Gah. I'm almost 35, and I've still not hit the job market - still trying to finish my PhD. Hooray grad school. And I have loans (though not as bad as some I know). Saving for retirement? Hah!!! At least boyfriend has an actual job with actual benefits. Still - every time I see an article like this,it twists that knife a tiny bit more - YOU SHOULD BE SAVING ALREADY, MS FROG. I know, I know...but it's hard when you've made under the federal poverty wage for pretty much your entire adult life...

I think it's lovely that parents save for their child's college education, but there's something to be said for earning your own way through college. Everyone that I've ever known whose parents paid for college fooled around and really didn't take their education seriously. Every single person that I know who paid their own way, did it quickly and VERY seriously - and then learned good financial management to pay back the school loans in a timely way. In that regard they learned to take care of themselves financially, and that has helped them in the long run, saving for a house, et cetera. I think people should be saving for retirement first, then helping the kids if they can afford to do so. I don't think it ever hurt any kid to understand the value of money by working AND going to school.

@Gracegottcha: I couldn't agree more. While I don't necessarily agree with always putting kids completely on their own, sometimes splitting loans makes it easier on both as well.

@Gracegottcha:

Everyone that I've ever known whose parents paid for college fooled around and really didn't take their education seriously. Every single person that I know who paid their own way, did it quickly and VERY seriously - and then learned good financial management to pay back the school loans in a timely way.

While I don't disagree that earning your own way through college is respectable, this is fallacious argument against children paying for their children's college. I know people who worked their asses off that much more, because it was their parents money, and they respected the fact that their parents worked for that money. But I will not claim this anecdotal evidence is worth representing what other people SHOULD do.

@Gracegottcha: I agree with half-sies. I had to pay for my whole education, and it meant missing out on ALOT of what makes college fun. Did I value my education more? Absolutely, and I worked hard, and I'm working super hard now to repay all the loans I had to take out when hours at my jobs (yes, plural) got cut. It would have been nice if it had been a LITTLE bit easier. Having my mom's income count against me on my FAFSA while she said she "couldn't afford" to help made it harder than it needed to be.

But at the same time I have students now who don't know the first thing about financial planning or even how their tuition gets paid. They just know the bills are covered, not what their parents are going through to make sure those bills are paid. That seems beyond sad to me.

@lpranal: wow, coffee hasn't kicked in yet, it's not a valid argument against PARENTS paying for their children's college...

@lpranal: Agreed. And there are also plenty of examples of people who took loans for college and did NOT have proper money management skills.

Adversity does not necessarily equal maturity.

@Gracegottcha:

Yup, I am still paying off my student loans...my dad paid for my rent in college, I picked up the tab for tuition, books, gas, car, insurance, etc.

What happens then is that you get people like me. I have a good job and I'm saving for retirement, but paying back my student loans currently takes about 33% of my take-home pay, and those payments will continue until I'm 62 unless I win the lottery or something. (Though granted, I expect that over time, that hard amount of $$ every month will become a smaller and smaller percentage of my income.)

The end result? I stay afloat okay, and we can probably even dredge up a way to have kids, but they are guaranteed to be completely on their own for college because mom and dad will still be paying off their own educations. There must be a better way...

(And before everyone jumps on the "you shouldn't have gone to blah blah bandwagon, I went to public school as an in-state student, and worked 20 - 35 hours per week all the way through plus full time in the summers. It didn't really make much of a difference.)

I would think that students who pay their own way would tend to gravitate toward state universities - which are perfectly good places to get an education - more than those hoity-toity $30,000/semester private schools. Even with financial aid, who can afford that? Who thinks they can make that money back? What does that money pay for, other than the tonier name on the diploma?

My personal case - GI Bill after 15 years in the Army. GPA was 3.8, and I graduated Magna Cum Laude.

The kid? Daddy paid (sucker). Kid got straight C's.

So I'd have to go with ScubaSteve on this one. Halfsies.

@subtlefrog: Whoa, I'm 28 and am working on my Ph.D. I thought I was old. Thanks!

My college savings plan for my kids is easy to sum up: ROTC!

They'll be 'paying off' their college loans by dodging bullets in some 3rd world hellhole, I'll be relaxing in retirement in my 3rd condo, probably in Kona.

@Gracegottcha:

Unfortunately I disagree. I had roommates in college that used their parents money wisely and used their spare time to either work or help others in the community.

