fields.)
We are already saving for my 2-year-old’s college — but I actually am on the fence about paying for 100% of it. I’d like her to pay for at least part of it, maybe books or fees or some portion of tuition. I think there are some benefits to having a child share in that responsibility, become more self-sufficient, prepare for life after college (when I don’t want her to need our financial support) and take ownership of their education and their future.
Maybe consider studying abroad: http://www.washingtonpost.com/blogs/worldviews/wp/2014/10/29/7-countries-where-americans-can-study-at-universities-in-english-for-free-or-almost-free/
Thankfully I went to BYU, with a very low tuition and excellent education. I paid for my own way through college, although my parents contributed $100 per month. I had Pell grants and Stafford loans. I graduated with about $12,000 of debt, which I was able to pay off in about 2 years. I’m thankful that I had to pay my own way, although I might feel differently if my tuition had been higher. We are socking money away, but not committing it to tuition. Maybe this is not a smart thing to do, but I don’t intend to pay for all of my children’s schooling. We have 4 kids, I’m happy to contribute, but we’ll have to see how things go down the road. Maybe this is mean, but I have a feeling that college should be their responsibility. Of course, they will be working hard to that point- I expect that they will receive some sort of scholarships, but if they don’t, I don’t think that we should pay for their schooling. We’ll see how this changes down the road- my oldest are only 9- but there is no way that we’ll be able to shell out hundreds of thousands of dollars for our children’s educations… and I don’t think that we should have to!
love the comments. particularly from the older moms…Mom In Mendon and Teresa.
We have a junior that is looking into college now.
Thanks
My parents were in a financial position to pay for me to go through school… and…. they didn’t. They had me save 20% of my income from the time I was tiny – (at least 20% and I started saving much more when I had a job in high school). And I am so incredibly grateful. I felt responsible for my education and empowered that I could make it happen… and then when it came down to it, my Dad surprised me by paying for rent.
My husband also paid his way through school. His parents were not in a position to help him at all. He supplemented his food by going to the girls dorms and offering to cook them dinner with whatever they had – then he would of course eat too. He also is grateful for the experience and hard work.
So in short. I expect my kids to pay for their own school. And I will step in if needed:)
My parents paid for my college tuition, and while I might not have fully appreciated it at the time, I am now immensely grateful.
One thing I haven’t seen mentioned, though maybe I missed it, is how college debt can effect so much of your life later. I chose to major in journalism, a field that I love but that doesn’t pay well. Some of my co-workers had college debts of $60,000 or $80,000 and were struggling mightily to pay their bills. This influenced the cities that they moved to and the jobs that they took. I know that their is a whole different discussion here about choosing a major you love vs. one that pays. My hope is that by helping my kids pay for college, I will allow them to choose a career that they love, whether that is art or medicine.
I’m not at all motivated to save for my kids’ tuition. Neither my parents nor my husband’s parents paid any tuition for us, but we both made choices that allowed us to graduate with minimal debt.
I am one of five children and paying for college was never a a possibility for my parents. They did, however, welcome us to live at home free and we live in a city with two universities and one community college. We could choose between those schools, live at home, and graduate with little cost, or go somewhere else and sort out the finances ourselves. We all chose to stay close to home and all are involved in good careers with little student debt. I plan to offer my children the same opportunity.
I watched too many students waste their parents money by fooling around at college without any drive or purpose. Within my group of friends, we almost all paid our way and it was quite manageable. We worked hard, we studied hard, and we did well.
I understand that there are extenuating circumstances in some cases, but for the most part I don’t believe that college tuition is a weight of guilt that parents must carry. It wasn’t for many generations before us – why add that now? For our family, it would mean taking money that is currently needed to care for our children – they and we need it more now.
On a different note, I heard a financial advisor talking about a concerning trend in which parents will prioritize saving for their children’s educations over saving for retirement. He commented about the short-sightedness of this goal – neglecting saving for essentials in old age only sets people up to be loaded with debt and a financial burden to those same children down the road.
