So, my wife and I have been giving a lot of thought to having children soon, and to be perfectly honest the thought alone scares the hell out of me. Not because I don’t like children, I do, but at 33 years old I still feel like I have a lot I want to see and do. All that aside, I’m fighting a losing a battle and it will probably happen sooner rather than later. Queue up the next related discussion…money! Children cost money, neither my wife or I are ignorant to this, but she doesn’t think they cost as much as I do. Forget about diapers, formula, toys, and all that other jazz. Saving for college has become a very real cost to raising children, and if it’s not, then it certainly should be.
My parents didn’t have a lot of money, and neither of them attended college, but they had always promised that if I went for my degree they would find a way to pay for it. My wife’s family has a bit more money, but also a few more kids, yet they still paid for each and every one’s college education. We couldn’t be more grateful, today we are debt free with the exception of a mortgage payment, and we owe a great deal of that to our families. After all, it’s not like I can start saving the necessary money and investing it at age zero! I read an article recently that said for any children born right now, the parents would need to save about $400 per month to pay for a 4 year degree at an average college by the time they turn 18 years of age. This is where the disagreement between my wife and I come into play.
I try to remind her that it is our moral and fiscal responsibility to save that money for our children, since they are unable to save and invest as newborn and children. We know better and have the means, they are clueless infants without disposable income! Ok ok, so we don’t have much disposable income either, but you see my point! My wife is in the camp that we save what we can, when we can, and they have the option of student loans and scholarships when it comes time. I like to remind her that’s not exactly how it worked for us, and while I did receive a small amount of scholarship money my parents would have paid the remainder no matter what…as would hers. It’s nice to sweep the issue under the rug and just worry about it when it comes time, but that’s the root of all financial troubles….procrastination! This is why people pay their bills late, ruin their credit, delay (or never enjoy) their retirement, etc. Financial planning is the cornerstone of being fiscally healthy. My wife isn’t a spendthrift by any means, she just likes to procrastinate when it comes to serious matters, and the little devil on my shoulder wants to listen to her.
Once they reach that age, we can also put some responsibility on our children to look for other ways to pay for college. For example, they can apply for federal and state scholarships and grants, which will help ease some of the financial burden. In most cases, the student simply has to fill out a FAFSA form, which is used to determine his or her need for assistance. External scholarships are also available, as millions of dollars are handed out to deserving students each year. Universities keep this scholarship information on their websites, in addition to information about federal grants and loans, making it easy to apply for this money. There are so many sites like Textbookrush, Chegg, Valore Books and Bookrenter that allow you to rent or buy textbook at huge discount. You can also sell your used book for great price.
Remember all of those statistics you used to see about the troubling amount of credit card debt per household? Turns out that is still an issue, but only a fraction of the $1.2 trillion of student loan debt this nation is facing. I have a friend who is a social worker with a PhD, $200,000 in student loan debt, and makes roughly $60,000 a year. She will be facing debt repayment for most , if not all of, her life. For the $160,000 it is going to take to put each of our imaginary children through college, we will be a lot better off saving incrementally now rather than cleaning out our measly retirement accounts when the tuition is due. That is unless you agree with my wife’s theory that our pretend children could take out loans and fend for themselves. But I ask you, based on the reasons above, whose responsibility do you think it is to pay for college???
I think parents should help out whatever the can manage financially, if it means paying for all of it, great, if not, then do what they can. There are so many options to help fund college and ease the burden of taking on big loans. Back in my day (30 years ago) my parents paid for my community college degree and would have paid for me to go on to a 4 year public university, but I got married, so was on my own. I got a job at a big company that had tuition assistance as part of the benefits and went to the university classes at night by taking 10 credits per quarter, instead of the full 15 credits, and got it paid for that way, even books.
My daughter (and myself) is super lucky that my parents were well off, invested well, and set aside money for her college, but she has done much to ease the financial cost. She participated in our state program where high school juniors and seniors can attend community college and get credit for both. She will graduate this June with a high school diploma and a AA degree from a community college. The cost was a quarterly fee of about $100 and books. Savings of thousands over full tuition at a community college and many many more thousands if she had gone to the university her first 2 years (probably close to $40,000 saved). So far, she has received a $2000 scholarship towards her tuition/room and board for the 4 year university she will be attending next fall, as a junior. If not for grandma’s generosity, she also would have the nearly $10,000 she will have saved by working part time the past 2 years to help with the costs (she will be paying for her own books in the coming 2 years).
