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Should Parents Pay for College?
If you have been around Millennial Legacy for a little while now you are well aware that I came from somewhat humble beginnings. I did not grow up in the lap of luxury and in a lot of ways I am both proud of that and thankful for that. It has given me a greater appreciation for the things that I do have.
My father was the first in his family to get a college degree. Where he grew up it was much more common to finish high school and go straight to work than to go to college. My dad paid for every last penny of his degree. He has told me many stories of how he worked multiple jobs at a time, including working a night shift as a janitor at a local elementary school so that he could pay for his tuition. He took out zero student loans and worked his tail off for four years. To say that he is proud of his accomplishment is an understatement. He earned it on his own and no one could take that away from him.
When it came time for me to attend college I took a somewhat similar approach as my dad. Sort of.
My Approach to College
I went to a community college for a couple of years and paid for that all on my own. I made many poor financial decisions in my college years but this is one of the few bright spots. I was able to get some prerequisites out-of-the-way and take on zero debt.
After community college I went on to big boy college, AKA a major state university. I had no way of paying the thousands of dollars of tuition for even one semester let alone my entire tenure at college. So, I did what everyone else did. I applied for student loans.
I worked several jobs during college and tried to only take out loans for tuition and books. I was able to make it work most of the time but there were several instances when I had to make that dreaded call home and ask for money. I hated doing it. I felt guilty about it, but I was out of money and had to make my rent payment.
I see three different financial approaches to the cost of college. There is the approach that my dad took of paying for absolutely everything himself, there is the hybrid approach that I took where I tried to do it on my own but needed my parents help several times and then there is the approach that some parents take of paying for everything for their kids.
Which approach is the best?
This is the question that my wife and I asked ourselves several years ago when we started saving for our kid’s college.
Kids Pay for College
This is the path my dad took. He worked multiple jobs, didn’t party every night (at least that’s what he tells me) and finished in four years debt free. He was also from a different generation when doing this sort of thing was much more common. In my opinion too many parents today want to make life as easy as possible for their children, never want them to suffer or struggle and make sure that they are always happy and comfortable. But what does that teach your children? It teaches them that someone else is always going to take care of things for them. If they make a bad decision mom and dad will bail them out.
- First and foremost by paying for college completely on his own, my dad valued his education and took it more seriously. Do you think he wanted to get an F and have to pay for a class a second time? Absolutely not.
- Also, this approach set a great precedent for the rest of his life. He learned that he could make it on his own with no one else’s help. My dad is the classic self-starter. He works ridiculously hard and is always trying to find ways to improve. He didn’t just wake up one day and have this mentality. Not only was he taught this mindset as a child but then he was forced to live it out once he went to college.
- Lastly, I know college is a lot more expensive than it was back in the 1970’s but getting through college completely debt free gives you a HUGE leg up on building wealth long-term.
- I do believe that there is an intrinsic value to college in terms of people you meet, relationships that are established and memories that are made. Being nose to the grindstone for your entire college experience would definitely take away from this as you would have far less time for social activities.
- Because of the necessity to work to pay your bills through college it would take away valuable study time and grades may suffer.
Basically, I paid for as much as I could and my parents picked up the slack. I ended up taking this path mostly by default. There was not much planning on my part when it came to college. If I had thought this through I would have done things much differently. But, because of the lack of planning on my part I was forced to take out student loans in order to finish my degree.
- I had skin in the game. Looking back, this was one of the biggest positives financially speaking. I was invested in my education and I was forced to learn things about personal finance. Unfortunately, I made a lot of mistakes and learned the hard way. But experience is the best teacher.
- My parents did not have to take out any loans for me. There are very few, if any circumstances when I would recommend a parent take out student loans for their kids. Parents need to worry about their own retirement first and then if they have the cash to help their children with college great, but they should never fund college with debt.
- The biggest con for my particular situation was the fact that I had to take on student loan debt. However, I think with proper planning, student loans can be avoided altogether using this hybrid strategy.
Related: 6 Steps to Getting out of Debt
Parents Pay For College
This can be a blessing and a curse. I had several friends in college that fell into this category. Typically, I saw one of two scenarios play out. Either the kid was raised well and appreciated what their parents had done for them and excelled in college or they were spoiled rotten and flunked out in the first year or two. Obviously, these are the extremes. There are many that fall somewhere in the middle. To successfully pull off this approach of paying for college takes both good parenting and good kids. If you don’t have both then it could backfire in a big way.
- The #1 benefit of this strategy is graduating from college debt free.
- If kids are not responsible for anything financially they should have more time for studying and excelling in their field of study. Or… it might just give them more time to party.
- Kids have no skin in the game. They are there on mom and dad’s dime. If they screw up they won’t feel it as much financially.
- Not only do they not have any skin in the game but many times parents just give them a credit card to pay for everything. They learn nothing about how to manage their own finances or how to live on their own.
So who should pay for college?
If we make decisions with the end goal in mind I think the answer is pretty clear. Ultimately, as parents our goal is to raise children that will be great adults. We are robbing our children of an incredible opportunity to learn to manage their finances in the real world by simply paying for everything. Fully paying for college sounds great in theory but offers little in the way of actually preparing your children to enter in to the real world.
My preference is to have my children be fully invested in their education both mentally and financially. Getting your kids to be invested financially in their education can take on many different forms. For example, it could be the kid’s responsibility to pay for books. This isn’t a huge expense but would require them to plan ahead each semester for how they are going to pay for the books. Or maybe they are required to pay for their monthly rent. It doesn’t matter what it is exactly as long as they know that they have to invest money that they earned into their education.
I would love to hear other points-of-view on this subject. How much of your children’s education do you plan to pay for and why?
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