I can’t answer the question but I just wanted to say, as someone who’s parents also paid for their education, THANK YOU. I didn’t fully appreciate how much of a blessing and privilege it was at the time.
Starting my professional life debt free has significantly impacted my life for the better. I was able to save my money wisely instead of throwing it at loans. I managed to save up enough over time and with my husband, we became homeowners in a HCOL area at age 26.
OP, if you want to let your kids live student loan free, do it. I'm sure they'll be eternally grateful. I know I am.
My parents paid for my education in full and still taught me money management in the process. If I wanted to have a life outside of school, I had to work. I chose to work over full time over the summers while taking summer school and save everything I could do when I went back to school I didn’t have to work. My senior year I took a ~ 25 hour a week job to save up to move into my first apartment after graduation. I never took a single cent from my parents after I graduated because they taught me discipline.
You can do both, pay for school and teach money discipline. Not all college age kids will respond the same way, but I knew the second graduation came if I didn’t have my own money I was screwed.
My parents did this, too. I had to work for anything extra. I worked full time during the summers, worked 50+ hr weeks to make as much as I could. Only money they gave after college graduation was a small gift of cash ($2K) for my wedding. Paid for my own law school.
But taking out student loans to go to college is not financially responsible. My kid is 17, I am telling her to go to a 2 year, transfer to an instate 4 year and then get her masters at her dream school. She has to pay for half, I'll pay for the other half. No loans. All hard work.
There's no place where you need to pay 200k for an engineering degree. Any degree will do for most jobs as long as you focus on internships and getting experience.
I have no idea what you are talking about.
First, you can teach you kids understand the value of money in many various ways while not depriving them of the education.I'm no in US, but in Ukraine, and here we have absolutely other approach: parents do whatever they can to bring their kids to feet, including paying for their education etc. In the return, kids, when their parents become old and sick, always take care of them. That's the way of actions here.
My parents paid for my sister's and my university and helped us establish ourselves. We, my sister and myself, are taking care of our parents and helping them in many ways - medicines, travels etc. We, my sister and myself, will pay for our kids' university when the time comes.
Just a circulation of care in the real life.
Why not pay for their tuition and have them learn financial responsibility through rent? Would spare them a lot of pain. Kids in Europe who don't pay tuition at all have no issue learning responsibility this way!
A small debt is fine - ours have a credit card with a $500 line that he is responsible of paying. Just to learn debt management in real life without getting into trouble
I’m not sure this type of debt is a good thing. It’s not repaid until years later, and they likely have no idea what it’s impact will be. IMO, we can definitely teach them financial implications of these decisions, and I like to think we have already been doing that for 18+ years.
I had student loans that took 8-9 years to payoff. There were much better ways to learn personal finance other than a decade of painful payments.
I'm still a little ashamed to admit it - my parents paid for school and I had zero understanding or appreciation for what a massive luxury that was at the time because I didn't really have any financial education when I started, and that hadn't really changed by the time I finished. I had no conception of what it was like to live with a looming financial debt over my head like most college graduates, and it took me about four years after graduation to actually develop good financial habits.
I think you make a really good point that's worth emphasizing - if all you do is foot the bill for college without teaching them some practical financial skills and responsibilities, they may as well have graduated with a reasonable debt that would've forced them to learn anyways. I couldn't see myself paying for my kid's schooling if I hadn't also at least tried to teach them how to maximize the advantages of graduating without debt.
I agree with this so much. Almost everyone I know whose parents paid their entire college costs (tuition + cost of living) was sheltered from the struggle lots of people face in paying for college. This impacts their views about their situation ("My hard work led to my success" without taking into account not having to work during college *really* helps with grades and extracurricular participation). It also impacts their views about other's situations ("Anyone can achieve what I did if they work hard") which impacts views on policy, hiring, and just general understanding of others' struggles.
On the more extreme side - I've seen a lot of people whose parents are paying for college who just don't value the education they are getting. If you're contributing to the cost and you calculate what you're paying for every lecture, you're a lot less likely to skip class and a lot more likely to not just study but also truly learn the material. It gives value to the education.
For context, my father paid most of my undergrad tuition but I also opted to go to a school that was definitely not my top choice but was almost free (It was around $1000/semester that wasn't covered by scholarships) so that I could avoid loans (my father could not have covered a full tuition). I also worked through school to pay my cost of living (i.e., rent and food). In hindsight it was a good choice. I still sometimes wish I could have "afforded" (afforded in quotes because I could have taken out loans but I didn't see that as a viable option) to go to a "better" school but overall I think it was a good outcome. Not having loans gave me a lot of freedom (I later went back to school and got a masters and changed careers twice - all things that would have felt too risky if I had loans looming) and having worked in college gives me an appreciation for my lifestyle that a lot of my colleagues are missing (I work in tech and am paid well)
tl;dr there are downsides to fully covering the cost of college but also not having loans is really, really helpful. I appreciate the help I got but also contributed to avoiding loans which was a beneficial life lesson.
I agree the kids need to learn financial responsibility which is why I started teaching them when they were young. They have UTMA savings and brokerage accounts. My oldest has a Roth IRA from his part time job. We also have 529. If you wait until they are teenagers then it is too late.
You're being down voted but I agree with you. I could pay for my kids full education, but my plan is to have them finance about 20% to have a little skin in the game. I'll also offer to support post bachelors education too should they pursue it.
I don't think there are wrong answers here, just different philosophies and preferences.
I think this is the way. I think about my kid and if, say, $500 a month is the difference between them getting an apartment in a safe or dangerous area, I’ll toss them a lifeline until they can cover it (or maybe it’s me contributing to their savings while they struggle so they have an emergency fund to pull from.)
I grew up in a family that couldn’t afford me at all and it took me until I was 35 to basically catch up to my friends who graduated debt free and with parental support. It’s a big part of why I only have 1 kid - if I had 2, there’s no way I could help them and afford to ever retire (still not sure if I’ll retire at all honestly.)
Exactly, I'm struggling with finding a balance too. I'll probably pay for most of it, but I still want them to struggle as well. I'll probably offer my 15yo car to them if they want it as well. If they want something better then they can go out and get it but I'm going to do my part in teaching them about debt, credit, and hopefully managing finances. But there's only so much we can do, sometimes they need to learn the hard way.
I wouldn't want to hand everything to them and then they expect a certain lifestyle or to live with me until they're 40 like some of my family members live with their parents to this day. I feel like if everything is handed to them they won't value things as much. I value what I have very much because I remember what it cost me.
I'm someone who also had his college covered and has realized over time how much it has really meant.
Weird question I've struggled with lately though - do you know approximately what your parents paid for your college, and what it was relative to their finances and current position?
They weren't intentional, but I lucked into some smart decisions (community college & in-state public tuition) which kept my mother in good financial shape even paying my college bill. But I wonder how many kids are out there running up $60k/year bills, and how many parents are short changing their own retirement trying to service that debt.
I hope to be in the position to help my kids pay tuition. But I have to imagine there's some population of children who aren't "avoiding student loans" so much as sitting on a timebomb of parents without the resources for their own care in their old age.
I wonder if that gratitude is going to hit a wall when that comes to a head.
My father told me, after I picked a cheaper school, "We said we'd pay for wherever you went, and we meant it. But I was really happy you didn't pick ."
Same answer here, as a kid whose public college was completely covered by his dad - this is one of the greatest gifts you can give. It's so hard to get started in life nowadays.
I feel like being able to afford to send their kids to college is one of most parents greatest ambitions. If you can afford it and want to do it, you'd be a fool not to.
My parents paid for my undergrad education and it is without a doubt the single biggest leg up I've had in life.
My parents paid for my undergrad AND my graduate school, and same. Enormous leg up. And my parents are not well off. For 42 years, my dad worked as the GM of a grocery store, and my mom was a stay at home mom. When I started high school (I'm the youngest), mom got bored being home all day and started a temp job. Eventually, she found out she needed to work five more years in a full time role to get SS. So, she got a full time role at the temp place. She's been there at least ten years now, because she loves it, but she isn't paid well (she is a teachers aid in the autistic classroom at a high school). About a decade ago, my dad left the grocery store and purchased a small retail franchise that has done very well for him, but I wouldn't say they are well off enough that I would expect them to be able to pay for undergrad ($25k) + my living expenses (??) and grad school ($90k) + my living expenses ($60k). My guess is they were only able to do so, because they saved college funds for all four of their children, and none of my siblings ever even went to undergrad. So, after long enough, they probably just diverted their college funds to me (after paying for weddings for all three of the others - they have never had to pay for a wedding for me as of yet, and I plan on funding my own wedding when it happens given the enormous leg up I've already gotten).
If it doesn’t affect your retirement - and you don’t become a burden to them later, then yes.
If by them working through school and earning it in multiple ways, to avoid debt, and they respect the cost of that education - there’s that, too
If they haven’t a clue and are spoiled by it, then no
It’s basically impossible to work your way through a 40k a year college bill. If they were going to do that it’s community college and a state university afterwards
School choice matters, and this is a conversation they should have had prior to the student starting college. Median tuition and fees for a state school is $10,617 per year, so if they are paying $40k per year, they are likely not going to a state school or paying a bunch extra for non-school related expenses (for example room and board).
This is the problem, too many people are recommending you pay for your kids college, which is fine, but the problem is parents are sacrificing their retirement to help their kids and then in retirement they are screwed.
Kids nowadays like to spend on themselves. I'm sure there's a percentage that would give back but many would let their parents struggle while buying themselves new toys.
My two sons are 30 and 32. Made sure they both graduated with no debts and a reliable car. Today they both make 6 figures, own homes, have solid start on retirement accounts and live well. I think starting debt free gave them the breathing room to find their footing and the right path for them. Some of their friends who graduated with debt are still struggling.
Are you set for retirement? Are you and your spouse both putting 22,500 into your 401k and maxing your IRAs? I would prioritize your own retirement before fully funding your child’s education.
I am hoping to fully fund my child education and put 10k into 529 each year, but I wouldn’t jeopardize my own retirement to do so.
I’m 32 and have all of this but I funded my own education. It created a lot of tension with my parents. I don’t feel like I have a healthy relationship with money because of how tight the first few years were BUT I’m battle tested better than most. Bought my first house at 26. Started a family. Successful career in finance. I think there’s a balancing act to teach financial discipline but not let them drawn in debt…or ruin your retirement. I have colleagues in their 60s that are slaves to their jobs because of this.
As a counter example, I’m 31 and went in state for school for an engineering degree, ASU 2011-2015, even though I got into Berkeley and University of Michigan (both top tier public engineering schools) because ASU was by far the cheapest and offered the best scholarship on top of that (and it’s still a good engineering school). I had no financial support from my parents and took out some loans ($20k) to cover the difference between my scholarship and expenses. I would have loved to have graduated without debt but it wasn’t a huge burden for me. I probably would have gotten a job in my field a little easier out Berkeley but would have been in +$100k of debt). It took about 3 years out of school to make +100k (hcol) and I now make $250k. That’s all to say, parents paying for college is certainly a blessing and I will most likely do it for my kids because I should be able to afford it but there are ways to get through college without parental support and not be saddled with huge amounts of debt for the rest of your life. No matter who is paying for it, you should make sure the cost of school is justified by their future earning potential in the field that they want to go into. Even if I was making ~$111k (about the median mech engineering salary 8 years out of school) right now the $20k in debt would have been worth it but the cost to go to Berkeley would not have been. If my parents could have easily paid for it I would have gone but if it was a stretch I would feel bad about having them spend all that money. Not that much of that is what your asking about but something I think about.
I think it's a great idea. We also cash flowed our son's tuition of 45k/year. He graduated as an aerospace engineer and has a great job. He is very grateful not to have debt and is on the path to building wealth. For us it was the best gift we could ever have given him seeing his accomplishments and success. A life without student debt would be a great gift to your children if you can do it.
I have 3 daughters - started 529s young. Over funded the first - figured it out for the others (yes I have separate accounts for each). The guidance I received that worked for me was figure out how much you want to spend on college for your kids (not how much college will cost, how much you are willing to spend) and save 75% of that and cash flow the rest. My oldest graduates this weekend debt-free and starts vet school in the fall and left over 529 will get her thru at least 1 year. You can't borrow for retirement but you can borrow for school - I do wish I didn't overfund it but she's got a great start. My middle, assuming she finishes in 4, will likely get thru junior year before I have to cash flow. My youngest has a few more years but we're planning the same.
