Many financial advisors make the case for saving for retirement instead of saving for your children’s college education.
Some might say that you should just save in a general savings account and sort it out when your child is in high school.
But making a plan that can be changed if necessary is better, IMHO. A saying I’ve heard that made an impression on me is that a bank will make a student loan but it won’t give you a loan for retirement. Hmmm . . .
My husband and I are retired and our youngest child will graduate from college this May. So we see the situation from the perspective of having helped our four kids get through their bachelor’s degrees. We told them all ahead of time that we would not help with any higher degrees. One got a master’s degree and one a Ph.D.–on their own dime.
We opted to pay for our kid’s college educations with help from loans, scholarships, & their jobs. While we hope that we won’t ever have to inconvenience them by needing to move in with them someday, we feel we made a good decision. We have to watch our money more now that we are retired because of it, but it was a good trade off for us. YMMV, and today’s economy makes lots of old assumptions seem iffy.
Your children should know if they are expected to pay for their college themselves so they can start saving for it ahead of time. Either way it’s good for them to have summer jobs to save for their future. Colleges and future employers like to see that the student has had the ambition and discipline to have jobs. Nobody wants to hire someone who has never had a regular job. That’s true even for students whose parents paid for everything.
Most colleges will give financial aid to your child based on the parents’ income no matter what you have told your child about support. They will assign an amount that the parents are expected to pay, even if your child explains to them the situation. They will assign an amount they expect the student to pay from their own savings from part-time and summer jobs while in high school. The remaining costs are what the school will look at when giving any kind of aid. If you family income is “too high” they will only give loans, not grants (money that doesn’t have to be repaid). In our experience most students don’t qualify for loans higher than about $10,000 a year, and they have to be paid back as soon as the student graduates from college or stops going to college. So look at the expected yearly college expenses with this in mind. Living at home will save the most money as room & board is usually about half of the costs at college.
There is not just one way to do this, but I’d encourage you to think of all of your children’s education needs. Try to plan so that each child gets an equal amount of help (or no help) from you. Work with your children on getting good grades for possible scholarships. If they need tutoring, pay for it. It’s probably a better investment than setting aside money for a college education they might not be able to get.
If their grades can take it, encourage them to have some extra-curricular activities they can put on college applications. Scholarships often go to people who seem like leaders in some way. Working at church activities count, but count more if your child is in charge of some activity there.
We all want the best for our children, but we have limited resources. And not every child will want to go to college. Encourage them to think about some kind of training after high school. Trade schools and certificate programs are often good.
Beware of for-profit career schools as they are often a scam. Click here to learn about these types of “schools.”
Research the job outlook for graduates of any program. This is so important before you invest time, effort, and money into any kind of education. Do your homework on this or you could really regret it.
Every family is different, but talking about it and saving for the future is always a good idea!
So I wrote this whole article, but I never had time to include some helpful resources on saving for college, financial aid, and student debt! After skimming the internet in the recent past, I was able to fill that gap pretty easily. Here are a few resources that will help you understand the breadth of your financial aid options.