My dad’s parents saved up to help him with college, and so he always had very strong feelings about helping his kids. I’m only 1 of 2, and he started as early as possible, so it was a little more manageable. He also strongly encouraged me to attend our local college (which is still a good public university) over a more expensive private school further away, so that the savings would cover it. I felt super lucky to graduate from undergrad with no debt, but then I went to grad school. My parents helped out by paying for my housing, but the tuition was all on me. I chose an expensive Ivy League school, which was really not very smart considering the across-the-board low pay of jobs in my area of study (and the fact that I could have gotten just as good an education at a much lower priced school). The loans I took out for grad school were overwhelming at first, but as I got used to the reality of paying them–and saw how many other kids were doing the same–I relaxed into it. Whether we like it or not, school loans are a fact of life for most.
I now have 2 kids (with no plans for more), and started a 529 for each as soon as they were born–mostly because of pressure from my dad :) Every year for birthdays and Christmas I give relatives the 529 info, saying that no one should feel obligated to give, but that school money is preferable to toys at this point.
Oh, one other interesting note: while I had to pay my way through grad school, my husband got paid for his advanced degree. He’s an engineer, and in many science fields grad students get paid a stipend during their time in school. I’d never push my kids to do something they don’t want to, but provided there’s an aptitude and interest I’ll definitely be encouraging scientific or math fields for my kids.
As the youngest of six kids, there is no way that my parents could have saved enough for college. I went to an ivy league school anyway – if you don’t have the money, they give you grants to cover a significant portion and loans to cover the rest. Yes, I have a lot of college loans. But I don’t regret it for a second, nor does any other person I went to school with. I got an excellent education, met the most amazing people in the world (including my husband!), and started off my life as an independent adult.
I graduated in 2006, and my college was ~$40k/year. It’s next to impossible for us to save up enough to pay in full for multiple kids. By the time they are in college, I imagine it will be at last $80k x 4 years x 2 (or more?) kids = $640,000! My kids will have the choice to go wherever they want and figure out financing to do it.
I don’t understand why people are so down on college loans. It’s just like a house loan, but more valuable long-term. What I really can’t stand is parents who make their kids go to a local school because it is cheaper (or because they cannot let them go) – let your kid decide where they want to start their life! I promise you colleges (even the super fancy ones!) help you figure out how to afford it.
This is such an interesting topic. I’m Franco-American, and it was my dream to go to college in the US, but it just wasn’t in the cards financially. I went to Canada, and got an excellent education for a fraction of the price. I’m very lucky that my parents helped out with almost everything (for my undergrad – I supported most of my graduate studies through work and scholarships), and I’m from an upper middle-class background, but college in the US without access to financial aid or government loans seemed so steep. I probably could have made it somehow, but would have missed out on my wonderful Canadian fiancé :)
I think having some money aside to help your kids is great, but not everyone can pay everything in full, especially in large families. I agree with other readers that it is important to be upfront about this with your children.
I might add, my parents’ agreement to pay for college was conditional on me being serious about it and maintaining high grades. I’m not sure they would have cut me off if I was messing around, but thankfully, the issue never came up.
Who knows what the educational system will be like in 18 years? What if our children are gifted in some way and they get scholarships? What if my kids don’t go to college?
We find there are a lot of questions about the future and for that reason, my husband and I save a hefty amount towards retirement. If we need to use some of it for education or training in the future for our children, we can make that decision at that time.
I also think it is unfair to put all that burden on parents. In college, I knew that the more student loans I racked up, the more I’d have to pay back later. I felt more responsible for my own future and it kept me focused on my own goals at a young age. I wasn’t skipping class, because I knew I was paying for it at some point.
Such a large percentage of commenters are already geared toward the goal of paying for their children’s college education (assuming they can) on the idea that ‘If at all possible, we should make it happen’. To me, the question is not whether we can, but whether we should.