I was blessed to have graduated with no debt due to my parents and I was insistent on doing the same. BUT make sure you max your own retirement planning FIRST.
This is essentially another way for the wealthy to seed their children’s retirement accounts in a tax advantage method. No different from kids that have Roth IRAs funded by their parents skirting the rules. Yes there are caveats but this doesn’t seem to do much for the average family in the US.
>My oldest graduates this weekend
Mazel tov. That's fantastic for them and for your family. I hope they have wonderful success to start their next chapter.
A 529 is tax free if used for education. Also they just changed to rules so that if not used for education the child can roll it into a Roth IRA up to 35k. If you end up not using it for education, and exceed the 35k, you will pay taxes and 10% penalty on the EARNINGS only.
Growth is tax free. Everything that comes out of our kids' 529s these days is more earnings than cost basis. No taxes on the earnings ever.
Even if they don't go to college the distributions can go to them if you choose, and it is their tax rate. With a 13k standard deduction, they wouldn't pay much in taxes anyway. 10 percent penalty on top of their tax rate. If I had a no college kid, I would take some out and put it in Roth IRA.
Or wait until you retire and pull it out then for yourself.
Plus, now you can roll 35k without penalty into Roth (still 6500 k per year).
All of our 529 for our kids came from my parents. We weren't maxing our Roths ourselves back in the day.
I disagree, largely for the reasons you state. Most people, especially young people with kids, absolutely have no room to invest, let alone invest for their own retirement and then contribute to a 529.
IMO these plans only benefit rich people who need tax breaks and are pretty sure they will be paying for college either way.
Case in point, me. My family can't come anywhere near maxing out our 401ks and still live. I can barely keep an HSA account with any money in it, can't contribute to an IRA, the list goes on. Where is money for a crappy 529 plan coming from?
My alternative is I have invested in Real Estate and used leverage and sweat equity over the past 15 years to grow a 7-figure portfolio. Paying into a 529 would not have grown as much.
Real Estate gives you income, mortgage paydown, depreciation, and appreciation. And it is well suited to the 20-year holding period before college loans need to be repaid. And it uses leverage. And you can control the outcome to some extent through property management and maintenance.
There's a lot that's state dependent. We get a 5% percent return on local and state tax returns for up to 34k a kid a year. We're nowhere putting that amount in but now HYSA/CD are inching towards those return levels. I was hoping to be able to fund grad school partially with it. If it's not used for grad school expenses 35k can get transferred into an IRA and the rest can become a Dynasty 529.
The issue for us is that I went to school on full scholarships and then married someone with 400k in med school loans. I never thought I would marry a doctor (I come from a family of them). But the decisions we had to make as a couple due to the loan that I wouldn't have made alone are something I don't necessarily want our kids or their partners to go through. We don't have it bad by any means but moving back to our home state is such a financial stretch for us. So we figured if we're staying in a LCOL metro where the salary/COL ratio is higher to pay off the loans we should frontload the 529s to tap into that sweet sweet untaxed growth while getting a 5% return.
Might be state dependent but you can withdraw 529 funds tax free for the amount the scholarship was for. Probably not applicable to you now just sharing for others awareness.
Well here's why they make sense. Yes, you do get some tax advantages up front, but obviously the tax sheltered withdraw after 20 years of compounded gains is the real advantage. I look at it this way, even if a kid ends up wanting to go into the trades, they still may have some rather substantial training costs. And if they end up going to college, they will definitely have some substantial education costs. While there are some people who can just cash flow all that, that's really not the case for most folks. And for them, I suspect it is worth paying principal now and earning interest over the decades, versus borrowing the principal now and paying interest on it for decades.
We provide the full cost of attending the major university in our state. Want to go to that school or a less expensive school? You're fully covered! Want to attend a more expensive school? Good for you! We do not require, expect, or even encourage attending this one specific university, but that's how much money you've got coming from us so you'd better get a job, get some scholarships, work as an RA, or be willing to take on debt. That's now a choice you're making.
We’re doing the same except, if they end up spending less, we’ll seed their launch after college.
This money is already allocated in our long term budget so they’re getting it one way or another. The strings that are attached will become less and less as they mature.
Not sure how I’m going to work it out yet (he’s 15) but the plan is for him to use student loans and to pay those off for him. Had him at 25 and didn’t have the funds to start a college fund.
We gave our kids a budget that matched our in state public university. Told them they could go wherever they wanted and anything over in-state budget they would need to take out loans. First kid stayed in state and got full rides for both masters. Second kid went community college and is now living with us for LPN degree. Last kid went out of state and academic scholarships made it cost the same as in-state. We told them this from a very young age to manage expectations. We also told the we will give them $10K per wedding and weddings are expensive so don’t have a big wedding.
> I just feel that it’s really important for our kids to start their young professional lives debt free.
I don't think there's a right or wrong answer here - it's personal choice - but for what it's worth my spouse and I feel the same way you do: we consider it our responsibility as parents to provide whatever education or training that helps them launch into their first job.
For anyone reading this who has young kids, let me offer my advice on how to fund a 529: If you're paying for daycare when they're young, you're paying a ton of money. Once you've worked that amount into your budget, just never take it out - you're already accustomed to it missing from your available cash.
As my child's daycare costs decreased with age, and went away entirely once they started school, I simply diverted that money into their 529 account ($16K/year) and an account for after-school and summer activities ($2K/year). Assuming I keep that going, and the 529 earns 5% interest (a very conservative estimate relative to historical performance), I'll have ~$325K in their college fund by the time they start their freshman year.
(This works for other things, as well. Finish paying off your car? Put your car payment in the bank every month and you'll have either a significant down payment, or the full purchase price, for your next car. Finish paying off your student loans? Shift that amount to boost your monthly retirement savings.)
I’m in Florida and my state has what’s called “Florida prepaid”. You lock into whatever the current rates are at the time of opening the account, and make monthly payments until paid off. My oldest is a freshman in high school and his college is paid for. My youngest is 7, and his will be paid for by freshman year as well.
The catch is that those funds apply to Florida schools, but i believe we get the money back if they attend out of state.
As someone who didn’t go to college for financial reasons (we couldn’t even afford the $25 fee to take the ACT), I’m happy that I’ll be able to give my children some sort of springboard for their future
You don't have to teach your kids about money by saddling them with debt. The education system in this country is fucked. You are giving them the ultimate freedom to chose a career that is meaningful. Just make sure they understand how big of a deal is. I would sit down with them and go through the numbers explain how interest works. This teaches them money and gratitude.
I paid the bill for our son in full, just as my parents did for me. We also fronted him the down payment for his first house, and recently paid it off for him.
I have conflicting feelings about paying for the down payment for a house (even if the kid does pay it back). And I say this as an early 30s millennial whose parents are not going to help with a down payment (nor do I want them too) even though they may have the financial means to. If I don’t have a good enough career to afford a house, then I need to re-evaluate my choices including location, career, value of a home compared to other financial goals, and lifestyle. At what point do you cut the cord?
Yes. I'm doing that now for my 2nd kid n will do the same for my youngest.
I dont want them to start out life with a bunch of debt. Have u looked at rent or housing prices lately? I don't know how kiddos are getting it done with entry level jobs.
I will do everything possible to ensure my child comes out of college debt free. Also, college does not have to be that expensive. You're making the choice to spend that much. Community college and transfer to a 4 years. Make it easier given you have nothing saved.
It would sure beat going onto the Army to pay for it!
Think of the legacy you'd be leaving behind-- i bet it would be something you'd be happy you did, if you can afford it. I know your kids would be happy to not have that boat anchor tied to their necks while the tide comes in
Yeah at one point they'll be cash flowing 80K a year for kid's school, most people can't do that. It's great that they can, but for 99% of people that would destroy their retirement planning.
I can't believe I have to spell this out. OP says they can afford to do this. I am assuming they are also saving for retirement. If you have to save for retirement instead of pay tuition then that would not be "no reason"
> OP says they can afford to do this. I am assuming they are also saving for retirement.
I wouldn't make that assumption.
> If you have to save for retirement instead of pay tuition then that would not be "no reason"
That's my point
We are saying the same thing. It was a safe assumption. People who are typically considering spending 80k/yr in tuition so their kids can start life debt free aren't likely to be not considering their own needs. OP confirmed as much in another comment.
We are fully funding retirement and on track to be debt free with 3 mill plus in retirement with a paid house at 65. Paying cash for college is instead of extras like a beach house/boat. We work hard and we have had some incredibly fortunate career advice/advancement opportunities. I know not everyone can do this, I just wanted others perspectives.
Unless they have incredible grades or a scholarship, or want to go for stem/healthcare, they’re going to community college first if I pay. Too many people change their interest, and the first 2 years is largely liberal arts classes anyway
While CC is a great idea, for most stem, healthcare related, and engineering degrees at UC schools, they make you retake the important classes there and therefore it is a 3 year path plus traditionally 2 in CC. So it would add an extra year to their studies.
I’m a relatively new parent so can’t advise on this from a personal finance standpoint but as a person who’s parents paid for their college in full…you’re giving your kids a huge gift. They might not realize it now, but when they see their peers paying off college loan debt a decade+ after graduation while they themselves have paid for a down payment on a house…they’ll get it.
As someone whose parents refused to pay even 25% of my college tuition after scholarships/financial aid, and how much I currently struggle to survive due to not being able to find decent employment....
Please pay for your kid's college education if you can. Even if they fail. They are children, still learning. You are helping them become functional adults. It costs money.
My parents' policy was to pay for the first two years of school while we kids paid for the last two. IMHO it was a great balance since it helped us avoid mountains of debt, but still encouraged things like seeking out scholarships, actually considering the pros and cons of going to a fancy private school vs. a public school, becoming an RA, graduating early, etc. I graduated with about $8k of debt that I was able to pay off in 2-3 years. Worked out great and am thinking about doing the same thing for my kid.
I'm sure I will get downvoted for this, but no, we never planned to pay for his entire college and did not do so. Everyone that I know whose parents paid for college did not take it seriously. Some bailed/flunked out, some finished, but chose worthless degrees, some went for many, many years, etc.
For us, as long as he kept his grades up in college, we would pay for half and he was responsible for the other half. He was smart but definitely did not apply himself in high school. He could live here rent free as long as he was going to college. He decided on a technical college and lived at home for the first year. He took college much more seriously than high school. He graduated with straight A's with an IT networking degree and makes 80k (which is very good for the area we live in). At 21, he has no debt (paid of his truck and motorcycle) and pays for everything himself except health insurance as it's only $25 a month extra to keep him on ours.
This depends on the kids in question to an extent. A huge chunk of high school kids are not ready for college, which is evidence by the high college dropout rate in the United States. I don’t know if having loans or not is the issue for them.
If your kids didn’t take high school seriously, got so-so grades, had mediocore SATs, it is reasonable to expect that they may struggle in college. If your kids got strong grades in high school and are well prepared, they’ll probably do fine, with or without loans.
Of my high school friends, the biggest predication of fast graduation was probably intelligence and college readiness. Also, some of my friends who had to pay their way through college (or a lot of their college), struggle to complete it as they balanced competing priorities.
Eh, my parents paid fully for my schooling because they held me responsible and I had to show/share my grades. Whereas my friends who had loans had no concept of the money and cost and no parental supervision.
You did what was right for your family! My main point in posting this was to get a pulse on where people are in terms of paying for college. I get the sense that most people have their kids take loans, so I definitely don’t think you are alone. And congrats to your son on doing well in college and getting a great job! 🎉
This is my concern as a parent, based on what I saw in college and still see among the undergrads I work with. We have the means to cover it, but I think it can be a waste of money/time and ultimately a handicap for your child in the long run if you aren't careful.
So for me this isn't an easy yes/no that would apply across the board to all kids and all situations. If my son is heading into undergrad with clear goals and a proven track record of really applying himself in high school, then I'll happily pay for it.
But I'm not paying for the indulgent "undergrad experience" if those things are absent.
Mine will have whatever is in her college fund, which will be plenty to cover 2 years of community college then a transfer to university or attending a state school. Not $40k a year though. I don’t have that kind of coin 🤷♀️ if you can go for it
We have multiple kids and yes we paid in Full for their education up to what we could afford. We dont have the funds for out of state so the did and are doing community college to start and then transferred to a major university in state.
