Attention parents: Saddling kids with thousands in student debt is a terrible way to teach responsibility. Here's why you should save for college instead.
College Savings

Wealthy Parents: Stop Making Excuses and Start Saving for College

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Recently, I had the opportunity to travel to the Hawaiian Islands of Oahu and Kauai for a work-related trip. I met all kinds of travel writers and influencers, along with tech support and public relations professionals. Over the course of a week, I had a blast!

Unfortunately, though, one conversation I endured really grinds my gears to this day.

During one of our lunches, I was seated near an individual who went on a tangent about how he didn’t want to pay for his children’s college education. No big deal, right? Lots of people can’t afford to save.

The problem is, this individual had the means to save for college for his young children – he just didn’t feel like it.

*sigh*

This is one of my biggest pet peeves – like – ever. I totally get it when parents can’t afford to save for college. I mean, they need to take care of other financial goals – like bills and retirement – first. However, I just can’t relate to wealthy parents who choose not to save.

Of course, this individual bragged endlessly about his home, his income, and other financial details…all while blathering on about why he didn’t feel obligated to save a penny for his kids. He was so against saving for their college, in fact, that he said he’d rather go broke before they turn 18 rather than let them get their hands on his hard-earned money. To top it off, he said that paying for their college wouldn’t teach his children responsibility and that kids whose parents paid for college always ended up lazy and entitled.

As you can probably guess, I loathe the argument that having kids pay for their own education is the only way to teach them not to be whiny assholes. I mean, really?

I’d had a few beers by this point, so I smartly kept the conversation pleasant and didn’t ask for many more details. But, I did tell him that I was saving for my children’s college education and had been since they were babies.

His response? My strategy “wasn’t smart” because “I shouldn’t have to sacrifice to save for my kids when they can take out student loans.”

5 Reasons Parents Should Save for College

Oh boy.

Nothing irks me more than being scolded for saving money by someone who isn’t. WHAT!?!

So, while fighting off the world’s biggest hard eye roll, I calmly told him I wasn’t sacrificing anything. We own our own home free and clear, travel the world three months per year, and are on a path to a very early retirement. That shut him up pretty fast.

Still, the whole conversation made me feel uncomfortable – mostly because I know far too well just how prevalent this mindset is. Greg and I live in a fairly affluent area where you would assume everyone is saving for college. The problem is, most people aren’t. They are spending money on homes, vacations, and fun without worrying about what might happen five or ten years from now. They are assuming everything will work itself out. But, what if it doesn’t?

At this point, you’re probably aware that student loan debt is a $1.5 trillion-dollar crisis affecting 44 million borrowers. According to Student Loan Hero, the average student loan debt worked out to $39,400 for the Class of 2017 graduates. Every year, that figure gets worse.

As someone who can afford to save, I will continue to do so. Not only is it my responsibility as a parent, but it is my sincere desire to help my children start their adult lives without debt. Here’s why every parent who can afford to save for college should do it and stop making excuses.

#1: Saving for college doesn’t have to be all or nothing.

One thing that annoys me about parents not wanting to save for college is this idea that you either have to pay for all of it or for absolutely nothing. #wrong People forget they could pay for half, or a third, or even just freshman year if that’s all they can do.

Paying for college is not something you must commit to fully when you’re first starting out. However, you can commit to saving some money and trying to help your kids stretch their funds by choosing an affordable school.

I am *trying* to pay for my children’s college education in full, but there are so many factors that could throw my plan off the rails. My kids are 7 and 9, so we don’t know where they will go to school or how much it will cost. I don’t know if they’ll receive merit scholarships or get a full ride somehow. Heck, I don’t know if they’ll skip college altogether to follow their generation’s equivalent of the Dave Matthews Band.

But, I do know I can save X dollars per month. I also know that, ten years from now, I’ll be glad I did.

You don’t need to have all the answers to start saving for college. So stop making excuses and start saving whatever you can.

#2: Anything you save can help.

Also, remember that anything you save will be helpful! We had a lot less money when I first started saving for higher education, so I could only put away $25 a month per kid. But that money still grew due to the power of compound interest. Now that I can save a few hundred per kid every month, it’s growing even faster.

Imagine you could save $10,000 for college by the time your kids reached college age. That’s $10,000 they don’t borrow, and that’s $10,000 in loans they won’t pay interest on for years to come.

Every bit helps, so don’t make excuses. If you can dine at Outback Steakhouse a few times per month, you can put $25 in a 529 account, too.

#3: Your income may prevent your kids from receiving aid.