Coming from large Mormon families (and with 6 kids of our own, ages 14-4) this is not a moot point. For my husband and I, there was never a thought that our parents were in any way obligated to fund our dreams, should we decide to pursue higher education. Yes, scholarships and Pell Grants were applied for and helpful, but so were JOBS. All of my husband’s 7 siblings (most of whom were Valedictorians) paid their way through college and/or nursing school if they chose to go – and almost all did. They became college professors at major universities, rural high school teachers, nurses, entrepreneurs, and SAHMs. My husband chose to move home to work after his mission, as we ended up marrying relatively young and starting our family. College education is important, but as a ‘ticket’ to a high-paying job, well, it’s definitely not a sure thing. Compared to his brother who has a doctorate and is a VERY well-published college professor, my husband works at a state prison with 8 weeks of paid time off a year, a huge bank of sick time, works 3 days a week and makes $20,000 more a year. Letters after his name couldn’t get him a job that works better for our family, so he has continued his education in his free time, and in a non-formal way.
Everything is about choices. What do your children want to do? Maybe they will decide that their passion leads them in a direction different from their ‘college fast-track’ peers. If they want a career that college is essential for, even then, there are options:
#1 – A.P. classes. They are usually FREE!!! In a rural Oregon town, I graduated high school halfway through my sophmore year of college, thanks to doing well in A.P. classes that were already a part of our high school curriculum – if not, look into taking them online in lieu of their regular Junior/Senior options.
#2 – Community or State Colleges are usually MUCH cheaper, and you can transfer with less or no debt to finish your degree, or to attend graduate school. Schools are very excited about those who are self-led and already proven to be motivated good students.
#3 – Work! If you want your children to really feel DRIVEN to do well and make the most of college, let them work for it. When each credit represents hours of THEIR labor, they don’t skip or fail classes, lol.
#4 – in a ‘post-google’ world, brand-name degrees from elite (and expensive) universities are less in demand then your skills, your drive and your passion. So just because little Johnny is smart and wants to be a doctor – if he works at it, and does well, and LOVES it, there are always jobs for doctors with skill and passion – even if their diploma doesn’t say Harvard! It does him no favors to expect his parents, long after the age he should have left the nest, to keep writing checks to fuel his dream. Especially when he is competing in his field with those who worked, saved and made it happen for themselves, having to budget money and time, work twice as hard, and didn’t let anything stop them – as opposed to letting someone else do all the work and make the sacrifices – who would YOU hire?
If anyone has the doubt, in Spain (and the rest of Europe in general), school and high school is free (except for books and food), while University is not but prices are more or less afordable. The only reason is taxes. Government takes 24% of my monthly income, and my company even pays some more money for me. And the same occurs with my husband. So when my children reach University, we would have paid a real fortune. Not so free, but students think it is and take it for granted.
I’m from Germany where College/University is practically for free and if your parents can’t help you with your living costs, you get a student loan from the state that you only have to pay back 50%. And not at all if you can’t because you have two kids and two many expenses and not enough income (like me:-).
I always wondered how you guys are handling it with six kids. Thanks for your very open post! It is a lot of stress and pressure, I can imagine. Here, people are usually only saving up for the drivers licence of the kids which is much more expensive than in the US. But not as expensive as college.
Are there any free options to study apart from scholarships?
I was fortunate enough to have parents who helped me financially through college for my first two years. My mom was diagnosed with stage 4 cancer my sophomore year of college so her medical expenses came before my college needs. Fortunately I had a grandmother who paid my rent the rest of the time and I worked full time during summers and part time during the school year to cover tuition and all other expenses. I was able to graduate debt free with careful budgeting. My husband and I already have started saving accounts for our children and contribute monthly to it, but we aren’t going to tell them about it. We want them to work hard for college themselves and not assume that mom and dad will take care of it . My husband put himself through school with little help from his parents since he is one of nine children . We will use the money saved as a surprise for when they need it after they have contributed their part. I feel like my children will more invested in their college experience if they are financially responsible for part of it.