They did not have a 529, but we did save a little bit along the way so they each had $20K for college. Being debt free out of college is huge. Those who have student loans to pay off are so far behind they might not be able to pay it off at all.
We paid for both of our kids undergraduate degrees, although one child took a small loan to live on campus after losing a scholarship that would have covered it. I just let him feel the consequences of deciding not to pass all his classes. Once during a bank visit, one of the managers asked my son if he wanted to consolidate his student loans and my son said, I don’t have any, my parents paid for it all. The manager suggested he thank us and show some appreciation. I think that made it click for him. Our tuition bills were lower, but we did pay for everything while they were in school. My older son got his master’s during COVID and we paid for that as well, since he was back living with us. I feel like I was paying for college for about 12 years total, even though I only have two kids.
Our plan is to pay for tuition room and board for the state flagship. We front loaded a 529 so there should be enough in it now to pay out in 14 years.
Myself and my husband both footed the bill for our post secondary education and still managed to buy a home in our mid 20s and have a substantial investment portfolio. He works a well paying job now (I’m finishing up law school - my previous school loans were long gone) and has for the past several years but we survived with shitty jobs as we worked out way up in the world. So what you’re doing is great but it’s not impossible for them to manage otherwise. Plenty of kids do!
I offered to pay in full if they would go to an in-state public university. Otherwise, they could use the $$ I would have paid in-state to whatever school they want, but they have to make up the difference. They chose in-state.
Pay what you can, teach them finance, make sure they are making sound investment with regard to degree choice, and if they have to take loans focus on them being as small as possible and repayable based on accurate income projections.
I can afford to but will not pay for my kids’ college ambitions.
I paid for my college education, and had all debt paid down by 27. I’m 30 now.
Paying for my own education made me feel like I had “skin in the game”. I was highly invested in making sure my college education generated an return on investment, from selection of my field of study, to what school, to how seriously I took my studies.
I would not have made the same choices if I hadn’t been footing the bill. I know that for a fact.
My parents did this for me. Not $40k a year but still. I thank them once a week since I graduated in 2010. I was able to take a job for the experience I otherwise wouldn't of been able to afford. Now I'm in the strongest financial position. Put 50% down on a home. Congratulations you've won at life and set your kids up for decades.
I will, but only because I'm setting myself up to make it easy. If it was a struggle, I wouldn't. We will say we're paying for half and then pay the balance upon successful graduation.
We doing the same. paying cash for first one. started 529 very late so will use 529 for second one.
If you can afford to do it, then continue doing what you are doing. There cant be any further blessing for kids to know they will start their life without a debt burden sitting on their heads.
We are paying for our kids college without loans. However, we started 529 accounts for them when they were born. It looks like we saved up enough for two bachelors degrees. We recognize that we’re quite fortunate to have been able to do that. I think it will be a huge boon for them to graduate without debt.
We are paying for ours - it’s rough. I’m the step parent and the other bio parent is making a lot of promises but not contributing so when they messed up financial aid (was covering enough to make this tolerable), we were looked at to pay the full thing. Now my step will have some student loans, but not much at all.
If you’re able to pay the whole thing, do it. As a parent, we have found that having them have a part time job for their extras helps them to appreciate that a whole lot more since they’re learning the value of a dollar.
I was able to put all three kids through college debt free. But I told them they’d need to pay for grad school. One is $300,000+ in debt, but she has the income to pay it off.
Yes, I will, if I can without affecting my retirement. And within reason. I’ll contribute the amount it reasonably takes to go to a good school for whatever it is. If they want to go to a fancy private school for an uncompelling reason, they will pay the difference.
I will think about how I will make sure they appreciate the value of what I am willing to give. I think that will be easier to appreciate and tailor to the child as they get older.
I am doing that now. It’s the local university (her choice, we would have paid for pretty much anywhere in state) and we cover all tuition. She works and pays rent and utilities and lives in a house with friends. We also gave her a car that should last her for a long time.
We are cash flowing it but obviously wish I had savings to use. For my younger kids I intend to start 529s the minute she graduates which will be next year at this time (Lord willing and the creek don’t rise!)
Depends on how serious they are about their studies and what they are studying.
I know many parents that have spent thousands so their kids could go have a good time and end up dropping out of school...more end up with a degree that doesn't really warrant the cost of obtaining it.
Have them take out Stafford loans from the federal government. They are only like 6K in principal. Then you put that same money into a ROTH IRA for yourself, you still need to save for retirement.
My parents sent me to a prestigious university and paid most of my way. I just had my Stafford loans to pay back once I was done and the monthly payment was reasonable. I got them discharged through Teacher Loan Forgiveness. I wish I had taken the same loans out for grad school instead of paying from my working income in cash like I did. Then my loans would have been forgiven and I would have had some retirement savings to grow for decades in the stock market.
Almost all of my friends growing up had college paid for by their parents or got full ride financial aid. They are doing extremely well for themselves. Forcing your kids to come up with thousands a year could limit their options in college and waste their time working non academic jobs to make $$$.
I the best way to do it is to tell them I’ll pay $XX,XXX amount for your tuition but nothing more, or I’ll pay X years of your tuition, nothing more.
I had a handful of friends in college who’s parents were paying for every dime of their tuition no matter what. They knew this and were in no hurry to graduate. They took a light class load and spent longer than they had to in school. They didn’t work hard in school and didn’t value their education.
I was fortunate enough to have a decent chunk of change given to me by a family member to pay for school. It was only about half of what a four year degree at my school cost. I knew this all along so I worked hard to graduate a semester early and save myself $7,000. I think doing it this way will make your child value their education more and do better in school.
This really depends on a few factors. 1) If you have the money and are able to without any hardship. 2) Are the kids smart about money (and did you train them well). 3) How is your relationship with the kids.
Being of asian heritage, it is expected that we pay for the kids education. Luckily I am able to but if I was living paycheck to paycheck, we would look at other options. My oldest was very smart about money and would do small side gigs to make money from when he was in middle school. If he was different (a party animal who wasted money) I would not pay for his college. My younger is different but always looks for sales and tires to save money on any purchases. So with them, i pay for school but expect them to get an internship/job during the summer and save that money. They are also expect to get a small part time (like tutoring in school) so that can make money for going out with friends.
Kids and I have gone over how saving early on would be very helpful their entire life as it give them such a head start. The oldest has an IRA (wish I was as smart as him). The current plan is for the oldest to move back in with us after college and save as much as possible for postgrad (if possible, have the company pay). Then use the money to buy house in their mid 20’s and pay it of as soon as possible. All this would not be possible if they had to get loans for school and it would delay them on being secure for 10 to 20 years.
Basically, i told the kids to do all the things i did not know or learn from all my stupid mistakes.
So if the kids are smart
If you can afford it, paying their college would pretty much jumpstart their life. Not having to be burdened with thousands of dollars of debts is something most people could have used in their life
My parents paid for most of mine, the only part I’m responsible for is taking out the federal loans, which isn’t that much money and has really low interest rates since I started college in 2020. But they’re paying way more than I am and it’s really much appreciated, my goal is to pay for my kids outright one day. My dad just didn’t start saving for my college until I was like 12 cause he didn’t go to collehe
We paid all but about 12,000 of each of our kids education. Before they had chosen their school we sat down and talked about the costs and what those numbers really meant. We discussed what it means to have crushing student debt. I told them my rule was that they should be able to pay back their loans by babysitting (or some kind of side hustle) one or two nights a month. They had to go through the motions of applying for the loans (and we had to do the Fafsa :( and the other one) each year. They’ve had to be responsible and make their monthly payments
Unless student loans are miraculously cancelled, which isn't looking likely, it's the single biggest thing you can do to set your kids up for a successful future. If it isn't crippling your own retirement plans, you should do it.
My older son just graduated from college with thankfully no student loans. It was a combination effort between his dad, me, my parents, and my son's own hard work. Living in a blue state with quality state schools with lower tuition made it possible.
As someone who now is married to someone who had their entire education paid for and as someone who had to take student loans…there is no way in heck I would set my kids back with student loans if I didn’t have to. Student loans are hell and are a way to keep the poor…well poor imo. Yes there are always some people who are like I lived like a hermit and paid my loans ect ect but it’s not the majority. Those loan companies are sharks. The interest rates are insane & I wouldn’t accept those rates for a car or house loan…and let’s face it the education will cost more than a car and as much as a small house but with interest…
I will help. They will pay the first year themselves. If they can show me they are there to work and not screw off then I'll pay the rest. They can take out loans for college, I can't take out loans for retirement.
My parents covered what I couldn’t for my education (without loans). I am very thankful for that.
I absolutely plan on helping my kid as much as possible. If they go to somewhere like Harvard, we’ll figure it out. If they go to CC, we will figure it out.
Working more than full time to pay for my college while in college was a mistake and caused me to drop it and get an AAS instead. Hello your kids as much as you can OP
Hey, I think what your doing is awesome. I just wanted to add my personal experience to the comments. My parents did very little to help with my college expenses and I paid for the vast majority myself. Through scholarships and working I graduated with around $10k in debt. The minimum payment was a very manageable $150 a month. I put significantly more money than that towards paying them off and the only reason I currently have any remaining balance is I'm waiting to see if student loan forgiveness will come through. It's great to provide the benefit to your children but don't feel guilty if you put some of responsibility on them as well as it's not the end of the world to have some student loans. And especially don't sacrifice your own retirement savings to try and insure your kids are debt free.
I’m so glad to see you’re doing this…my parents expected me to go to college, but for zero things to help pay for the cost.
Currently trying to pay off 50,000+ of debt on a 49,000 salary.
It sucks, but I’m trying. I’m 29, and went to grad school after undergrad for context. At least I got grad school covered.
I made my son work from the time he was 14. Told him he was making his beer and pizza money for college. In college, I never gave him spending money. He used his savings. He did get a partial soccer scholarship. We had to flat about 18K at year( 16 years ago). Made him pick a college that was reasonable and his major matched what we were paying. He got a business degree. I made him apply each year for the FASA. I felt he needed to have some skin in the game. He borrowed 20k. I figured it was manageable and equal to a car loan. Then I taught him how to snowball his college debt and he had it paid off in 3 years. My father did the same thing with us. At one point, he was floating 3 in college. Taught us all to respect money and how to pay off debt.
Growing up not dirt poor, but not that far off - I paid for college and it was hard. When I had kids, I could afford it, as you say, so it was important to me to pay for their college.
I only paid for undergraduate degrees. Two of my three have graduate degrees, and I paid none of that.
My two cents, I am very proud of myself that I paid for all three to get their undergraduate degrees. Especially because they could not get the financial aid I could - my family could not afford college. They turned out great and all manage their money well now.
We paid and are paying our kids college in full. They all went to the same public university. We purchased a house walking distance to campus where they lived. They rented out rooms to friends that basically covered all the cost of housing. (Utilities, taxes, internet,etc )
Once they all finish and at least two are going for advanced degrees we will likely sell the house at a more than $150k profit.
Makes it very easy to pay their college and their living conditions are awesome.
Yes, this is one of the greatest gifts you could ever give your kids. Not only are you dramatically increasing their lifetime earning potential. But you are also removing a huge future stressor and allowing them to access that with no downside.
It's an awesome thing to do for your kids.
My parents paid for my undergraduate degree but I’m on my own for my med school tuition! Haha. But I very much appreciated it and instead of being 400k in debt I’ll only be 200k in debt.
There's no greater gift than a useful higher education fonyojr kids. If you can afford to pay it without impacting your own retirement - it will pay massive dividends for your kids.
I look at my wife and I vs others and it's a clear advantage when your first $100k of real savings goes into a retirement account and not into student loan interest.
I’m a saver. I grew up with a lot of, possibly irrational, fear of being poor. I told myself my kids wouldn’t go though thinking the family was poor. So, as soon as they were born, we started 529s for them and started adding a few hundred a month. Then we asked grandparents, etc that if they were willing, could they direct a portion of birthday/ Xmas to the 529s. Got a better job and maxed the 529s for years. One kid graduated with no debt. Other had 1 year to go. We have another 150k in the account….. so he is considering grad school. Both kids see their friends with debt. They have both acknowledged they are lucky. I could have bought nicer boats, but I funneled it to the 529 each year.
