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.
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
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
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?