Becoming a parent means taking on the financial responsibility of guiding your child into adulthood, and one of the most significant expenses is often their post-secondary education. Financial experts recommend starting to save for college in your child’s first year, possibly through a custodial account, to be prepared when the time comes. However, if you haven’t saved and your child is growing up fast, don’t panic. More than half of parents can’t afford to save for college while raising children. Finding the money later is challenging but achievable.
Should parents pay for their child’s education? Does footing the bill for a college education reduce a child’s motivation to succeed? Or does not paying risk their ability to complete college?
In 2010, college funding broke down as follows: 37% of parents used savings or income, 23% relied on grants and scholarships, 24% combined parental and student loans, 7% secured funding from friends or relatives, and 9% left the responsibility to the student. Children from wealthier households with annual incomes over $100,000 were more likely to have their education fully funded by parents, according to a Sallie Mae Gallup poll. In contrast, those from moderate- or low-income families often depended on the student securing grants, scholarships, or loans.
The Value of a College Education
Many parents feel obligated to pay for college because it’s long been seen as a key to success. Historically, a college degree offered a significant advantage, but recent research suggests that any post-secondary education, particularly in trades or skills, is valuable. In 2010, individuals trained in specialty trades often enjoyed greater job security and financial stability than college graduates. During recessions, highly educated, high-paid employees are frequently the first to face layoffs or salary cuts, and replacing those jobs in a competitive market filled with degree-holders is tough.
Parents who initially feel pressured to fund their child’s education may realize, as college approaches, that they must also plan for their own future. Financial analysts often advise prioritizing retirement planning over college funding, as loans are widely available for education but not for retirement. As parents age, they become more aware of what they’ll need for a comfortable retirement. By seeking loans, grants, or scholarships instead of covering all college costs, parents can better prepare for their later years, trusting their children will establish their own lives by then.
Encouraging Responsibility Through Financial Autonomy
Some parents believe that autonomy fosters responsibility, and children should learn to manage their own finances. When college is treated as a free ride, students may not take it seriously, viewing it as an adventure rather than an education. Shifting some or all financial responsibility to the child can motivate them to excel academically. Students who borrow for college, take their studies seriously, and plan their careers can often be debt-free by age 30. In contrast, parents who deplete their savings on college may struggle to rebuild for retirement.
Fortunately, numerous options exist for funding college, including student financial aid, loans, scholarships, grants, and state educational assistance. Whether you, as a parent, cover all or part of the costs is a personal decision based on your circumstances and your child’s needs. It’s wise to ensure your child has some responsibilities during college. For example, if you pay tuition, they could cover room fees, books, or food. If a child faces no financial obligations, they may not fully appreciate their education or strive for success, as it’s human nature to value what comes with effort.