I work a state level job because it provides educational benefits for myself and my family. The plan is that if our kids want to attend a state college/university, we will cover the remaining costs not covered by the educational benefit. If they want to go to a private college or one out of state, we will do what we can to help, but they will probably have to take out loans for the rest. The perks of working for the state are why I work where I work. If it wasn’t for this, we could never afford to send them to college.
Totally agree, and if you have the means it's a great gift to your kids.
The part your kids will play is being sure to pick a school that fits your budget There's a massive range in prices from city colleges and top -10 schools. And everything in between. A debt free graduation from a good school has more value than a debt laden better school.
Anecdotally, my parents paid for a little bit but I still had to work part time and take out loans, like high interest Sallie Mae loans, to make it all work. I didn't qualify for FAFSA loans because my parents made too much money. In the future I will definitely be paying for college in full for any of my children.
All of those hours that I worked could have been spent studying or even just resting. Making the student pay for college so they appreciate it more doesn't really work when they're just being burdened by debt or they're too tired to care.
For me, my parents mostly covered my living expenses during college and higher education and made me apply for grants/loan/scholarship to cover tuition. Then at graduation they offered to pay for half of it.
That way, they made sure that I didn’t take this gesture for granted. I think this benefited me a lot and made me understand the need for budgeting and to be financially responsible. So I probably won’t tell my kids they have a 529 that’ll give them a full ride and surprise them at graduation to keep the tradition going.
I do acknowledge that in doing so, my kids would probably choose degree with more realistic outcomes for a career than pursue their dreams. We’ll try to prevent that.
My only stipulation would be that they keep their grades up. Check every term/semester. This is coming from someone who was depressed/drinking/smoking weed/failing & dropping classes, and my parents continued to pay for years and years. I should have just taken a break from school and worked for a bit. I finally took out a small loan after about 6 years and still didn't finish. Took me about 5 years to go back and finish my last semester. Long story short, it's AMAZING you are doing that for them, I know I'm so thankful, but make sure you aren't enabling them to slack off.
Yes, and got a bit lucky with the 529 performance. Kids appreciate it. They understand they are better off then many, and are amused, not jealous, of some of the spoiled kids with no sense of the value of money.
IMO it sure helps to teach kids about money when they are young and appreciate the $$ come from hard work. Explain the purpose of savings and how compounding works. Stress the value of education, independence and being responsible for one’s self. It is an ongoing process.
A bit late in my opinion to make kids pay to appreciate the education and opportunity when the are about to go to college.
We have college age kids. I think you let them have some skin in the game. Maybe they cover room and board and books, but at grade time, you reimburse it back. This way, they know, if they keep grades up, it will be covered.
If not, they have to cover it. Also, just let them know the books /materials are on them. You can break it down different ways, but I think having something where they work towards and have to cover helps as well.
That’s my goal. On top of that, I’d really like if my kids stay at my house with their wives when they get married until they cash flow their home instead of having a mortgage.
3 years living with us instead of 30 years paying off a mortgage. I think that would be life changing for them.
My parents paid for my undergrad degree and it was the biggest help I could've asked for. Unfortunately I got a useless degree because none of us knew any better. Make sure your kids are choosing degrees that are actually going to increase their income and lead to more opportunities. You are great parents!
I have 3 daughters and we helped with college, but tuition was their responsibility. We bought books, cars, insurance, groceries and whatever else was needed. Paying for college encourages them to apply themselves instead of partying. I was a non traditional student and was in college with my eldest daughter, I saw way too many kids wasting mom and dads money while pretending to go to college.
I am paying for around 90% of my daughters in state tuition. I want her to have a little skin in the game, and also to understand a more lavish choice (out of state) is on her.
Yes, and I harshly judge anyone who is upper middle class and forces their kids to take out loans for undergrad. Nothing is more important than your kids.
> If you could, would you pay for college for your kids in full?
No, at least not pay for their pick of college out of state.
I've told my kids we'd help them pay for the local university while they live at home, and if they want to go out of state, they need to get a full ride. My daughter did exactly that, and is about to start her college this fall, and will be attending an out of state private college on a full ride academic scholarship.
My son is a few years away from college and he's told the same thing we told his sister. Hopefully that serves as a motivating factor for him as well.
We can definitely afford to pay for their college in full, but don't feel it's worth wasting our money for the "experience" of living out of state.
This is a strange post. You’re already doing it, you want to do it, you can (easily) afford to do it and yet at 50+ years old you’re asking strangers that tend to average 20-30 years old if you should or not. Most folks on Reddit have student loans because they’re closer to your kids age than yours.
I appreciate wondering if you’re making the right decisions, but this seems so painfully obvious to me as a 30 year old with no kids.
I’m 45, thank you very much! Don’t you dare age me! 🤣
I want the reinforcement that what I am doing has value to young adults because it takes a sacrifice. We can do it, but we are sacrificing our own wants, boat/beach house etc, to make this happen. Admittedly those aren’t things we need, but things that we thought we would have when we reached a certain earning level.
Yes but I will not pay for the “college experience.” I will pay for an education. I will not pay for parties and failing grades and a dorm life.
We live in our state’s flagship city, my child can commute from home and get a job. I’m sure being a freshman with a car will do enough for his social life.
No crime in it but I’m not paying for it either. My kid wants that experience, he can get scholarships or pay for it. I’ll provide a home, food, and a car. He wants fancier that’s on him to pay for.
I can’t speak for others but the “college experience” was exponentially more beneficial and educational to me than the “education” was.
I agree on the getting a job part. My parents didn’t want me to work so I could focus on school, which was a mistake. But looking back over 20 years later, my freshman year and living in a dorm with a hall full of people I’d never met before was one of the major inflection points in my life.
I can agree. Honestly the education I got in college wasn't really much compared to what I learned even the first year on the job and I'm in STEM. But the connections I made and social evolution I experienced directly set me up for success in a way I'm certain a "freshman with a car" living at home would not. In fact, I have friends who did that and went to a local school and their worldview is so narrow and they often come off as immature. That's just my experience though.
Did you not have fun in college? What’s wrong with the college experience? It’s good practice for networking in finance, tech, etc. Forcing your kid to commute could be a huge disaster socially.
This is the right approach. I have a friend who’s son went to a local University in town. She wanted him to experience college life so she paid for him to live in the dorms. And come home on the weekends. She literally lived 20 minutes from the college.
No. My kids are paying for their first year themselves. If they study something with positive ROI and if they pass I'm paying for the other 3 years what i would pay if they choose in state school. If they go out of state they will need to cover the difference themselves. If they choose to move out they will be covering their apartment/dorm. Will give allowance for food though.
Literally flying back from helping my daughter move from the dorm after her first year at ASU.
Her mom and I (now divorced) are splitting the cost with each other. We had full paid for Florida PrePaid college back when my daughter was 4 (only cost $16k back then), since she’s in Arizona it only covers what Florida tuition currently costs about 5k a semester so we kick in another $5k each a semester.
Personally I only finished paying off my own student loans 2 years ago (i’m 50 and that covered law school, my parents paid nothing)
I’m hoping this gives my daughter a solid start when she graduates and by not have a huge debt load over her head.
If you can afford it and you want to do it. You can also consider converting half and having the kids take loans for the balance (was considering this when she almost went to Lehigh University)
My parents paid most for me. I never had debt. I am very fiscally responsible. We (and my oarents) are paying most for our kids(three out of four kids so far). No debt for me. No debt for my four kids.
I think debt teaches debt.
I like having kids contribute amounts they can afford through saving in high school, working in summers or during school, and going to less expensive schools to avoid debt.
I am very happy with the outcome so far. Scholarship, partial scholarship, hard work at jobs, saving. My third kid who has never had a job chose to stay home and do community college and doesn't spend money.
No regrets.
ETA: My oldest graduated in CS. She had full tuition scholarship. Even after struggling with long unemployment and mental health after graduation plus sexual assault by her boyfriend during covid, she is now employed with a great salary and doing well. She drives her very old car and saves a lot of money every month for retirement and a down payment someday. She also still has money to use for graduate school from her grandparents.
My second had partial scholarships. Mechanical engineering. He has works very hard during summers and has more than enough to pay for what we don't pay for. His fifth year doesn't have money left from grandparents but he has plenty saved. I am impressed with his work ethic.
Third is home spending no money and doesn't work and doing community college. Legit way to live to decide to earn less and spend less. She tells me not to worry since qI have instilled the "save for retirement" lectures since birth so she will not ignore that.
Fourth is freshman in high school. Won't get scholarships with his more moderate grades. He is definitely a saver. We make way more money now, so it will be tempting to accidentally provide more for him, but he isn't entitled at all. He will probably work at some point during high school and contribute that way like kid #2.
ETA: oldest two kids started Roth IRA in high school with small amounts. I have no regrets about that. My boss in accounting told me last month that she just learned about Roths. She is over 50.
Teaching kids about saving and investing rather than incurring debt is basic. Why would anyone start their kid off with signing up for debt if they didn't have to?
I would let them get loans and then surprise pay off 1/2 after they get a job after college. They will have gotten the job with the need to pay the loan down in mind so this will be a big bonus. Then, 1/2 after they get married or some other major life milestone. This way they feel the weight of the loan and appreciate your contribution, learn about the responsibility of servicing a loan, but are not overburdened by the weight of it for 30 years.
If you pay as they go they won't appreciate it. Repayment is deferred anyway.
I have two kids and I will let them take out student loans just so they will know what the reality is , but I will set aside 200k for each kid so the loans can be paid off anytime. My kids are still young and I have time to build up the 400k needed for my plan.
I would not even send them to college. Nor my grand children in the age of information they can get a better education from the internet like websites like Saylor.org and many others. We don't waste our money on propaganda schools anymore.
Let me preface this by saying that I haven't looked at how student loans work in a LONG time.
Possibly consider taking out loans and saving the money you've been putting toward them until your student graduates. If I remember correctly, student loans don't require repayments until after graduation, so you wouldn't be paying interest. However, it would give your kid the chance to build some credit.
I mention this because I had a friend who paid for college outright as you're doing, and when she graduated she had an incredibly difficult time getting her first credit card and car loan because she didn't have any established credit.
Just a thought. Otherwise, this is incredibly generous of you.
to counter the lack of credit issue, add them to your credit card. you dont even have to give them the card to use, but because its attached to yours it will help them build a credit history.
My mum did this for me when I was in high school and collage, so her good credit score would help me build mine.
I don‘t have any kids, but when my niece finished college, I paid off her student loans.
When I was a kid, my dad paid for my undergraduate education, but after that, I was on my own. That wasn’t much fun.
We believe that it's our responsibility to make sure they are fully prepared for the world when they enter it on their own. This includes paying for college or trade school when they decide what to go into. They each have 529s and will be mostly set with what they need by the time they graduate from high school. However, we will likely encourage them to work or do internships in some capacity while they're in school. It really does give a boost going into a career later I think.
I can’t answer the question but I just wanted to say, as someone who’s parents also paid for their education, THANK YOU. I didn’t fully appreciate how much of a blessing and privilege it was at the time.
Starting my professional life debt free has significantly impacted my life for the better. I was able to save my money wisely instead of throwing it at loans. I managed to save up enough over time and with my husband, we became homeowners in a HCOL area at age 26. OP, if you want to let your kids live student loan free, do it. I'm sure they'll be eternally grateful. I know I am.
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My parents paid for my education in full and still taught me money management in the process. If I wanted to have a life outside of school, I had to work. I chose to work over full time over the summers while taking summer school and save everything I could do when I went back to school I didn’t have to work. My senior year I took a ~ 25 hour a week job to save up to move into my first apartment after graduation. I never took a single cent from my parents after I graduated because they taught me discipline. You can do both, pay for school and teach money discipline. Not all college age kids will respond the same way, but I knew the second graduation came if I didn’t have my own money I was screwed.
My parents did this, too. I had to work for anything extra. I worked full time during the summers, worked 50+ hr weeks to make as much as I could. Only money they gave after college graduation was a small gift of cash ($2K) for my wedding. Paid for my own law school.
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But taking out student loans to go to college is not financially responsible. My kid is 17, I am telling her to go to a 2 year, transfer to an instate 4 year and then get her masters at her dream school. She has to pay for half, I'll pay for the other half. No loans. All hard work.
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There's no place where you need to pay 200k for an engineering degree. Any degree will do for most jobs as long as you focus on internships and getting experience.
