Apr 14th, 2008
Paying for College - Who should pay?
Something I struggle internally about a lot, who should be paying for college: parents or kids? Some people think it’s the child’s own responsibility, others that the parents should pay for it. I have friends that paid for college and are in debt, friends that paid for college but aren’t in debt, friends that didn’t pay and are in debt and obviously friends that didn’t pay and aren’t in debt.
The truth of the matter is that I fall somewhere in the middle of the argument. I had to pay for my own schooling but I had the advantage of having a very good job while going to school. I also ended up with a nasty rate on a student loan when I was laid off which I do not want my children to be sattled with. I can’t say I didn’t have any help because my parents did help me out when I was laid off and did everything they could for me.
Another thing to consider is that college tuition has been increasing at a rate faster than ANYTHING else every year. In fact, its infuriating because even public universities which receive a ton of public funding are STILL increasing tuition at ridiculous rates.
So I did an assessment, if I pay for my children’s college education:
Good:
- They won’t have student loan debt
- If I invest when they are born, assuming decent returns on an account, I should be able to pay for their entire tuition with around $8000.00
- They can concentrate more.
- The do more extra curricular activities
- They can finish school sooner
Bad:
- They wont learn to handle money well
- They may not learn a good work ethic
- I pay for it
- They may not be grateful for education
So that leaves us somewhere in the middle. I came up with a couple middle ground solutions for you out there who are considering the same things:
-I will pay for your undergrad but graduate degree you pay for
-I will allow you to take out a 0% loan from me to pay for school
-I will pay for school, but anything else, you are on your own
-I will pay for school, as long as its in state tuition
-I will pay for school as long as you are involved in many small or one large (football, dancing, music, whatever) activity
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I was lucky. My dad is a professor at a private university with a reputation. They provide tuition help for 4 years. The school I went to was cheap enough that my tuition was covered by my dad’s school. Great perk!
My parents made enough to cover room and board, but they never had a college fund for me and big brother. That being said, I learned everything I needed to know about money without paying for school.
The key is to get them used to an income at a young age, whether it be allowance or a part-time job. This teaches the fundamentals of personal finance, a budget.
I’ll set up a college fund for my kids (whenever that happens) so they don’t have to worry about paying for school. But I will provide incentives for them to arrange their own funding via grants and scholarships.
Here’s another scenario: I will pay for 2 years of your school: your last two years when you’re focusing on your major. The hope here is that they can get some scholarships to take care of that first year, and maybe learn some responsibility that 2nd year. The third year they still could choose to get a job if they want to live off-campus or have better housing/living.
Both great ideas…and Romey has a good point about scholarships. There are a TON of scholarships out there its just a matter of applying for them. I seem to remember Ramit (iwillteachyoutoberich) was having trouble finding applicants for his scholarship…and Ive heard this is fairly common.
The way my school loan was handled was that I took out a $10,000 loan to cover some of the expenses and my parents took out the remaining. That way I still understood how to pay a loan and got better with money as well as not being totally dependent on me alone. Plus once I graduated and started working full time with my degree I am paying my parents some money to help pay for mine as well. I must say it worked rather well.