One thing that I find rather troubling is this persistent idea that parents must pay for their kid’s college education. Recently Nicole Seghetti, a contributing writer on "The Motley Fool", penned an article called "5 Simple Steps for Funding Your Kid’s College". Her list was these items:
- Develop your goal
- Understand your options
- Star saving early
- Stay on track
- Increase contributions
Again, why this focus on the parents paying or otherwise contributing at all to the kid’s post-secondary education? My parents didn’t contribute much to my education. All they provided was a roof over my head while I was in community college and between semesters at a 4-year institution. Everything else was loans, grants and scholarships.
Add to this the fact that studies have shown that students who pay for their education actually do better, and the question still remains: why this implied obligation that parents pay for their kid’s college education?
Here are my 5 steps for funding your kid’s college education:
- Teach them early how to save. Note that this requires you have an understanding of what saving is and a good grasp on financial management concepts.
- When legally able, push your kid into getting a job. Tell them as well that they need to keep working while in school.
- Set up a savings account and plan with them as to how much of their paycheck they will put away in the bank to save up for school. To help build their desire to save, you could even provide a deal where you match a portion or all of what they deposit to the account. Also emphasize that they need to squirrel away some of their paychecks while in school into this account as well to build up savings for later semesters.
- Periodically check-in to ensure they are sticking with their savings plan. Since minors cannot have a bank account solely in their own name, this shouldn’t require anything more than a balance and transaction check. Provide a penalty for withdrawals from the account as well.
- Help the student research financial aid options, such as grants, scholarships and loans to help them carry their savings farther.
All of this is with the aim of teaching your children personal financial responsibility instead of you paying for their college for them. If they save up for it themselves and pay for it, they are more likely to take their education more seriously, study something that truly interests them, and come out more successful in the end.
In short, we need to stop advocating this implicit obligation by parents to pay for their kids to go to college and instead teach them how to do it themselves.