These kinds of questions are also really relevant to my blog, as I began it extremely focused on paying off my $40,000 student loan debt (you can read about how I paid off my student loans in just 7 months).
My student loan debt was higher than the average $30,000 per student, and surprisingly, it is often the parents who are taking out loans to cover their kid’s education. I’ve read countless stories of parents who have $200,000 in student loan debt for their children, parents who are struggling financially, etc. These are parents who are drowning in debt for their children.
But, what’s even more surprising, many parents think this is normal. Even so, it’s a tough decision for a parent to make.
Many of the emails I receive are related to whether or not a parent should risk or possibly ruin their retirement by helping their child pay for college.
Here are some of the stories that parents have emailed me:
One mother told me that her and her husband were in constant fights over the amount of student loan debt they took out for their child. They aren’t on track for retirement and struggle with their daily bills, all because they thought that they HAD to pay for their child’s education.
One family has a child in medical school, and the parents are paying for all of their college expenses plus food, car, rent, etc. These parents are not on track for retirement and they have debt.
One set of parents told me that they had over $100,000 in student loans taken out in their name so their child could go to school. These parents are not on track for retirement and they have a lot of other debt besides student loans.
Another family has a child in law school, and the child said that if their parents don’t continue paying for their expenses, that they would hate their parents. This child was even more mad when the parents printed out every single blog post of mine and gave it to them (I did not tell their parents to do that, it was entirely their idea). The child said I was ruining their life (yup, that actually happened). And, these parents are not on track for retirement.
I hate hearing about these parents who are already in debt, not on track for retirement, and are now going even further into debt for their children’s education.
I understand that I’m not a parent.
However, I put myself through college entirely on my own. I paid for all of my housing expenses, food, college, transportation, and more.
I don’t hold grudges against my parents for the fact that I had to pay for everything (this is a reason for why some parents pay for their children’s education- they are worried that their children will be angry), and honestly I would be more upset if I found out that my parents went into debt and were struggling financially to get me through college.
So, if you want to pay for your child’s college education and can truly afford it, then do whatever you want with your money. However, before you take out loans when you’re not on track for retirement, please stop and think before you make any further actions!
Think before you cosign or use college loans for parents.
The default rate on student loan debt averages around 10% to 15%. In recent years, 90% of student loans are co-signed by others (mostly parents).
This means that if you co-sign a student loan for your child and they default, you will be stuck with the bill.
You may have a great relationship with your child, but everything can change once money is in the mix. I have heard of several people who had a falling out with their parents and actually purposely stopped paying their student loans because they knew that their parents would start paying them instead.
This is absolutely horrible, I know, but it does happen.
College can be expensive, which means that many people take out student loans in order to “afford it.” Before you cosign on student loan debt and pay for your child’s college education, I hope you understand the consequences that can come from it.
Your children will get better grades without your help.
Now, if you’re still on the fence about whether or not to pay for your child’s college education, maybe this next fact will help.
According to Forbes, children who have parents that pay for their college education tend to get the worst grades. This is because students who pay for their own education tend to be more serious about it because it’s their own money.
There are other ways you can help your child get through college.
If you cannot afford to pay for child’s college education, or if you decide that you just do not want to, there are many other things you can do to help them.
Help your child understand personal finance. Helping your child understand personal finance, such as creating a budget, will help them greatly in life. I recommend reading How To Create a Budget.
Support them and help them make a plan. Even if you are not offering financial support for college, you should support your children mentally. This doesn’t mean that you have to agree with what they do, rather help them by giving advice and coming up with a solid financial and college plan.
Help your child find ways to make money. There are tons of ways to make extra money, and helping your children find ways to do so can help them pay for college and their living expenses.
Inform your children about affordable alternatives. For example, your child may only think they should go to an expensive private university, but it’s important for you to inform them of more affordable alternatives, such as going to community college or a state university.
Help your child apply for scholarships. There are numerous scholarships that your child may qualify for. Some may require them to write essays, whereas others are based on high school grades. Most take very little effort and are given away by the college itself, which makes it a no brainer to apply for them!
Help your child in other ways. For some reason, there is this myth out there that helping your child go to college means you need to pay for everything. Instead of paying for their tuition, textbooks, food, dorm, car, and everything else, set limits. You might help by giving them emotional support, letting them stay in your home while they are in college, helping them find ways to save money for college, helping them cut their college expenses, and more.
So, should parents pay for college? And, do parents have to pay for college?
Back to the questions that began this blog post, I believe that parents should only fund their child’s college education if the parent is on track for retirement.
This is because there are multiple ways to pay for college (paying for it with cash, student loans, grants, scholarships, etc.), but there is only one way to fund your retirement.
Remember, you cannot take out a loan for your retirement!
Due to this, you should not wreck your retirement plans to help your children through college. You should analyze your financial situation and your track for retirement to see if helping your children through college is possible. If it’s not possible, be realistic with yourself and your child. And, as you’ve seen in this post, you can help them in many other ways.
What do you think? Should parents pay for college? What do you think of college loans for parents?