Bethany, one of our Members of the Tribe here on the blog, recently asked “How much do you spend on your children’s education?” She astutely noted that I do place a great deal of emphasis on education in The Old Money Book and on this blog.
It is, as many have noted before me, the surest path from poverty into the middle class. It is also a time-tested tool for anyone wishing to go from any socioeconomic position into the upper class, cultural elite, or just plain rich.
More importantly, it is a large contributing factor to quality of life, as well. College graduates, in addition to earning an average of more than $600,000.00 over a working lifetime than non-c0llege graduates, also divorce less.
So the benefits are obvious. But if you’re a parent on a budget, how much do you spend on a college education? Do you risk your own financial security to invest in your child’s future? How much is too much?
First, let me say that I’m going to want to hear from everybody on this subject, as this can’t be the first time this conversation has come up between a married couple, or faced by a single parent, a grandparent, or an involved aunt or uncle.
Second, I think a lot of the choices–the decision of whether or not to go to college, as opposed to a technical or vocational school, to attend a local university and live at home, to attend a state school, or to attend a private school in another area or another country–depends on the motivation and inclination of the child in question.
All of the above options will increase in costs as a parent considers each one. So the motivation factor is key if you decide (for example) to get a second mortgage on your house or put a big dent in your savings in order to finance your child’s college education.
Will a specific education from a specific university really benefit your child and supercharge their future? Universities develop reputations for engineering, science, law, medicine, and film, etc. that make them funnels for industry, government, and the arts, communities that are constantly looking for educated talent.
Is your child on that focused, accelerated track for a particular field of study and subsequent profession? Is graduate school part of this path? Are (often unpaid) internships?
As always, I recommend candor. As the senior year of high school approaches, I would have a heart-to-heart, come-to-Jesus conversation with your college-bound child. Ask them questions and listen. Accept ambiguity. Not many people know exactly what they want to do or be at age 18. But motivation and passion are obvious, even at a young age.
Communicate to your child what you as parents are willing to commit to their education. And communicate that you expect them to match that commitment in their efforts to get good grades, finish college, and max out their potential in life.
This conversation may help both parent and child decide on the best course of action and the best way forward.
Young people rise to expectations, especially when those expectations are motivated by love and accompanied by support.
Now, again, I’d like to hear from everyone on this very important subject. Feel free to chime in on scholarships, grants, loans…anything and everything that can help.
Good luck, Bethany. We definitely want to support you, your children, and your endeavors to educate them.
- BGT
We paid for our sons college degree as we didn’t want him to start with student loan debt. He has graduated with a degree in history and a minor in antiterrorism. The issue has been finding a job. He is searching and applying with no luck. We planned for his education while he was still a child. We would do it all again. We believe it was worth every penny.
Perhaps info in this link might be helpful: https://www.historians.org/research-and-publications/perspectives-on-history/april-2017/history-is-not-a-useless-major-fighting-myths-with-data
Wishing him good luck in his job search. Take care.
When I was young, it was always assumed and expected that I would continue through higher education and earn my degrees (I did.). I had the full financial and emotional support of my parents plus an academic scholarship in graduate school, and I am so thankful for this.
Byron’s words: “Communicate to your child what you as parents are willing to commit to their education. And communicate that you expect them to match that commitment in their efforts to get good grades, finish college, and max out their potential in life.”
ring true for me, and I am continuing this tradition with my own children (twin daughters who are 11 years old). The conversations started early and happen often. When my daughters were born, my family opened up Educational Trusts (pre-paid college tuition) as well as 529 accounts, and we all contribute. The 529s can be transferred and up to 35K can (eventually) be moved into a ROTH (this is a fairly new law, so please check with your CPA, etc. to ensure you are following IRS laws.)
Best wishes to all families who support – financially and emotionally – your adult children through their educational journey.
“Young people rise to expectations, especially when those expectations are motivated by love and accompanied by support.”
