In the world of financial guidance and responsibility, there are few topics as contentious as college tuition. One expert will say that parents should plan on covering their child’s college cost, while others will argue that the child should be responsible for saving and paying for their own education.
Differing opinions aside, most will agree that student loans are something best avoided, but with today’s college costs, is that realistic?
The truth is, who pays for college and how it’s paid for can be situational. Rather than give a definitive answer, we thought we’d share some guidance by looking at both sides of the argument.
Having the Parents Pay
Many people believe that the best and most realistic way for a child to get a college education without being burdened by debt is for a parent to cover at least some of the cost, if not all. An adult is in a much better position to earn the money required for college than a teenager is. Many well-earning, financially responsible parents already have the resources on hand to fund their child’s education.
Before you go and write a check to a school, however, there is something else to consider.
As a parent, you are responsible for the well-being of your entire family, as well as yourself. This extends beyond covering the tuition of one or more children. If paying for college tuition means putting yourself into debt, dipping into retirement savings, or otherwise exposing yourself to financial hardship, then it is not a healthy choice to make.
Wanting to pay for your child’s education is great, but that doesn’t make it the right choice. Generally, a parent should only be paying for their kid’s college if they can afford to do so responsibly.
Having the Child Pay
If your kid is planning to go to college, and you won’t be assisting them in tuition costs, you should help them in making a plan. There will be some hard work and a lot of saving required. In most cases, they won’t be able to have all the money they need set aside by graduation.
It’s a good idea to create a timeline and try to determine how much they could realistically save by the time they graduate from high school. From there, you should be able to figure out how much money they’ll need to make during each semester and during summers to pay for the remaining cost of college as they go.
If you’re serious about your child paying for college and having them graduate debt free, they might also need to put a cap on what their school tuition can be. That means certain schools might not be an option, even if they can get into them. It’s also worth considering alternatives to college. Now more than ever, trade jobs are growing in both demand and salaries. By finishing a program that takes a few months to two years, your child could get a job that pays the same as a job requiring a four-year degree.
The most important thing is to start this conversation with your children sooner rather than later. Help them figure out what they actually want to do, and how they can get there.
Splitting the Cost
Another option that takes a “best of both worlds” approach is to split the cost of college with your child. Some parents do a 50/50 match. Others give a set amount that they will provide, and it’s up to the child to cover anything above that.
Either way, this approach can help lighten the burden of college while teaching them the importance of saving, working hard, and being financially responsible.
What if Loans are Needed?
Some parents simply cannot cover the cost of their child’s college education, even if they want to. As for the child paying upfront, depending on their extracurricular life in school, as well as local job opportunities, it might be unrealistic as well. While school loans are best avoided, they can be handled responsibly if you’re intentional with what’s taken out, and you make a plan to pay it off quickly.
The goal here is to have the child pay as much as they can as they go. Then, once they graduate, their number one priority becomes paying off the remainder of their debt.
Leaving a Financial Legacy for Your Children
Whether you plan on covering your child’s tuition or not, it’s important to leave them with an example to follow. By living free of debt, managing your wealth, and properly saving for retirement, you can not only show your children what financial responsibility looks like, but you can leave them with an inheritance that they can use to further their lives.
The best way to ensure you’re on the right track is to partner with a certified financial advisor. They’ll be able to help you map out an achievable plan for all of your financial goals. That includes saving and paying for your child’s education, if you choose.
For financial planning in Springfield, Ohio, contact KB&P Partners today!