A friend of my son’s has student loans she has taken out, but she is doing a work program where a good portion of her wages she works while attending the university go back to paying her student loans. She worked part time during the school quarters and full time during the summers.
You both sound very fortunate, and I am glad to hear you had the means for attending college. Obviously, there are many parents out there that can’t afford to save and/or pay for college when the time comes.
I went to a commuter school, University of Michigan – Dearborn… same affiliation as U of M, but no room and board, which saved a ton of money.
I 100% agree with your wife. Honestly I paid for my entire college myself. I’m the oldest my next youngest sib is my sister. She is 7 years younger. My parents not only paid for her first 2 years of college but also gave her a monthly spending allowance. She basically pissed away the first 2 years of college and only ended up with 21 credits some failed classes and a bunch of party pictures. In high school she was a straight A student. I didn’t get straight A’s in high school I was mostly a B sometimes C student. I worked sometimes 3 jobs while going to school attended all my classes and never failed anything. It was because it was MY money. Now that my parents are no longer footing her bill she attends class everyday hasn’t failed anything and has a job. When you pay for it yourself it teaches you a valuable lesson. It teaches you to be responsible for yourself and manage money. I’m not saying you can’t help out. My Mom helped me some, paying my cell phone and insurance and occasionally giving me money when I needed it. I was very grateful for the help I had. My friends whose parents paid everything in college spent most of their time going to parties and retaking failed classes. When it comes time for my kids to go to college I will first suggest getting a certificate in something like CNA for instance so they can get a a decent part time job while in school. Then I will suggest junior college for the first 2 years and then finish up the last 2 at a 4 yr school. Unless they get full rides or something that is what I plan for them. I will help pay for what I can but I WILL NOT foot the entire bill.
As far as the expense of a baby I think your wife is right. It all depends on your wants. If you buy everything name brand and top of the line and don’t look for sales it is expensive. If you use cloth diapers or shop sales or shop secondhand it is affordable.
I actually agree with what you say about paying with your own money…though on the other hand, I did have college paid for and ended up with my MBA…Keep in mind my parents paid for the bachelors, and my employer paid for the MBA…but the point being, I didnt really pay much for either one, yet was still disciplined. I think it depends a lot on the person.
The only real issue I have is when you are talking “top 20” schools. While 99% of the population doesn’t get into these schools, they tend to come with increased competition, prices, and opporunity! If I had a child who could get into Harvard but couldn’t afford it, then I would certainly feel guilty.
If your kid is smart enough to get into one of the top 20 schools then they should be able to get lots of scholarships to cover expenses. A friend of mine was super smart and got a great ACT score she spend most of senior year writing essays and applying for scholarships ( most of which paid for 2-4 yrs some were only 1 depends on the scholarship. And she had very little financial obligation after receiving 10 + scholarships. I myself with my average grades and average ACT score received 2 scholarships with VERY little effort. One I had to write a 1 page essay on why going to college was important to me and another I had to present my artwork that I’d made throughout high school.
That’s the thing though… there aren’t always as many scholarship opportunities for ivy league schools, simply because the competition is increased. Now granted, you can apply for scholarships that are not affiliated with the school, but getting a $3,000 scholarship isn’t going to put a dent into a $200,000 education…it’s all relative.
Yeah but I wouldn’t bank on my child getting into an Ivy League school. It sounds kind of silly to me to assume that before they are even born. If thats what your intentions are then it sounds like college tuition isnt the only money you would need to save. Private preschool and k-12 would be quite expensive as well. To me it sounds like one of my friends telling me the whole time she was pregnant that her baby was going to do this and that and walk at this age and potty train by this age etc. Of course nothing happened as she thought because that’s how kids are. All that being said I’m a firm believer in the “when there’s a will there’s a way” philosophy. In 19-21 years when your child goes to college (or not!) together you will make it happen.