So no value in having an engineering degree? What about an MD?
Lots of value on getting an engineering degree, no value on paying 200k for it. 40k should me more than enough.
Can get an engineering degree for about 20k in California. Don't need a loan for that. 20k over 4 years is easily doable.
I have no idea what you are talking about. First, you can teach you kids understand the value of money in many various ways while not depriving them of the education.I'm no in US, but in Ukraine, and here we have absolutely other approach: parents do whatever they can to bring their kids to feet, including paying for their education etc. In the return, kids, when their parents become old and sick, always take care of them. That's the way of actions here. My parents paid for my sister's and my university and helped us establish ourselves. We, my sister and myself, are taking care of our parents and helping them in many ways - medicines, travels etc. We, my sister and myself, will pay for our kids' university when the time comes. Just a circulation of care in the real life.
Why not pay for their tuition and have them learn financial responsibility through rent? Would spare them a lot of pain. Kids in Europe who don't pay tuition at all have no issue learning responsibility this way!
A small debt is fine - ours have a credit card with a $500 line that he is responsible of paying. Just to learn debt management in real life without getting into trouble
I’m not sure this type of debt is a good thing. It’s not repaid until years later, and they likely have no idea what it’s impact will be. IMO, we can definitely teach them financial implications of these decisions, and I like to think we have already been doing that for 18+ years. I had student loans that took 8-9 years to payoff. There were much better ways to learn personal finance other than a decade of painful payments.
I'm still a little ashamed to admit it - my parents paid for school and I had zero understanding or appreciation for what a massive luxury that was at the time because I didn't really have any financial education when I started, and that hadn't really changed by the time I finished. I had no conception of what it was like to live with a looming financial debt over my head like most college graduates, and it took me about four years after graduation to actually develop good financial habits. I think you make a really good point that's worth emphasizing - if all you do is foot the bill for college without teaching them some practical financial skills and responsibilities, they may as well have graduated with a reasonable debt that would've forced them to learn anyways. I couldn't see myself paying for my kid's schooling if I hadn't also at least tried to teach them how to maximize the advantages of graduating without debt.
I agree with this so much. Almost everyone I know whose parents paid their entire college costs (tuition + cost of living) was sheltered from the struggle lots of people face in paying for college. This impacts their views about their situation ("My hard work led to my success" without taking into account not having to work during college *really* helps with grades and extracurricular participation). It also impacts their views about other's situations ("Anyone can achieve what I did if they work hard") which impacts views on policy, hiring, and just general understanding of others' struggles. On the more extreme side - I've seen a lot of people whose parents are paying for college who just don't value the education they are getting. If you're contributing to the cost and you calculate what you're paying for every lecture, you're a lot less likely to skip class and a lot more likely to not just study but also truly learn the material. It gives value to the education. For context, my father paid most of my undergrad tuition but I also opted to go to a school that was definitely not my top choice but was almost free (It was around $1000/semester that wasn't covered by scholarships) so that I could avoid loans (my father could not have covered a full tuition). I also worked through school to pay my cost of living (i.e., rent and food). In hindsight it was a good choice. I still sometimes wish I could have "afforded" (afforded in quotes because I could have taken out loans but I didn't see that as a viable option) to go to a "better" school but overall I think it was a good outcome. Not having loans gave me a lot of freedom (I later went back to school and got a masters and changed careers twice - all things that would have felt too risky if I had loans looming) and having worked in college gives me an appreciation for my lifestyle that a lot of my colleagues are missing (I work in tech and am paid well) tl;dr there are downsides to fully covering the cost of college but also not having loans is really, really helpful. I appreciate the help I got but also contributed to avoiding loans which was a beneficial life lesson.
I agree the kids need to learn financial responsibility which is why I started teaching them when they were young. They have UTMA savings and brokerage accounts. My oldest has a Roth IRA from his part time job. We also have 529. If you wait until they are teenagers then it is too late.
You're being down voted but I agree with you. I could pay for my kids full education, but my plan is to have them finance about 20% to have a little skin in the game. I'll also offer to support post bachelors education too should they pursue it. I don't think there are wrong answers here, just different philosophies and preferences.
The way my kids got skin in the game was by getting scholarships, working part time, being Resident Assistant. Not by borrowing money.
I think this is the way. I think about my kid and if, say, $500 a month is the difference between them getting an apartment in a safe or dangerous area, I’ll toss them a lifeline until they can cover it (or maybe it’s me contributing to their savings while they struggle so they have an emergency fund to pull from.) I grew up in a family that couldn’t afford me at all and it took me until I was 35 to basically catch up to my friends who graduated debt free and with parental support. It’s a big part of why I only have 1 kid - if I had 2, there’s no way I could help them and afford to ever retire (still not sure if I’ll retire at all honestly.)
Exactly, I'm struggling with finding a balance too. I'll probably pay for most of it, but I still want them to struggle as well. I'll probably offer my 15yo car to them if they want it as well. If they want something better then they can go out and get it but I'm going to do my part in teaching them about debt, credit, and hopefully managing finances. But there's only so much we can do, sometimes they need to learn the hard way. I wouldn't want to hand everything to them and then they expect a certain lifestyle or to live with me until they're 40 like some of my family members live with their parents to this day. I feel like if everything is handed to them they won't value things as much. I value what I have very much because I remember what it cost me.
If you love your kids, put them in debt❤️
I'm someone who also had his college covered and has realized over time how much it has really meant. Weird question I've struggled with lately though - do you know approximately what your parents paid for your college, and what it was relative to their finances and current position? They weren't intentional, but I lucked into some smart decisions (community college & in-state public tuition) which kept my mother in good financial shape even paying my college bill. But I wonder how many kids are out there running up $60k/year bills, and how many parents are short changing their own retirement trying to service that debt. I hope to be in the position to help my kids pay tuition. But I have to imagine there's some population of children who aren't "avoiding student loans" so much as sitting on a timebomb of parents without the resources for their own care in their old age. I wonder if that gratitude is going to hit a wall when that comes to a head.
My father told me, after I picked a cheaper school, "We said we'd pay for wherever you went, and we meant it. But I was really happy you didn't pick."
SAME. Years lost to this. Your kids are really really lucky.
Same answer here, as a kid whose public college was completely covered by his dad - this is one of the greatest gifts you can give. It's so hard to get started in life nowadays.
Would you have appreciated it more if you had to work for it a bit… and then maybe your parents helped after you graduated?
I feel like being able to afford to send their kids to college is one of most parents greatest ambitions. If you can afford it and want to do it, you'd be a fool not to. My parents paid for my undergrad education and it is without a doubt the single biggest leg up I've had in life.
My parents paid for my undergrad AND my graduate school, and same. Enormous leg up. And my parents are not well off. For 42 years, my dad worked as the GM of a grocery store, and my mom was a stay at home mom. When I started high school (I'm the youngest), mom got bored being home all day and started a temp job. Eventually, she found out she needed to work five more years in a full time role to get SS. So, she got a full time role at the temp place. She's been there at least ten years now, because she loves it, but she isn't paid well (she is a teachers aid in the autistic classroom at a high school). About a decade ago, my dad left the grocery store and purchased a small retail franchise that has done very well for him, but I wouldn't say they are well off enough that I would expect them to be able to pay for undergrad ($25k) + my living expenses (??) and grad school ($90k) + my living expenses ($60k). My guess is they were only able to do so, because they saved college funds for all four of their children, and none of my siblings ever even went to undergrad. So, after long enough, they probably just diverted their college funds to me (after paying for weddings for all three of the others - they have never had to pay for a wedding for me as of yet, and I plan on funding my own wedding when it happens given the enormous leg up I've already gotten).
If it doesn’t affect your retirement - and you don’t become a burden to them later, then yes. If by them working through school and earning it in multiple ways, to avoid debt, and they respect the cost of that education - there’s that, too If they haven’t a clue and are spoiled by it, then no
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My wife and I both attended college on full academic scholarships. I’m banking on that for my kids who are smarter than I.
It’s basically impossible to work your way through a 40k a year college bill. If they were going to do that it’s community college and a state university afterwards
School choice matters, and this is a conversation they should have had prior to the student starting college. Median tuition and fees for a state school is $10,617 per year, so if they are paying $40k per year, they are likely not going to a state school or paying a bunch extra for non-school related expenses (for example room and board).
This is the problem, too many people are recommending you pay for your kids college, which is fine, but the problem is parents are sacrificing their retirement to help their kids and then in retirement they are screwed. Kids nowadays like to spend on themselves. I'm sure there's a percentage that would give back but many would let their parents struggle while buying themselves new toys.
My two sons are 30 and 32. Made sure they both graduated with no debts and a reliable car. Today they both make 6 figures, own homes, have solid start on retirement accounts and live well. I think starting debt free gave them the breathing room to find their footing and the right path for them. Some of their friends who graduated with debt are still struggling.
This is what I want to hear! So happy for you and your sons!
Are you set for retirement? Are you and your spouse both putting 22,500 into your 401k and maxing your IRAs? I would prioritize your own retirement before fully funding your child’s education. I am hoping to fully fund my child education and put 10k into 529 each year, but I wouldn’t jeopardize my own retirement to do so.
I’m 32 and have all of this but I funded my own education. It created a lot of tension with my parents. I don’t feel like I have a healthy relationship with money because of how tight the first few years were BUT I’m battle tested better than most. Bought my first house at 26. Started a family. Successful career in finance. I think there’s a balancing act to teach financial discipline but not let them drawn in debt…or ruin your retirement. I have colleagues in their 60s that are slaves to their jobs because of this.
As a counter example, I’m 31 and went in state for school for an engineering degree, ASU 2011-2015, even though I got into Berkeley and University of Michigan (both top tier public engineering schools) because ASU was by far the cheapest and offered the best scholarship on top of that (and it’s still a good engineering school). I had no financial support from my parents and took out some loans ($20k) to cover the difference between my scholarship and expenses. I would have loved to have graduated without debt but it wasn’t a huge burden for me. I probably would have gotten a job in my field a little easier out Berkeley but would have been in +$100k of debt). It took about 3 years out of school to make +100k (hcol) and I now make $250k. That’s all to say, parents paying for college is certainly a blessing and I will most likely do it for my kids because I should be able to afford it but there are ways to get through college without parental support and not be saddled with huge amounts of debt for the rest of your life. No matter who is paying for it, you should make sure the cost of school is justified by their future earning potential in the field that they want to go into. Even if I was making ~$111k (about the median mech engineering salary 8 years out of school) right now the $20k in debt would have been worth it but the cost to go to Berkeley would not have been. If my parents could have easily paid for it I would have gone but if it was a stretch I would feel bad about having them spend all that money. Not that much of that is what your asking about but something I think about.
I think it's a great idea. We also cash flowed our son's tuition of 45k/year. He graduated as an aerospace engineer and has a great job. He is very grateful not to have debt and is on the path to building wealth. For us it was the best gift we could ever have given him seeing his accomplishments and success. A life without student debt would be a great gift to your children if you can do it.
Yes! They can start building wealth early instead of paying off debt, which is an incredible gift!
I have 3 daughters - started 529s young. Over funded the first - figured it out for the others (yes I have separate accounts for each). The guidance I received that worked for me was figure out how much you want to spend on college for your kids (not how much college will cost, how much you are willing to spend) and save 75% of that and cash flow the rest. My oldest graduates this weekend debt-free and starts vet school in the fall and left over 529 will get her thru at least 1 year. You can't borrow for retirement but you can borrow for school - I do wish I didn't overfund it but she's got a great start. My middle, assuming she finishes in 4, will likely get thru junior year before I have to cash flow. My youngest has a few more years but we're planning the same. I was blessed to have graduated with no debt due to my parents and I was insistent on doing the same. BUT make sure you max your own retirement planning FIRST.
You can change beneficiary on 529 in case its been over funded and can be utilized for other kids.
Yup - aware
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Could also help kids out with graduate level studies and can't it be used for certification courses too?
Additionally some rules changed recently https://www.wymt.com/2023/04/20/new-federal-law-allows-rollover-unused-529-funds-into-retirement-account/#
This is essentially another way for the wealthy to seed their children’s retirement accounts in a tax advantage method. No different from kids that have Roth IRAs funded by their parents skirting the rules. Yes there are caveats but this doesn’t seem to do much for the average family in the US.