If you’re moderately wealthy, it’s fairly easy to assume your kid won’t receive much (or any) financial aid for school -outside of merit based aid or sports scholarships, anyway. A lot of the proposals put forth by politicians for “free college” have suggested income caps in the $125,000. That means parents with adjusted gross incomes higher than that would be on their own. This is the promise Hillary Clinton made when she ran for President in 2016.

We don’t know what will happen with these proposals in the future, but I would be willing to bet something similar is passed in the next decade. If you earn a lot of money and don’t save for your child, you may be setting them up for a double whammy if free college ever comes into play – no help from mom and dad and no help from the government while a lot of their friends get to go to school for free.

#4: There is more than one way to teach your kids how to be responsible.

The idea that setting your kids up for a lifetime of debt is the only way to teach them responsibility is utter bullshit. There are plenty of ways to teach your kids to grow up. Have them do chores. Make them get a job. Have them take out student loans, then use the funds you saved to pay them off if they maintain a certain GPA.

When you can easily afford to save something each month, not saving for college to teach your kids a lesson is just a dick move.

#5: You may receive tax benefits for saving in a 529 savings account.

Finally, you may receive tax advantages if you save for school. In my home state of Indiana, we get a 20% tax credit on the first $5,000 we save each year. That’s $1,000 in free money that we gladly take advantage of. It would be a shame not to.

Check the laws in your state to see if you receive any tax advantages for any college money you stash away. If you live in Indiana like we do, you really have no excuse.

The Bottom Line

Attention parents: Saddling kids with thousands in student debt is a terrible way to teach responsibility. Here's why you should save for college instead.

If you’re struggling so much that you can’t even worry about college, then it is certainly best to focus on your own financial goals. But, if you’re a wealthy parent who chooses not to save, I implore you to reconsider.

Starting your child off with tens of thousands in student loan debt is an awful way to teach them responsibility. Try a chore chart instead.

Do you save for your children’s college education? Why or why not? 

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16 Comments

  1. I guess I’ll start my comment with something provacatibve and then wheel it back a bit. I’m not saving for our kids college. Now first that isn’t the same as I won’t pay for it. I treat all money as one big bucket, so I’m saving for all possible outcomes. I’m also hoping but not banking that my income will cover it without savings. We shall see.

    There are some downsides to savings for college. The amount of savings you have also drives financial aid levels. Accounts like retirement accounts don’t count nor does value of your home. So there are scenarios where not specifically saving for college can be advantageous.

    1. “There are some downsides to savings for college. The amount of savings you have also drives financial aid levels.”

      That’s why I am writing to wealthy parents here with high annual incomes. The point is that it’s unlikely they will receive financial aid anyway.

      Personally, I would never feel comfortable not saving with the goal of *hoping* my kids will get aid – no matter my income level. You’re basically just winging it and hoping things work out. This is not a plan, but unfortunately, this is how many people approach the issue of paying for college.

  2. We did not save much for college because we could easily cash flow it for our three kids. We saved aggressively for retirement instead. We told them they could go anywhere but we’d only cover the equivalent cost of state U. They all chose state U, all got merit based free rides including room and board and nobody borrowed any money. If your kids are smart enough, have good study habits and major in a stem field it isn’t hard to get free rides even if the parents are high earners.

    1. I am glad your kids all got merit-based free rides but that is not even close to the norm. I know this because currently 44 million borrowers owe a collective $1.5 trillion in student loan debt. You are the exception, not the rule. Again, this is not a plan. You got extremely lucky this happened for you, and I am happy for you and your kids!

  3. Totally agree! Saving up for your kids college really doesn’t have to be all or nothing! Just helping in one way or another will be highly appreciated in the future. It’s always better to save some than nothing at all.
    Thanks for a great read, easy to follow and very interesting!

  4. Strongly agree with your article. Saving early for anything is beneficial in many ways.

  5. YES YES YES. I’ve worked so hard to become a high earner/wealthy parent so I CAN do that for my son. I know what it’s like to deal with loans. I know what it’s like to start your life with a negative net worth and being broke. I will not allow that to happen to him. I can’t believe some people feel this way, you should want your kids to do BETTER than you.

  6. We were very lucky and also were very focused on instilling good study habits in our kids. But the genetic lottery certainly came out well for them as they were all three much better at school than the vast majority of kids are. We did have a sound plan though. We did not have kids right away and I had already established myself as a high earner so we budgeted 100% of their college costs into our normal spend. It was not a stretch at all, we just planned to reduce our aggressive savings a little as required. We’d still have plenty to retire early if I ever got tired of working. It is only a plan for high earners but just like we did not have to have a new car fund because we could buy cars with cash out of our cash flow so could we do college at the attractive Arkansas prices. It was nice they got free rides but our current early retired nest egg would only be slightly smaller now had we funded the whole thing ourselves.