I don’t think it’s the parent’s responsibility to pay for college at all. There are so many ways for kids to go to college for cheap or even free these days. I didn’t have anything paid for and I think it helped shape me into the person I am today.
I’d like to believe that, but the more selective a school the more expensive it is and less aid they tend to provide.
If it was truly that easy and cheap then I would think that we’d have a lot less of a student loan dilemma in this nation. That being said, people need to stop paying $100k for a degree that will earn them $30k a year lol.
Disclaimer: I don’t have kids. And I’m not from the US so the idea of paying for college tuition is strange to me and I find the whole student debt situation (as I’ve read about it on many debt blogs) ludicrious.
That being said, not being in the situation has never stopped me having an opinion before! Actually, it’s someone else’s opinion I want to share (ah yes, someone else’s opinion – I’m much better at having them than my own). Mr. Money Mustache did a good article on college costs for kids a while back (I’ve only discovered his blog fairly recently so it’s fresh in my mind): http://www.mrmoneymustache.com/2011/05/12/the-coffee-machine-that-can-pay-for-a-university-education/
He has a couple of articles on general costs of having a kid, too, that might be interesting for you to read.
I don’t think parents should necessarily fund their children’s education. One opinion I do hold for myself is that an awful lot of kids would benefit from spending a year abroad before starting college – I didn’t get to go until the summer after my first year (so at age 18) but I got so much from that four months and grew up so much in that time. I really think every kid could benefit from being away from home, having to work and provide for themselves.
From what I’ve read of various US-based debt blogs one thing you could do which would be far more useful to your kids than just giving them the money, is making sure they understand the way the various loans work. There are some people working hard to pay money off their loans all the time and yet the amounts they owe are going up all the time. The whole system (or at least parts of it) seems very unfair und tricky to me and making sure that they fully understand the consequences could be the best gift you could give them.
Haha I actually know Mr Money Mustache, and I am aware of this article…its a good point! But of course a bit satirical as well… Unfortunately, I already brew my coffee at home, my wife doesn’t drink coffee, and I still can’t imagine how we are going to come up with $160k in the next 18 years.
I forget the source, but I recently read a finance article titled something like “where are all the Ferrari’s?” The point of the article was that if a typical pack-a-day smoker gave up his habit, after 10 years he could be driving a Ferrari…yet, we don’t see many Ferrari’s out there on the road! Point being, people find a way to spend small incremental savings, which is unfortunate.
There are so many methods for children to go to higher education for inexpensive or even 100 % free nowadays. I did not have anything compensated for and I think it assisted form me into the individual I am nowadays. Thanks.
I think anyone who pays for it themselves and makes something of themselves would probably agree with you! Hell, I agree with you!
On the other hand, there are those of us that got a HUGE helping hand from our family, and also think that’s what got us to where we are today. Who knows, if I didn’t have their help I may not have finished (or even started) college!
We have 5 kids ranging from 16 to 2 years of age. We intend to pay 60% of the costs of college. The kids can pay the rest by working or borrowing. This way we ensure that their debts do not get too large, but we avoid that they feel no responsibilty of their own. We have started saving at birth into a college fund which worked out fine. The fund is now large enough for our intentions.
So a hybrid approach..interesting. May I ask how you came up with the 60% number?
I have a younger sister who is a second year college in Nursing this school year opening. She was a scholar before with her old course, but our aunt asked her to shift Nursing because she promised that she would pay her full tuition. My father passed away and my mom doesn’t have a work. But unexpectedly, my aunt got sick and she can’t pay my sister’s tuition for the next 3 years. So now, I really had a big responsibility, I told my mom that I would help my sister as long as I can. Student loan doesn’t exist in our small city, so we need to pay her tuition cash.
I’m truly sorry to hear about your father Marie.
Though, may I ask where you live? Federal student loans should exist regardless of your geographic location, unless you aren’t in the U.S. Though I know “My Personal Finance Journey” quite well, and thought you were all based in the U.S.
We plan to pay for all of our son’s college, depending on where he ends up going. We have saved $200k in a 529 so far. He is only 13. That should get him through most any state school. He has said he wants to go to Stanford. I told him he may have to come up with the difference. When he is older, I will also point out that most employers do not care that much where a person earned their undergrad degree. Employers are looking more for skills that align with their needs, so working summers as an intern would be more important that what school he attended.
