This is not an article about whether or not you can afford to pay for your child’s/children’s college education. Rather, this is an article from the perspective of a recent college grad (2005) on whether or not parents should pay for their child’s college education. What do I mean by using such a conditional and potentially guilt-ridden word? The media likes to portray most students as having student loan debt of over $100,000 with degrees that could not possibly support their loans. With all of the recent media attention about college grads with cumbersome loans and smaller chances of landing that crucial first job out of college, I thought it might be helpful for parents to hear an opinion from a semi-recent college grad who had loans as part of her package. You could say that my situation was different because I ‘only’ had $36,000 in debt, but CNN writes that students in 2011 graduated with an average debt load of $25,000 ($11,000 less than my own). I also realize that the job market is at an all-time low which makes taking out student loans more precarious in these times. However, I still want to make the argument that college loans helped me mature financially (oh would my parents love to read this article!) and could help your child do the same.

How I Paid for College

I attended a private liberal arts college from 2001-2005. If I remember correctly, the college was priced at $32,000 per year for tuition, fees, room, and board (I just looked up what tuition is at my alma mater in 2012 and *gasped* at the $48,000 price tag for tuition, fees, room, and board).

Obviously I would never have been able to afford these costs on my own—nor would my parents have been able to. I also never would have taken out student loans totaling over $100,000 to pay for this particular college. Fortunately, I received several scholarships and grants. My father contributed $5,000 per year, and my mother gave me $200 each month for spending (as a natural saver, I accumulated over $2,000 by the time I had graduated—thanks Mom!). So, my parents contributed a combined total of $7,400 per year towards my college education.

In the end, I came out with approximately $36,000 in loans under my name.

Reasons Why Parents Should Not Pay the Entire Way

I am very grateful to my parents for their contribution towards my education. Without their funds, I would have been over $65,000 in debt instead of $36,000. Don’t get me wrong—$36,000 is a huge sum of money. However, with the proper skills and a good job market (which we are currently not experiencing) it is a manageable sum of student loan debt. I have always considered my education to be the best investment I have ever made in my life, both personally and professionally. As such, here are some reasons why parents should not pay the entire way towards their child’s education:

  • Scholarships are More Likely: I think that if children know they have to pay some or all of their way through college, then they will strive harder in academic performance in high school, as well as more diligently seek scholarship opportunities. I know I did.
  • Students have More of a Stake in it: Academic performance in college could also be a higher priority because the student has a stake in their education. Who wants to spend thousands of dollars of their future money for D’s and C’s?
  • Take on some Financial Responsibility: Student loans may be the first loan (hopefully) that a young adult has to their name. A manageable amount of loans could help a young adult become financially responsible. I was financially responsible before college; however, I did not have any consistent and large bills. During the financial aid exit interview I suddenly had a huge weight on my shoulders which turned into a desire to get out from my student loans in as little time as possible. This helped me to become more financially responsible—a trait that will serve me the rest of my life.
  • Learn to Work Towards a Financial Goal and Achieve it: There are any number of financial goals adults will have over their lifetimes. Owning a home, having children, debt freedom, traveling, etc.—there are large bills that will come due from our dreams. Manageable student loans give a student the first opportunity to chip away at the financial goal of debt freedom. In the meantime, they will potentially become more financially savvy. For instance, I consolidated my student loans the summer that I graduated due to low interest rates. I learned about the consolidation process, as well as how to lower the interest rate even more by not consolidating a smaller private loan I had with a staggering 9% interest rate. I paid the higher interest loan off quickly while making minimum payments on the consolidated loan sum and saved myself a bundle of money.
  • Learn the Interest Game: Everywhere we turn there are opportunities to spend money. And not having money is no reason not to spend money in our society. Loans are everywhere: credit cards, payday lenders, banks, car dealerships, etc. Student loan interest rates are generally lower than those of other loans (though we did just lock in a 3.5% fixed mortgage rate on our home—these are different times). A student loan gives young adults the opportunity to learn about debt, interest rates, and paying money towards debt that does not come off of the principle. I have all of my forms from my financial aid exit interview, and each loan shows how much interest I will have paid if I had taken the 11 years to pay off the loans granted by the lender. This lit a fire under me to pay each loan off more quickly and save myself a lot of money over the long term. Lesson learned.

I paid my last student loan off in September 2010. This was approximately five years after graduation, and six years less than the time of the loan payoff the lender had given me (11 years). In the meantime, I learned a substantial amount about finances, debt load, cash flow, interest rates, consolidation, and how to achieve a financial goal.

What are your thoughts on this issue? Will you be paying for your child’s college education? Was your education paid for?  

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Comments to Should You Pay for Your Child’s College Education?

  1. Definetly students should have to pay of a portion of thier loans, and not rely on thier parents completly.

    My parents helped me, but I still graduated with student loans. I managed to learn all about how interest works, and loans work by paying it off, and it taught me better financial understanding. Because of the lessons learned from that, I’ve been able to pay off cars quicker, and make better decisions on my home loan.

    Students, and parents need to sitdown before college and look over the cost. They need to do some research and figure out if the degree they are going for, is worth the cost of getting it. You should major in something that gets you a career. You minor in whatever is your interest.

    Shahid

    • You seem to have had a similar experience to me in that student loans helped you mature financially (and even become savvy). Thank you for sharing your own experience!

      Amanda L Grossman

  2. I agree with your points. I think that young adults need to learn about handling money and taking on responsibility. At some point, the Bank of Mom & Dad has to close, otherwise the child will always depend on them and use them as their safety net. I’m not saying parents shouldn’t help at all, but they don’t need to take care of everything either.

    Don @ MoneySmartGuides

  3. My husband and I have discussed a contract scenario with our 3 boys. We will pay for the first semester or some portion of it, but the boys will have to earn each semester after that. So, no we don’t believe it’s the right of a parent to automatically pay for a child’s education. At 18, they are considered adults and we plan to treat them as such. There is so much to being a parent that it also includes cutting the purse strings and being a mentor to your children. If they really want their education, they will figure out a way to get it.

    Debbie

    • Very interesting system. Do you think this will sway their choice in college between private school or state schools?

      Amanda L Grossman

    • Hmmm…my comment seems to have disappeared.

      I think your system is interesting! Do you think it will sway your son’s choice between private and state schools?

      Amanda L Grossman

  4. My parents were not financially able to pay for my college education. I knew that throughout high school so I worked summer jobs and had saved over $7000 by the time I started college. Between that, a full-tuition scholarship, and working during college, I only had to borrow $1000 which I repaid within the 6-month interest-free time limit of my federally-funded loan. I was fortunate that I learned on my own how to manage money as my parents didn’t teach me but not all kids are like that. My two sisters each have big student loans because they chose to attend expensive schools and got degrees that were not as marketable as mine, which was engineering. I think the main thing is to teach your kids to manage money early on and to allow them to earn part of the money for college. That’s what I will do with my kids who are young right now.

    Linda

    • Hi Linda!

      That’s a great experience you’ve shared.

      I only learned how to sweat finances from my parents; money was always tight. I guess that taught me a lot as well.

      Good luck with teaching your children.

      Amanda L Grossman

  5. I agree with your first point – why would I work my butt of to get scholarships if I knew my parents would help me? I’ll save for my kids future but he would know about it.

    Katie Christianson

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