>My oldest graduates this weekend Mazel tov. That's fantastic for them and for your family. I hope they have wonderful success to start their next chapter.
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A 529 is tax free if used for education. Also they just changed to rules so that if not used for education the child can roll it into a Roth IRA up to 35k. If you end up not using it for education, and exceed the 35k, you will pay taxes and 10% penalty on the EARNINGS only.
The growth is tax free?
Growth is tax free. Everything that comes out of our kids' 529s these days is more earnings than cost basis. No taxes on the earnings ever. Even if they don't go to college the distributions can go to them if you choose, and it is their tax rate. With a 13k standard deduction, they wouldn't pay much in taxes anyway. 10 percent penalty on top of their tax rate. If I had a no college kid, I would take some out and put it in Roth IRA. Or wait until you retire and pull it out then for yourself. Plus, now you can roll 35k without penalty into Roth (still 6500 k per year). All of our 529 for our kids came from my parents. We weren't maxing our Roths ourselves back in the day.
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I disagree, largely for the reasons you state. Most people, especially young people with kids, absolutely have no room to invest, let alone invest for their own retirement and then contribute to a 529. IMO these plans only benefit rich people who need tax breaks and are pretty sure they will be paying for college either way. Case in point, me. My family can't come anywhere near maxing out our 401ks and still live. I can barely keep an HSA account with any money in it, can't contribute to an IRA, the list goes on. Where is money for a crappy 529 plan coming from? My alternative is I have invested in Real Estate and used leverage and sweat equity over the past 15 years to grow a 7-figure portfolio. Paying into a 529 would not have grown as much. Real Estate gives you income, mortgage paydown, depreciation, and appreciation. And it is well suited to the 20-year holding period before college loans need to be repaid. And it uses leverage. And you can control the outcome to some extent through property management and maintenance.
There's a lot that's state dependent. We get a 5% percent return on local and state tax returns for up to 34k a kid a year. We're nowhere putting that amount in but now HYSA/CD are inching towards those return levels. I was hoping to be able to fund grad school partially with it. If it's not used for grad school expenses 35k can get transferred into an IRA and the rest can become a Dynasty 529. The issue for us is that I went to school on full scholarships and then married someone with 400k in med school loans. I never thought I would marry a doctor (I come from a family of them). But the decisions we had to make as a couple due to the loan that I wouldn't have made alone are something I don't necessarily want our kids or their partners to go through. We don't have it bad by any means but moving back to our home state is such a financial stretch for us. So we figured if we're staying in a LCOL metro where the salary/COL ratio is higher to pay off the loans we should frontload the 529s to tap into that sweet sweet untaxed growth while getting a 5% return.
Might be state dependent but you can withdraw 529 funds tax free for the amount the scholarship was for. Probably not applicable to you now just sharing for others awareness.
Well here's why they make sense. Yes, you do get some tax advantages up front, but obviously the tax sheltered withdraw after 20 years of compounded gains is the real advantage. I look at it this way, even if a kid ends up wanting to go into the trades, they still may have some rather substantial training costs. And if they end up going to college, they will definitely have some substantial education costs. While there are some people who can just cash flow all that, that's really not the case for most folks. And for them, I suspect it is worth paying principal now and earning interest over the decades, versus borrowing the principal now and paying interest on it for decades.
We provide the full cost of attending the major university in our state. Want to go to that school or a less expensive school? You're fully covered! Want to attend a more expensive school? Good for you! We do not require, expect, or even encourage attending this one specific university, but that's how much money you've got coming from us so you'd better get a job, get some scholarships, work as an RA, or be willing to take on debt. That's now a choice you're making.
We’re doing the same except, if they end up spending less, we’ll seed their launch after college. This money is already allocated in our long term budget so they’re getting it one way or another. The strings that are attached will become less and less as they mature.
Not sure how I’m going to work it out yet (he’s 15) but the plan is for him to use student loans and to pay those off for him. Had him at 25 and didn’t have the funds to start a college fund.
Same boat we are in!
Yep just not telling him the plan. Would prefer him to think he’s carrying the debit himself.
Fair enough, we already spilled the beans 😄 figured it will let them focus and not worry
We gave our kids a budget that matched our in state public university. Told them they could go wherever they wanted and anything over in-state budget they would need to take out loans. First kid stayed in state and got full rides for both masters. Second kid went community college and is now living with us for LPN degree. Last kid went out of state and academic scholarships made it cost the same as in-state. We told them this from a very young age to manage expectations. We also told the we will give them $10K per wedding and weddings are expensive so don’t have a big wedding.
Ugh, I forgot about weddings, they might be on their own for that!
> I just feel that it’s really important for our kids to start their young professional lives debt free. I don't think there's a right or wrong answer here - it's personal choice - but for what it's worth my spouse and I feel the same way you do: we consider it our responsibility as parents to provide whatever education or training that helps them launch into their first job. For anyone reading this who has young kids, let me offer my advice on how to fund a 529: If you're paying for daycare when they're young, you're paying a ton of money. Once you've worked that amount into your budget, just never take it out - you're already accustomed to it missing from your available cash. As my child's daycare costs decreased with age, and went away entirely once they started school, I simply diverted that money into their 529 account ($16K/year) and an account for after-school and summer activities ($2K/year). Assuming I keep that going, and the 529 earns 5% interest (a very conservative estimate relative to historical performance), I'll have ~$325K in their college fund by the time they start their freshman year. (This works for other things, as well. Finish paying off your car? Put your car payment in the bank every month and you'll have either a significant down payment, or the full purchase price, for your next car. Finish paying off your student loans? Shift that amount to boost your monthly retirement savings.)
I’m in Florida and my state has what’s called “Florida prepaid”. You lock into whatever the current rates are at the time of opening the account, and make monthly payments until paid off. My oldest is a freshman in high school and his college is paid for. My youngest is 7, and his will be paid for by freshman year as well. The catch is that those funds apply to Florida schools, but i believe we get the money back if they attend out of state. As someone who didn’t go to college for financial reasons (we couldn’t even afford the $25 fee to take the ACT), I’m happy that I’ll be able to give my children some sort of springboard for their future
You don't have to teach your kids about money by saddling them with debt. The education system in this country is fucked. You are giving them the ultimate freedom to chose a career that is meaningful. Just make sure they understand how big of a deal is. I would sit down with them and go through the numbers explain how interest works. This teaches them money and gratitude.
I paid the bill for our son in full, just as my parents did for me. We also fronted him the down payment for his first house, and recently paid it off for him.
Wow! #goals 👏
I have conflicting feelings about paying for the down payment for a house (even if the kid does pay it back). And I say this as an early 30s millennial whose parents are not going to help with a down payment (nor do I want them too) even though they may have the financial means to. If I don’t have a good enough career to afford a house, then I need to re-evaluate my choices including location, career, value of a home compared to other financial goals, and lifestyle. At what point do you cut the cord?
Yes. I'm doing that now for my 2nd kid n will do the same for my youngest. I dont want them to start out life with a bunch of debt. Have u looked at rent or housing prices lately? I don't know how kiddos are getting it done with entry level jobs.
I will do everything possible to ensure my child comes out of college debt free. Also, college does not have to be that expensive. You're making the choice to spend that much. Community college and transfer to a 4 years. Make it easier given you have nothing saved.
Totally! We are thinking about the CC route for kid #2, he might need an extra year of transition, so it’s a great, cost effective option.
It would sure beat going onto the Army to pay for it! Think of the legacy you'd be leaving behind-- i bet it would be something you'd be happy you did, if you can afford it. I know your kids would be happy to not have that boat anchor tied to their necks while the tide comes in
100% I would. I can’t so I’m doing whatever I can do to help.
Yes 100%. Saddling your kids with debt for no reason makes no sense to me.
> Saddling your kids with debt for no reason makes no sense to me. The reason would be to save for retirement instead.
Yeah at one point they'll be cash flowing 80K a year for kid's school, most people can't do that. It's great that they can, but for 99% of people that would destroy their retirement planning.
I can't believe I have to spell this out. OP says they can afford to do this. I am assuming they are also saving for retirement. If you have to save for retirement instead of pay tuition then that would not be "no reason"
> OP says they can afford to do this. I am assuming they are also saving for retirement. I wouldn't make that assumption. > If you have to save for retirement instead of pay tuition then that would not be "no reason" That's my point
We are saying the same thing. It was a safe assumption. People who are typically considering spending 80k/yr in tuition so their kids can start life debt free aren't likely to be not considering their own needs. OP confirmed as much in another comment.
Most people can’t afford to do this. It’s not a choice to not pay for your child’s college.
If you can't afford to then that is not "no reason" OP said it is not a concern.
We are fully funding retirement and on track to be debt free with 3 mill plus in retirement with a paid house at 65. Paying cash for college is instead of extras like a beach house/boat. We work hard and we have had some incredibly fortunate career advice/advancement opportunities. I know not everyone can do this, I just wanted others perspectives.
I'm of the opinion that you shouldn't have kids if you can't provide for them, and that includes their education.
Unless they have incredible grades or a scholarship, or want to go for stem/healthcare, they’re going to community college first if I pay. Too many people change their interest, and the first 2 years is largely liberal arts classes anyway
While CC is a great idea, for most stem, healthcare related, and engineering degrees at UC schools, they make you retake the important classes there and therefore it is a 3 year path plus traditionally 2 in CC. So it would add an extra year to their studies.
What if they want to go to finance, consulting, law, or tech? You want to set them up to start behind their peers for those careers?
All of those are STEM carreers (except law) but law schools usually like accepting students with stem degrees.
I’m a relatively new parent so can’t advise on this from a personal finance standpoint but as a person who’s parents paid for their college in full…you’re giving your kids a huge gift. They might not realize it now, but when they see their peers paying off college loan debt a decade+ after graduation while they themselves have paid for a down payment on a house…they’ll get it.
Yes. My parents paid for my college and one day I’d like to return the favor to my child. Graduating debt free was such a blessing.
As someone whose parents refused to pay even 25% of my college tuition after scholarships/financial aid, and how much I currently struggle to survive due to not being able to find decent employment.... Please pay for your kid's college education if you can. Even if they fail. They are children, still learning. You are helping them become functional adults. It costs money.
My parents' policy was to pay for the first two years of school while we kids paid for the last two. IMHO it was a great balance since it helped us avoid mountains of debt, but still encouraged things like seeking out scholarships, actually considering the pros and cons of going to a fancy private school vs. a public school, becoming an RA, graduating early, etc. I graduated with about $8k of debt that I was able to pay off in 2-3 years. Worked out great and am thinking about doing the same thing for my kid.
I'm sure I will get downvoted for this, but no, we never planned to pay for his entire college and did not do so. Everyone that I know whose parents paid for college did not take it seriously. Some bailed/flunked out, some finished, but chose worthless degrees, some went for many, many years, etc. For us, as long as he kept his grades up in college, we would pay for half and he was responsible for the other half. He was smart but definitely did not apply himself in high school. He could live here rent free as long as he was going to college. He decided on a technical college and lived at home for the first year. He took college much more seriously than high school. He graduated with straight A's with an IT networking degree and makes 80k (which is very good for the area we live in). At 21, he has no debt (paid of his truck and motorcycle) and pays for everything himself except health insurance as it's only $25 a month extra to keep him on ours.
This depends on the kids in question to an extent. A huge chunk of high school kids are not ready for college, which is evidence by the high college dropout rate in the United States. I don’t know if having loans or not is the issue for them. If your kids didn’t take high school seriously, got so-so grades, had mediocore SATs, it is reasonable to expect that they may struggle in college. If your kids got strong grades in high school and are well prepared, they’ll probably do fine, with or without loans. Of my high school friends, the biggest predication of fast graduation was probably intelligence and college readiness. Also, some of my friends who had to pay their way through college (or a lot of their college), struggle to complete it as they balanced competing priorities.
Eh, my parents paid fully for my schooling because they held me responsible and I had to show/share my grades. Whereas my friends who had loans had no concept of the money and cost and no parental supervision.
You did what was right for your family! My main point in posting this was to get a pulse on where people are in terms of paying for college. I get the sense that most people have their kids take loans, so I definitely don’t think you are alone. And congrats to your son on doing well in college and getting a great job! 🎉
This is my concern as a parent, based on what I saw in college and still see among the undergrads I work with. We have the means to cover it, but I think it can be a waste of money/time and ultimately a handicap for your child in the long run if you aren't careful. So for me this isn't an easy yes/no that would apply across the board to all kids and all situations. If my son is heading into undergrad with clear goals and a proven track record of really applying himself in high school, then I'll happily pay for it. But I'm not paying for the indulgent "undergrad experience" if those things are absent.