May I ask how long you contributed, and how much per month? $200k is impressive by 13 years old…I cant say my 401k has even done that well LOL
I am obviously not a finance whiz but you have to consider your retirement before your kids education. You can’t borrow for that. I am hoping for the best for my kid, maybe scholarships, but I can’t guarantee her that I will pay for her education. First, I am still paying for my own and secondly, I am trying to figure out how to buy her a car in a few years. Double or triple how much you think kids cost! Trust me! Lol. Good luck! Maybe you will have triplets!!! Lol xoxo
I see a lot of articles on retirement vs education these days, it’s the new “hot topic” in the media. Im not suggesting we substitute one for the other by any means. Haha no triplets!!! Even twins freaks me out!!
But wait, your tag line says ” surviving single parenthood…” Huh? I confused. 🙂
Our four children graduated from college in the 90’s. Three of them had Army ROTC scholarships and entered the army after graduation as officers. (Four year commitment, but one son has made it his career.) The oldest went to Notre Dame on an ROTC scholarship. In the early 90’s, it was a great deal. ROTC paid 90% of tuition, which was about $20,000 /year in those days. My husband and I made up the difference and paid room and board.
Two of them went to Cornell University on ROTC. In just a few short years, things changed with ROTC. They then put a cap on the amount awarded, which was $10,000. So by the time the youngest was a senior, ROTC was covering about one third of a yearly $30,000 tuition. That means hubby and I made up the difference for them. Our fourth child did not go the ROTC route but went to Wake Forest. In the early 90’s, it was one of the best-kept secrets in college education. It cost what a state school did in those days. Now it is your typical $45,000+ /year.
Our ND child had no debt. The other three borrowed about i $1,200 each year. Did we have a ton saved up before they went? Nope! In fact, very little. Our circumstances simply did not allow it early on to save much. We figured it out was we went. The kids all worked during the year and in the summers. My husband started a small business which did remarkably well during those college years, and we earmarked the funds for college. We believe it is the responsibility of parents to provide an education. Otherwise, I feel one should not have children. I also disagree that kids don’t do well if parents pay for it. That sounds like sour grapes to me usually! Our kids all graduated with honors and went on to obtain master’s degrees on their own dime and with no debt. They all have good careers now.
In conclusion, I really get tired of the retirement vs. your child’s education argument. Do you really want to send a kid out into the world with the kind of debt we see today? It’s only going to get worse! They will have absolutely no life with that kind of crippling debt. I see parents really not wanting to make the hard sacrifices. They still want all the bells and whistles and toys.
I remember hearing about the ROTC program when I was younger, definitely had its benefits!
The issue is that people have multiple children without giving thought to how to properly afford and take care of that many children. It sounds like you planned well!
We will certainly have to make some sacrifices if we have two children and save the suggested amount for education each month.
I often say that I’m my father’s only investment (and it payed off really well). I grew up in communist Bulgaria where education was presumably free – this only meant that like in most Continental European countries I didn’t have to pay fees for my university education. All else – living expenses in a capital city – had to be payed. My Dad did it; and I don’t remember an occasion when I phone him because I’d run out of money and he refused to send me some. This continued till I finished my first PhD. I never forgot it and when my parents needed financial support in their older years I supported them gladly – this is what families are for.
My step sons took loans to go to university; when John and I are financially independent I’m going to pay the loans off- this is the least I can do to help them start their life right. God knows that their generation is shafted enough.
That is actually another great idea Maria! If you don’t have the money available to you then let them take out the loans and help them pay it off…sounds simple, but not something I thought of before. At least that way we don’t get into the retirement vs education debate LOL. Thanks for stopping by 🙂
I do agree that having the student pay some amount changes the way they view college. I’m a perfect example. My parents paid for a very large amount of my college tuition. I left college with a baby size loan and no real financial burden during the 4 years. Because of that I didn’t view college as an investment in my future and chose the easiest major – a career that I will likely never return to. While I don’t think it’s moral to save nothing for a child, I do think that requiring them to spend their own hard earned cash puts the expense in a perspective.