Absolutely this. While we aren’t hard nosed about all As in our home, we know our kids are capable of excelling in school because they’ve shown us – and that’s because we’ve communicated that we have high expectations, and they have our support in whatever they need to meet them: tutoring, helping with studying, etc.
Our kids each have had a 529 college savings fund since they were a year old. Currently there is enough in there to pay for four years at a state university of two years at a decent private school, and that’s not even including things like scholarships and grants that we hope they’ll receive.
https://www.fidelity.com/529-plans/what-is-a-529-plan
Typo: or, not of
By choice, I do not have children. Education for me, starting in childhood, was a love of reading, and reading was something I did because I wanted to learn something new. In middle school, I remember starting on the set of encyclopedias we had at home and reading every one. Out of high school (mid-80’s), I worked a full-time job and 2 part-time jobs for 2 years because I wasn’t sure what I wanted to “specialize” in. I wanted to learn about life, making/saving money, exploring as a young adult for a while. My parents did not have the means to pay for higher education, but I had a strict, conservative upbringing – good grades, saving money, being productive, making good choices were expected. After a while, I decided on a degree in accounting, so I worked full time while attending college full time, paying for everything as I went to avoid debt. I moved away from my hometown and started down another career path about 4 years later; again, working full time, taking classes, earning certifications, paying for it all along the way. Since I was paying for it all, the educational choices were carefully, seriously selected. Being an older student gives you a different perspective as well. All in all, money well spent.
We’ve spent quite a bit on our child’s higher education, and it’s been worth every penny. We had ongoing discussions starting at age ten about college, majors, the cost of education, undergrad versus grad school, career path options, ROI on college and many other considerations.
I’m always surprised by well to do parents who have greatly benefited from their own higher education, but are loathe to support to their kid’s education because they didn’t receive help from their parents. They forget that the cost of their education was far lower compared to the cost of education today.
There is a strong relationship between educational attainment and income as evidenced by BLS data: https://www.bls.gov/careeroutlook/2022/data-on-display/education-pays.htm
My son went to private school, whilst my daughter switched to public school for high school as she wanted to attend a specialist Agricultural school which was public. I told them early on that I was not going to pay for their University study, though they could live at home while studying (Australian young people mostly attend university in their home towns unless the degree they wish to do is not available). In Australia students incur tuition fees which are set by the government with a maximum of about $16k a year. Nursing and other in demand professions are about half that. And they don’t start paying what they owe until they hit an income threshold. All very civilised in my opinion!
I did 3 of my 4 degrees in the UK. My parents paid for one and contributed to a second one (about a quarter of tuition and living expenses) and I paid for the 3rd myself. For my PhD I got a full scholarship and am very grateful not to owe a penny (the Australian government pays PhD tuition for up to 4 years for citizens – luckily I was a citizen and qualified by then!). With each degree my income went up, so I was happy to contribute financially to my own education. Similarly, both my kids will be expected to earn more than someone who only finished high school. I don’t think it is unreasonable for young people to contribute to their own education. It might make them appreciate it a bit more.
The cost of college at the undergraduate level should be limited in expense for the student. Considering the growing requirement for advanced degrees in the 21st Century economy, it is necessary to save the expense for the final degree that will be attached to one’s name throughout their career.
This is advantageous because professional degrees do not always require four years, and encouraging a child with “I’ll pay for your undergrad, you pay for your masters and doctorate” sends the message “You owe me, now do it”.
The way I see it, 18-year-olds should not be worrying about bills that to their income and experience seem mammoth. The transactional relationship should encourage a sense of debt to parents and a duty to achieve more.
With this in mind, do not go to a college with an insane price tag and mediocre reputation. Half the time that is the market finding the highest price for the biggest sucker. Be reasonable with the undergrad, but not cheap, and have the child owe you an extended degree even if you express disappointment in them for noncompliance at every holiday gathering for the next decade.
Thank you mom for that idea.
Yes! Mom! Thanks, Dario. – BGT