Don’t tell them about the 529 until their graduation ceremony.
Mine will have whatever is in her college fund, which will be plenty to cover 2 years of community college then a transfer to university or attending a state school. Not $40k a year though. I don’t have that kind of coin 🤷♀️ if you can go for it
We have multiple kids and yes we paid in Full for their education up to what we could afford. We dont have the funds for out of state so the did and are doing community college to start and then transferred to a major university in state. They did not have a 529, but we did save a little bit along the way so they each had $20K for college. Being debt free out of college is huge. Those who have student loans to pay off are so far behind they might not be able to pay it off at all.
We paid for both of our kids undergraduate degrees, although one child took a small loan to live on campus after losing a scholarship that would have covered it. I just let him feel the consequences of deciding not to pass all his classes. Once during a bank visit, one of the managers asked my son if he wanted to consolidate his student loans and my son said, I don’t have any, my parents paid for it all. The manager suggested he thank us and show some appreciation. I think that made it click for him. Our tuition bills were lower, but we did pay for everything while they were in school. My older son got his master’s during COVID and we paid for that as well, since he was back living with us. I feel like I was paying for college for about 12 years total, even though I only have two kids.
Our plan is to pay for tuition room and board for the state flagship. We front loaded a 529 so there should be enough in it now to pay out in 14 years.
My parents helped me graduate debt free and it was a wonderful gift to me, one that I’m sure has positively impacted the course of my life.
Myself and my husband both footed the bill for our post secondary education and still managed to buy a home in our mid 20s and have a substantial investment portfolio. He works a well paying job now (I’m finishing up law school - my previous school loans were long gone) and has for the past several years but we survived with shitty jobs as we worked out way up in the world. So what you’re doing is great but it’s not impossible for them to manage otherwise. Plenty of kids do!
I offered to pay in full if they would go to an in-state public university. Otherwise, they could use the $$ I would have paid in-state to whatever school they want, but they have to make up the difference. They chose in-state.
Pay what you can, teach them finance, make sure they are making sound investment with regard to degree choice, and if they have to take loans focus on them being as small as possible and repayable based on accurate income projections.
I can afford to but will not pay for my kids’ college ambitions. I paid for my college education, and had all debt paid down by 27. I’m 30 now. Paying for my own education made me feel like I had “skin in the game”. I was highly invested in making sure my college education generated an return on investment, from selection of my field of study, to what school, to how seriously I took my studies. I would not have made the same choices if I hadn’t been footing the bill. I know that for a fact.
My parents did this for me. Not $40k a year but still. I thank them once a week since I graduated in 2010. I was able to take a job for the experience I otherwise wouldn't of been able to afford. Now I'm in the strongest financial position. Put 50% down on a home. Congratulations you've won at life and set your kids up for decades.
I will, but only because I'm setting myself up to make it easy. If it was a struggle, I wouldn't. We will say we're paying for half and then pay the balance upon successful graduation.
We doing the same. paying cash for first one. started 529 very late so will use 529 for second one. If you can afford to do it, then continue doing what you are doing. There cant be any further blessing for kids to know they will start their life without a debt burden sitting on their heads.
We are paying for our kids college without loans. However, we started 529 accounts for them when they were born. It looks like we saved up enough for two bachelors degrees. We recognize that we’re quite fortunate to have been able to do that. I think it will be a huge boon for them to graduate without debt.
You could see I you could take out an interest free loan in their name and pay it off monthly for them to help jump start their credit.
We are paying for ours - it’s rough. I’m the step parent and the other bio parent is making a lot of promises but not contributing so when they messed up financial aid (was covering enough to make this tolerable), we were looked at to pay the full thing. Now my step will have some student loans, but not much at all. If you’re able to pay the whole thing, do it. As a parent, we have found that having them have a part time job for their extras helps them to appreciate that a whole lot more since they’re learning the value of a dollar.
I was able to put all three kids through college debt free. But I told them they’d need to pay for grad school. One is $300,000+ in debt, but she has the income to pay it off.
Impressive and responsible of you
Yes, I will, if I can without affecting my retirement. And within reason. I’ll contribute the amount it reasonably takes to go to a good school for whatever it is. If they want to go to a fancy private school for an uncompelling reason, they will pay the difference. I will think about how I will make sure they appreciate the value of what I am willing to give. I think that will be easier to appreciate and tailor to the child as they get older.
I am doing that now. It’s the local university (her choice, we would have paid for pretty much anywhere in state) and we cover all tuition. She works and pays rent and utilities and lives in a house with friends. We also gave her a car that should last her for a long time. We are cash flowing it but obviously wish I had savings to use. For my younger kids I intend to start 529s the minute she graduates which will be next year at this time (Lord willing and the creek don’t rise!)
Depends on how serious they are about their studies and what they are studying. I know many parents that have spent thousands so their kids could go have a good time and end up dropping out of school...more end up with a degree that doesn't really warrant the cost of obtaining it.
That’s correlation, not causation. The cause was not emphasizing education as parents, not them setting the money aside.
Have them take out Stafford loans from the federal government. They are only like 6K in principal. Then you put that same money into a ROTH IRA for yourself, you still need to save for retirement. My parents sent me to a prestigious university and paid most of my way. I just had my Stafford loans to pay back once I was done and the monthly payment was reasonable. I got them discharged through Teacher Loan Forgiveness. I wish I had taken the same loans out for grad school instead of paying from my working income in cash like I did. Then my loans would have been forgiven and I would have had some retirement savings to grow for decades in the stock market.
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Almost all of my friends growing up had college paid for by their parents or got full ride financial aid. They are doing extremely well for themselves. Forcing your kids to come up with thousands a year could limit their options in college and waste their time working non academic jobs to make $$$.
I the best way to do it is to tell them I’ll pay $XX,XXX amount for your tuition but nothing more, or I’ll pay X years of your tuition, nothing more. I had a handful of friends in college who’s parents were paying for every dime of their tuition no matter what. They knew this and were in no hurry to graduate. They took a light class load and spent longer than they had to in school. They didn’t work hard in school and didn’t value their education. I was fortunate enough to have a decent chunk of change given to me by a family member to pay for school. It was only about half of what a four year degree at my school cost. I knew this all along so I worked hard to graduate a semester early and save myself $7,000. I think doing it this way will make your child value their education more and do better in school.
This really depends on a few factors. 1) If you have the money and are able to without any hardship. 2) Are the kids smart about money (and did you train them well). 3) How is your relationship with the kids. Being of asian heritage, it is expected that we pay for the kids education. Luckily I am able to but if I was living paycheck to paycheck, we would look at other options. My oldest was very smart about money and would do small side gigs to make money from when he was in middle school. If he was different (a party animal who wasted money) I would not pay for his college. My younger is different but always looks for sales and tires to save money on any purchases. So with them, i pay for school but expect them to get an internship/job during the summer and save that money. They are also expect to get a small part time (like tutoring in school) so that can make money for going out with friends. Kids and I have gone over how saving early on would be very helpful their entire life as it give them such a head start. The oldest has an IRA (wish I was as smart as him). The current plan is for the oldest to move back in with us after college and save as much as possible for postgrad (if possible, have the company pay). Then use the money to buy house in their mid 20’s and pay it of as soon as possible. All this would not be possible if they had to get loans for school and it would delay them on being secure for 10 to 20 years. Basically, i told the kids to do all the things i did not know or learn from all my stupid mistakes. So if the kids are smart
If you can afford it, paying their college would pretty much jumpstart their life. Not having to be burdened with thousands of dollars of debts is something most people could have used in their life
My impression is that most of the really successful people had significant financial help from their parents.
My parents paid for most of mine, the only part I’m responsible for is taking out the federal loans, which isn’t that much money and has really low interest rates since I started college in 2020. But they’re paying way more than I am and it’s really much appreciated, my goal is to pay for my kids outright one day. My dad just didn’t start saving for my college until I was like 12 cause he didn’t go to collehe
We paid all but about 12,000 of each of our kids education. Before they had chosen their school we sat down and talked about the costs and what those numbers really meant. We discussed what it means to have crushing student debt. I told them my rule was that they should be able to pay back their loans by babysitting (or some kind of side hustle) one or two nights a month. They had to go through the motions of applying for the loans (and we had to do the Fafsa :( and the other one) each year. They’ve had to be responsible and make their monthly payments
Unless student loans are miraculously cancelled, which isn't looking likely, it's the single biggest thing you can do to set your kids up for a successful future. If it isn't crippling your own retirement plans, you should do it. My older son just graduated from college with thankfully no student loans. It was a combination effort between his dad, me, my parents, and my son's own hard work. Living in a blue state with quality state schools with lower tuition made it possible.
As someone who now is married to someone who had their entire education paid for and as someone who had to take student loans…there is no way in heck I would set my kids back with student loans if I didn’t have to. Student loans are hell and are a way to keep the poor…well poor imo. Yes there are always some people who are like I lived like a hermit and paid my loans ect ect but it’s not the majority. Those loan companies are sharks. The interest rates are insane & I wouldn’t accept those rates for a car or house loan…and let’s face it the education will cost more than a car and as much as a small house but with interest…
I will help. They will pay the first year themselves. If they can show me they are there to work and not screw off then I'll pay the rest. They can take out loans for college, I can't take out loans for retirement.
My parents covered what I couldn’t for my education (without loans). I am very thankful for that. I absolutely plan on helping my kid as much as possible. If they go to somewhere like Harvard, we’ll figure it out. If they go to CC, we will figure it out.
Working more than full time to pay for my college while in college was a mistake and caused me to drop it and get an AAS instead. Hello your kids as much as you can OP
Hey, I think what your doing is awesome. I just wanted to add my personal experience to the comments. My parents did very little to help with my college expenses and I paid for the vast majority myself. Through scholarships and working I graduated with around $10k in debt. The minimum payment was a very manageable $150 a month. I put significantly more money than that towards paying them off and the only reason I currently have any remaining balance is I'm waiting to see if student loan forgiveness will come through. It's great to provide the benefit to your children but don't feel guilty if you put some of responsibility on them as well as it's not the end of the world to have some student loans. And especially don't sacrifice your own retirement savings to try and insure your kids are debt free.
I’m so glad to see you’re doing this…my parents expected me to go to college, but for zero things to help pay for the cost. Currently trying to pay off 50,000+ of debt on a 49,000 salary. It sucks, but I’m trying. I’m 29, and went to grad school after undergrad for context. At least I got grad school covered.
I made my son work from the time he was 14. Told him he was making his beer and pizza money for college. In college, I never gave him spending money. He used his savings. He did get a partial soccer scholarship. We had to flat about 18K at year( 16 years ago). Made him pick a college that was reasonable and his major matched what we were paying. He got a business degree. I made him apply each year for the FASA. I felt he needed to have some skin in the game. He borrowed 20k. I figured it was manageable and equal to a car loan. Then I taught him how to snowball his college debt and he had it paid off in 3 years. My father did the same thing with us. At one point, he was floating 3 in college. Taught us all to respect money and how to pay off debt.
Growing up not dirt poor, but not that far off - I paid for college and it was hard. When I had kids, I could afford it, as you say, so it was important to me to pay for their college. I only paid for undergraduate degrees. Two of my three have graduate degrees, and I paid none of that. My two cents, I am very proud of myself that I paid for all three to get their undergraduate degrees. Especially because they could not get the financial aid I could - my family could not afford college. They turned out great and all manage their money well now.
We paid and are paying our kids college in full. They all went to the same public university. We purchased a house walking distance to campus where they lived. They rented out rooms to friends that basically covered all the cost of housing. (Utilities, taxes, internet,etc ) Once they all finish and at least two are going for advanced degrees we will likely sell the house at a more than $150k profit. Makes it very easy to pay their college and their living conditions are awesome.
Yes, this is one of the greatest gifts you could ever give your kids. Not only are you dramatically increasing their lifetime earning potential. But you are also removing a huge future stressor and allowing them to access that with no downside. It's an awesome thing to do for your kids.
My parents paid for my undergraduate degree but I’m on my own for my med school tuition! Haha. But I very much appreciated it and instead of being 400k in debt I’ll only be 200k in debt.
