If you thought the last baby step was controversial we are only getting started! Now there are many different angles you could take with this baby step, and we are going to try to address them the questions we think are the most important. After you are debt free, have a large emergency fund, and are saving for your future and retirement, Dave suggests you start saving for your kids college. Let’s unpack this and see where the controversy lies. It may not all be because of Dave!
Disclaimer- We wrote this from the perspective of parent and student because we believe that this should be a joint decision and that the information is applicable for both parent and students.
Were you even planning on paying for your kids college?- This one is pretty easy. If you do want to pay for all or help pay for your kids college then you might as well start saving sooner rather than later. You are only limiting how much money you can save if you don’t start now. There are multiple avenues to do this, but just starting is better than nothing! If you were not planning on paying for your kids college then you can skip this baby step. How easy was that?
Does paying for your kids college make them lazy?- Some people think that when parents pay for their kids college, it makes their kids feel entitled and does not teach them work ethic. It all depends on how parents handle it, but paying for your kids college can either be a blessing or a curse. To make it a blessing show your kid or kids what you are sacrificing to pay for their college, show them state vs out of state costs, private vs public. If you walk through the process with them and teach them along the way, we strongly believe that only good things will come out of it. However, if you take care of everything and bail them out when they make mistakes, then they won’t learn about sacrifice and hard work. No kid wants to disappoint their parents if they know that they had their best interest in mind, know the sacrifice they made, and understand that college is a privilege not a vacation or social time.
What about scholarships and hard work to pay for college?- This is probably every parents dream that their kids get a scholarship to a school to cover as much of if not all of the cost to go to school. If you save up all that money in a college savings fund and then they get a great scholarship, will you still be able to use that money? This is a legitimate concern as well. It is not a good plan to assume your kid is going to get a scholarship (also to mention the immense amount of pressure you are putting on them!). This is a possibility though so it needs to be discussed as realistic or not realistic. Getting a scholarship could even be looked at as a part time job for your kids because there are so many scholarships out there, you need to apply to be in the game! Our last point on this aspect of paying for your kids school is to actually not pay for their school or maybe only a portion is paid for. Just because you are in school learning to be responsible and preparing yourself to get a job, does not mean that as a student you ca not handle working as well. Now everyone will be able to handle different amount of work and some degrees do require more time and attention, but we feel there is nothing wrong with having your kid work while they are in school. It teaches them that college is not free, how to handle multiple responsibilities, and really prepares them for the real world of working and maintaining control on their life.
Will you contribute to the student loan crisis?- This is also a controversial baby step because everyone has a different take on student loans. Our stance is very simple. If you take out student loans, you should be expected to repay them back and want to pay them back fast! This goes back to the previous point that if a high schooler does not understand the true cost of college, they will not take it as seriously. We as a country and community need to think about the ROI of college and how/who is going to pay for it and we don’t mean the government. It is crazy to us to hear stories of people leaving the country because they “can’t” pay their student loans or people carrying their student loan debt into their 40s! Paying off student loan debt is not easy, but it can be done and should be done especially if you following the baby steps. This decision can play a huge role in your family legacy as well in either a good or bad way. It deserves your attention.
Is college even worth it?- We still believe that college is worth it, but worth is a relative term. We might mean worth it at $20,000 for 4 years. Your worth it might be $40,000 for 4 years. What is the ROI for the degree you are getting and the job you can get right when you get out of college? We know that loans are not the best way to approach paying for school, but if you choose to go that route, are you ready for the sacrifice you will have to make to pay them off? The myth that we would like to break is that you NEED to go to college to get ahead/get a job/get a life. This is absolutely false. Now does college help with those things, yes. If you go $40,000 in debt though or spend $40,000 on a degree only to come out making $40,000 in a career that does not have a lot of upside, even if that degree helped you get the job, it still was not a good investment. That is a tough statement to hear, but you should always keep these the following two things in mind. 1. You should love your job no matter what you do. If you work 40 hours a week, after sleep, this is going to be where you spend a majority of your time. 2. The thing to keep in mind is that, more than ever before, there are so many new ways to build a resume or body of work that does not involve college. You can self-teach yourself more easily now than you could even 5-10 years ago. If you choose to invest your time in that and even put some money in yourself, lets say $10,000, you can recoup that amount much faster than spending $40,000 on college. It also shows you can take action, create and ship something, and that you are a go-getter who thinks differently.
We want to close by saying that college is not bad. You can go to college and not just grow and learn academically, but also as a person and socially. Those benefits are hard to put a price on. The issue is you don’t want to have the stereotypical college experience where you coast through college, don’t apply yourself, party and have “fun”, but come out with no real work place skills. If you do that, you may enjoy the 4 years, but have 10+ years of hard work paying back debt and work experience to make up for. So should you pay for your kids college? A more important question to ask is, is this the right investment for my kids or myself? Could I use that money for something else to help my kids out? Should I pay some or all? Thinking and having these conversations are the first step. While we don’t fully agree that paying for your kids college is for everybody, it’s a discussion everyone should have before they go to college whether you are a parent or student!