It seems like every personal finance magazine I read reinforces the idea that our children are entitled to a college education. Beyond that – it’s the parent’s sole financial responsibility to provide a college education free and clear for their children. Don’t get me wrong, every parent would like their child to have a college education, but at what cost?
Where was it written that we as parents need to gift a college education to our children?
Those with a college degree still fair better financially than those without, but consider this: The average college graduate leaves school with $20,000 in debt. Is that really putting your child on the road to financial success?
Maybe, maybe not.
If your child is going to change the world and earn enough money to pay off that debt within 5 years, it’s probably worth it. But if your child is looking at a profession with a starting salary of $35,000, it’s going to take a long time to dig out from that degree.
Any responsible parent would feel at least a little like a failure if they saddled their child with $20,000 of debt before they even joined the workforce. So it’s not surprising that many parents are paying the bill themselves. But this is putting in place an even riskier situation down the road. Parents who tap into their retirement savings, or skip saving for retirement altogether for the purpose of paying for their children’s college costs are going to end up much worse than the student with $20,000 in debt.
Remember this: they have student loans for college costs, there’s no such thing as a retirement loan.
With social security on the fast track to bankruptcy, and their retirement savings flushed down the university drain, the wreckage caused by a generation of retirees who spent their savings on their children’s education might make the recent credit crisis, resulting bailout and deficit increase look like a bank overdraft fee.
A better choice for those in this situation is to start at a 2 year school, subsidized loans, grants, scholarships, and a part time job.
I got a Bachelor’s Degree, but I did the first 2 years of classes at a community college where the tuition was a fraction of a state University. I paid for the whole thing with minimal cash from my parents, and a part time job. I got the basic classes out of the way and did it without going into debt.
After that, I went to a state University for the final 2 years to focus on core classes that related to my degree. I still graduated with student loan debt, but far less than I would have had I gone straight to a 4 year school out of high school. And my various part time jobs taught me the value of money and having to work to afford the things I wanted. A win-win for me and my parents.