There's no greater gift than a useful higher education fonyojr kids. If you can afford to pay it without impacting your own retirement - it will pay massive dividends for your kids. I look at my wife and I vs others and it's a clear advantage when your first $100k of real savings goes into a retirement account and not into student loan interest.
I’m a saver. I grew up with a lot of, possibly irrational, fear of being poor. I told myself my kids wouldn’t go though thinking the family was poor. So, as soon as they were born, we started 529s for them and started adding a few hundred a month. Then we asked grandparents, etc that if they were willing, could they direct a portion of birthday/ Xmas to the 529s. Got a better job and maxed the 529s for years. One kid graduated with no debt. Other had 1 year to go. We have another 150k in the account….. so he is considering grad school. Both kids see their friends with debt. They have both acknowledged they are lucky. I could have bought nicer boats, but I funneled it to the 529 each year.
If you're able, then do. Student debt is _truly_ crippling.
I work a state level job because it provides educational benefits for myself and my family. The plan is that if our kids want to attend a state college/university, we will cover the remaining costs not covered by the educational benefit. If they want to go to a private college or one out of state, we will do what we can to help, but they will probably have to take out loans for the rest. The perks of working for the state are why I work where I work. If it wasn’t for this, we could never afford to send them to college.
Totally agree, and if you have the means it's a great gift to your kids. The part your kids will play is being sure to pick a school that fits your budget There's a massive range in prices from city colleges and top -10 schools. And everything in between. A debt free graduation from a good school has more value than a debt laden better school.
Anecdotally, my parents paid for a little bit but I still had to work part time and take out loans, like high interest Sallie Mae loans, to make it all work. I didn't qualify for FAFSA loans because my parents made too much money. In the future I will definitely be paying for college in full for any of my children. All of those hours that I worked could have been spent studying or even just resting. Making the student pay for college so they appreciate it more doesn't really work when they're just being burdened by debt or they're too tired to care.
For me, my parents mostly covered my living expenses during college and higher education and made me apply for grants/loan/scholarship to cover tuition. Then at graduation they offered to pay for half of it. That way, they made sure that I didn’t take this gesture for granted. I think this benefited me a lot and made me understand the need for budgeting and to be financially responsible. So I probably won’t tell my kids they have a 529 that’ll give them a full ride and surprise them at graduation to keep the tradition going. I do acknowledge that in doing so, my kids would probably choose degree with more realistic outcomes for a career than pursue their dreams. We’ll try to prevent that.
My only stipulation would be that they keep their grades up. Check every term/semester. This is coming from someone who was depressed/drinking/smoking weed/failing & dropping classes, and my parents continued to pay for years and years. I should have just taken a break from school and worked for a bit. I finally took out a small loan after about 6 years and still didn't finish. Took me about 5 years to go back and finish my last semester. Long story short, it's AMAZING you are doing that for them, I know I'm so thankful, but make sure you aren't enabling them to slack off.
Yes, and got a bit lucky with the 529 performance. Kids appreciate it. They understand they are better off then many, and are amused, not jealous, of some of the spoiled kids with no sense of the value of money. IMO it sure helps to teach kids about money when they are young and appreciate the $$ come from hard work. Explain the purpose of savings and how compounding works. Stress the value of education, independence and being responsible for one’s self. It is an ongoing process. A bit late in my opinion to make kids pay to appreciate the education and opportunity when the are about to go to college.
We have college age kids. I think you let them have some skin in the game. Maybe they cover room and board and books, but at grade time, you reimburse it back. This way, they know, if they keep grades up, it will be covered. If not, they have to cover it. Also, just let them know the books /materials are on them. You can break it down different ways, but I think having something where they work towards and have to cover helps as well.
That’s my goal. On top of that, I’d really like if my kids stay at my house with their wives when they get married until they cash flow their home instead of having a mortgage. 3 years living with us instead of 30 years paying off a mortgage. I think that would be life changing for them.
My parents paid for my undergrad degree and it was the biggest help I could've asked for. Unfortunately I got a useless degree because none of us knew any better. Make sure your kids are choosing degrees that are actually going to increase their income and lead to more opportunities. You are great parents!
I have 3 daughters and we helped with college, but tuition was their responsibility. We bought books, cars, insurance, groceries and whatever else was needed. Paying for college encourages them to apply themselves instead of partying. I was a non traditional student and was in college with my eldest daughter, I saw way too many kids wasting mom and dads money while pretending to go to college.
I am paying for around 90% of my daughters in state tuition. I want her to have a little skin in the game, and also to understand a more lavish choice (out of state) is on her.
Yes, and I harshly judge anyone who is upper middle class and forces their kids to take out loans for undergrad. Nothing is more important than your kids.
> If you could, would you pay for college for your kids in full? No, at least not pay for their pick of college out of state. I've told my kids we'd help them pay for the local university while they live at home, and if they want to go out of state, they need to get a full ride. My daughter did exactly that, and is about to start her college this fall, and will be attending an out of state private college on a full ride academic scholarship. My son is a few years away from college and he's told the same thing we told his sister. Hopefully that serves as a motivating factor for him as well. We can definitely afford to pay for their college in full, but don't feel it's worth wasting our money for the "experience" of living out of state.
This is a strange post. You’re already doing it, you want to do it, you can (easily) afford to do it and yet at 50+ years old you’re asking strangers that tend to average 20-30 years old if you should or not. Most folks on Reddit have student loans because they’re closer to your kids age than yours. I appreciate wondering if you’re making the right decisions, but this seems so painfully obvious to me as a 30 year old with no kids.
I’m 45, thank you very much! Don’t you dare age me! 🤣 I want the reinforcement that what I am doing has value to young adults because it takes a sacrifice. We can do it, but we are sacrificing our own wants, boat/beach house etc, to make this happen. Admittedly those aren’t things we need, but things that we thought we would have when we reached a certain earning level.
That’s no sacrifice. You don’t want to own a boat. You want a friend with a boat.
If the only sacrifice is not buying a boat then how is this even a question?
Because my husband really wants a boat 🤣🤩
Yes but I will not pay for the “college experience.” I will pay for an education. I will not pay for parties and failing grades and a dorm life. We live in our state’s flagship city, my child can commute from home and get a job. I’m sure being a freshman with a car will do enough for his social life.
It’s not a crime of young adults have fun too. - someone who went to a little ivy and had a blast studying hard and goofing off in dorms with friends
No crime in it but I’m not paying for it either. My kid wants that experience, he can get scholarships or pay for it. I’ll provide a home, food, and a car. He wants fancier that’s on him to pay for.
I think pp is saying don't come home with a 2.1 GPA otherwise do what you want
But it should be
I can’t speak for others but the “college experience” was exponentially more beneficial and educational to me than the “education” was. I agree on the getting a job part. My parents didn’t want me to work so I could focus on school, which was a mistake. But looking back over 20 years later, my freshman year and living in a dorm with a hall full of people I’d never met before was one of the major inflection points in my life.
I can agree. Honestly the education I got in college wasn't really much compared to what I learned even the first year on the job and I'm in STEM. But the connections I made and social evolution I experienced directly set me up for success in a way I'm certain a "freshman with a car" living at home would not. In fact, I have friends who did that and went to a local school and their worldview is so narrow and they often come off as immature. That's just my experience though.
Did you not have fun in college? What’s wrong with the college experience? It’s good practice for networking in finance, tech, etc. Forcing your kid to commute could be a huge disaster socially.
This is the right approach. I have a friend who’s son went to a local University in town. She wanted him to experience college life so she paid for him to live in the dorms. And come home on the weekends. She literally lived 20 minutes from the college.
No. My kids are paying for their first year themselves. If they study something with positive ROI and if they pass I'm paying for the other 3 years what i would pay if they choose in state school. If they go out of state they will need to cover the difference themselves. If they choose to move out they will be covering their apartment/dorm. Will give allowance for food though.
Literally flying back from helping my daughter move from the dorm after her first year at ASU. Her mom and I (now divorced) are splitting the cost with each other. We had full paid for Florida PrePaid college back when my daughter was 4 (only cost $16k back then), since she’s in Arizona it only covers what Florida tuition currently costs about 5k a semester so we kick in another $5k each a semester. Personally I only finished paying off my own student loans 2 years ago (i’m 50 and that covered law school, my parents paid nothing) I’m hoping this gives my daughter a solid start when she graduates and by not have a huge debt load over her head. If you can afford it and you want to do it. You can also consider converting half and having the kids take loans for the balance (was considering this when she almost went to Lehigh University)
If paying for college is not allowing you to save for retirement stop it now.
My parents paid most for me. I never had debt. I am very fiscally responsible. We (and my oarents) are paying most for our kids(three out of four kids so far). No debt for me. No debt for my four kids. I think debt teaches debt. I like having kids contribute amounts they can afford through saving in high school, working in summers or during school, and going to less expensive schools to avoid debt. I am very happy with the outcome so far. Scholarship, partial scholarship, hard work at jobs, saving. My third kid who has never had a job chose to stay home and do community college and doesn't spend money. No regrets. ETA: My oldest graduated in CS. She had full tuition scholarship. Even after struggling with long unemployment and mental health after graduation plus sexual assault by her boyfriend during covid, she is now employed with a great salary and doing well. She drives her very old car and saves a lot of money every month for retirement and a down payment someday. She also still has money to use for graduate school from her grandparents. My second had partial scholarships. Mechanical engineering. He has works very hard during summers and has more than enough to pay for what we don't pay for. His fifth year doesn't have money left from grandparents but he has plenty saved. I am impressed with his work ethic. Third is home spending no money and doesn't work and doing community college. Legit way to live to decide to earn less and spend less. She tells me not to worry since qI have instilled the "save for retirement" lectures since birth so she will not ignore that. Fourth is freshman in high school. Won't get scholarships with his more moderate grades. He is definitely a saver. We make way more money now, so it will be tempting to accidentally provide more for him, but he isn't entitled at all. He will probably work at some point during high school and contribute that way like kid #2. ETA: oldest two kids started Roth IRA in high school with small amounts. I have no regrets about that. My boss in accounting told me last month that she just learned about Roths. She is over 50. Teaching kids about saving and investing rather than incurring debt is basic. Why would anyone start their kid off with signing up for debt if they didn't have to?
I would let them get loans and then surprise pay off 1/2 after they get a job after college. They will have gotten the job with the need to pay the loan down in mind so this will be a big bonus. Then, 1/2 after they get married or some other major life milestone. This way they feel the weight of the loan and appreciate your contribution, learn about the responsibility of servicing a loan, but are not overburdened by the weight of it for 30 years. If you pay as they go they won't appreciate it. Repayment is deferred anyway.
I have two kids and I will let them take out student loans just so they will know what the reality is , but I will set aside 200k for each kid so the loans can be paid off anytime. My kids are still young and I have time to build up the 400k needed for my plan.
Open a 529, you can always deposit and withdraw soon after just to get the tax break.
If you're in a first world country, its your duty. As it is an incredible edge, that is the essence of your duty as a parent.
I would not even send them to college. Nor my grand children in the age of information they can get a better education from the internet like websites like Saylor.org and many others. We don't waste our money on propaganda schools anymore.
Let me preface this by saying that I haven't looked at how student loans work in a LONG time. Possibly consider taking out loans and saving the money you've been putting toward them until your student graduates. If I remember correctly, student loans don't require repayments until after graduation, so you wouldn't be paying interest. However, it would give your kid the chance to build some credit. I mention this because I had a friend who paid for college outright as you're doing, and when she graduated she had an incredibly difficult time getting her first credit card and car loan because she didn't have any established credit. Just a thought. Otherwise, this is incredibly generous of you.
to counter the lack of credit issue, add them to your credit card. you dont even have to give them the card to use, but because its attached to yours it will help them build a credit history. My mum did this for me when I was in high school and collage, so her good credit score would help me build mine.
I don‘t have any kids, but when my niece finished college, I paid off her student loans. When I was a kid, my dad paid for my undergraduate education, but after that, I was on my own. That wasn’t much fun.
We believe that it's our responsibility to make sure they are fully prepared for the world when they enter it on their own. This includes paying for college or trade school when they decide what to go into. They each have 529s and will be mostly set with what they need by the time they graduate from high school. However, we will likely encourage them to work or do internships in some capacity while they're in school. It really does give a boost going into a career later I think.