  7. Thank you for this article! I used to work in college admissions and we were expected to coach people through the financial aid packages (which is sometimes siloed away from the admissions side). It was always amazing to me when people would demonstrate all the things they were willing to spend a tuition payment’s worth of money on (extravagant weddings for older siblings, second and third homes, etc.) but fight tooth and nail to not pay for their student’s education. These were often (not always) the same people who would scoff at the residence halls that were more than a year old (new construction costs money, people), or who wanted to grill us about lower student:faculty ratios (which can be super important – but do they think the faculty work without salary and benefits??). As was mentioned in the article and comments, there’s a difference between can’t and won’t, and there are multiple ways to make it happen, but I always felt bad for students whose parents essentially made it seem like some of life’s “extras” were more important than the child’s future.

    One note about something that always bothers me a bit (per an earlier comment): Depending on the state, it’s not always safe to assume that a public institution is automatically going to be the cheapest option. There is a huge difference between price tag and the actual cost to attend. I worked at a private institution with a price tag that was much higher than all the state’s institutions, but the bottom line of what an individual student was expected to pay per year after financial aid was frequently less expensive than even the flagship state institution. College is expensive enough as it is – it’s worth doing an actual comparison per student per school instead of making assumptions. There are also unintended costs to consider – e.g. look at four-year graduation rates. No one thinks it’s their kid who won’t graduate in four years, but when the four-year grad rate is 55%, 45% of students are paying for an extra semester, year, or years of school, and those 45% are all SOMEONE’s kid. (I also think focusing on the absolutely cheapest option as the top priority in choosing a school can end badly for some students, but that’s another topic for another day. I do think it belongs in the mix of things to be considered, but there can be a value consideration that gets lost.)

  8. Hello! What would you say qualifies as a “wealthy” parent?

    1. It depends on a lot of factors and there is no hard and fast rule on who is wealthy and who isn’t. But, if you have the money to max out retirement accounts each year, have a nice home, have two new cars with $500 monthly payments, etc. then you can afford to throw a few hundred bucks in a 529 plan each month.

  9. I’m sorry you usually write very good articles but you neglected to mention that our colleges today have become liberal cesspools where they do nothing but protest everything that used to be good in society, they have safe spaces because of course you can’t offend anyone nowadays if you speak of morals and values and they are even claiming that what they get served as food is racist.

    Also everyone I know who went to college regrets it. They never used the degree that they originally wanted and now they are in debt and wished they would have taken training that goes with their current career.

    I never went to college and I make more money than all my college friends.

    Go to college and get a job is what the government wants you to do and is typical brainwashing. I will never give money to my kids college fund but I will put it towards specialized training when they know for sure what they want to do. But they can spend their own money if they want to be indoctrinated into liberal political correctness and drink and party all the money away. I just spoke to my friend who is over 50,000$ in debt bc all he did was party.

    1. I don’t disagree with you. I *am not* advocating we save money for our kids to get liberal arts degrees that don’t lead to real jobs. I am an advocate for community college and two-year degrees. We live in an area where my kids could attend college and live at home, and I certainly hope they do.

      I certainly don’t believe you have to go to college to be successful either, but you do have to earn a degree for certain careers. I want my kids to have more options in life and for me that includes my hope they earn a college degree. I will certainly steer them toward degree options that make sense and lead to real careers, and I hope other parents do the same.

  10. The worst one is when people say “higher-ed will be free in the future.” These people are delusional (sorry but true). There is no such thing as a free lunch (I learned that in my econ classes). And if college is ever “free” in the future, colleges will be super-picky, you can bet your bottom dollar they won’t be picking C students to attend for free. College entrance exams will be more difficult and well, may God have mercy on our souls if college is ever “free” in the future.

    Another one that I hate is that “kids won’t have a skin in the game” well why can’t they be emotionally invested in their education? You can get your kids grades throughout the semester. So you can make sure they are working hard. People often say “they can get scholarships….” Scholarships are soooo hard to get ya’ll. SO HARD. They’re ultra-competitive. I like to think of scholarships as the wild card ya know. It’s great if they get them but if they don’t get them, well that’s okay.

    1. I hate the “skin in the game” comment, too. As if there aren’t other ways to ensure your kids are responsible for their grades and education.

      I heard one good idea I liked if that worries you. You can save for your kid’s college, have them take out loans, then pay the loans off with the colllege savings cash if they keep their grades up and graduate.

      I think people use the “skin in the game” argument because they’re too lazy and unmotivated to save. That’s it. Why do people want their kids to start their adult lives with tens of thousands in debt just to teach them a lesson? I find other ways to teach my kids about responsibility.

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