Paying your own way:

This is what I did back in the early 90's. This was extremely difficult financially. It was also difficult to dedicate the necessary time to school when I was so busy working. My grades suffered.

A few years later college tuition was no longer regulated by the state. The price skyrocketed. I would not have been able to put myself through school today like I did in the early 90's.

My wife and I are hoping to do what we can to save for our kids college. The rate of debt by those finishing college is getting higher and higher. I don't see my kids getting a free ride but hopefully we can help.

I am saddened by the cost of college these days. It makes it very difficult for many to get a good education. The fees are quite unreasonable and I believe the book purchasing requirements should be outlawed. How often do the laws of physics change after all?

@MostlyHarmless: I fall in with Gracegottcha's stereotype. Dad paid for school, I didn't take it seriously and dropped out. I went back, paid for it myself and graduated with honors.

Since the cost of college has increased way above inflation, I will be pushing my kids to go to state schools anyway. My buddy's school loans amount to essentially a second mortgage. ROTC all the way, kids!

@Gracegottcha:
I dunno, I went to an expensive private university, and a lot of my friends had well-off parents that paid their full expenses. Now in our late 20's, all of them are successful in their career paths and seem responsible financially speaking. Myself, I took out the max subsidized gov't loans (which I'm still paying off), got some financial aid from school, and my parents paid the remainder. It was a big expense for them, but I don't think they regret it.
Also, I think the opposite argument can be made; working full time during college can cause you to miss out on a lot of experiences. I don't think there is necessarily a wrong or right way to approach the issue, it really depends on the family.

The major private university give financial aid to people based on their parents' income and savings. If you have money in a 529, that university is going to expect it to go into their pockets, independent of your income at that point in time. If it is in a 401k, it is yours to keep. So, for anybody who is middle class and can't actually pay for the full tuition at a top end private university (with a decent financial aid program), the choice is clear: don't save for educational expenses, or you are throwing your money away.

Yes I have student loans, but they always max those out first before giving grants. Your child will always have the same amount of student loans, unless you can pay for the entire cost of education!

@Gracegottcha: Everyone always says that, but my parents paid/are paying my way and I couldn't be more thankful. I'm going into a profession that is not going to make much money, but I need an advanced degree for it. It would take over a decade for me to pay it off with the high interest that would be attached and a reasonable enough payment for me to continue to pay my regular bills. I can graduate with a clean slate.

I use the extra time not to slack off, but to take more classes a semester. I'm able to slow down and take extra classes on subjects that I want to know about but aren't necessary for my degree. Since I am going into a research field the more information I can gather the better.

I understand that this doesn't work for everyone. A lot of my classmates certainly took it for granted, but those kids don't last long. If I'm bullshitting my grades will reflect it. I'll either get kicked out by the school or pulled out by my parents.

@sleze69: Well I have two degrees, my parents paid for both, and I passed with honors in both. And the Masters i actually fast tracked in 3 semesters.

Anecdotes are just that: anecdotes. Multiple of anecdote does not equate empirical evidence.

that part at the end is a big reason to save for retirement before you save for your kid's college: 529 plans are (at least partially) factored into the means assessment for financial aid - retirement accounts are not.

however, you can often make a qualified withdrawal from a retirement account & avoid the 10% withdrawal penalty to pay for college. just keep in mind that you'll have to declare that withdrawal as income & report it on your tax return.

if you're going to save for the kid's college, i suggest bonds, just make sure to do it right (here's a hint: STOP putting the bonds in the kid's name - at most, list them as a POD). here's a helpful guide: [www.finaid.org]

the great thing about bonds is that you can "forget" to report them & if you don't need them, you can use them to supplement your retirement (though the interest is taxed as income).

@Etoiles: i love that bandwagon, though most of the people ON the bandwagon tend to be internet strangers, i've never had someone who actually knows me and my circumstances question my decisions.

i do wish i had been able to find a job earlier and started paying on some of the loans while in grace and interest is subsidized.

@savvy999: Bashing military service is always a classy way to go... the Montgomery GI Bill is actually a great way to pay for college, and can be obtained with three or four years worth of a simple desk job if you know how to pick the right service/job.

@HurtsSoGood: like everything in life, it all depends on the quality of the organization and institution. you can have a pretty expensive school that's completely useless or a pretty cheap school that's completely useless.

if i was given the chance to redo the past 7 years, i'd still go to the private undergrad (as I felt like I was a person there with problems that needed to be addressed but also ideas to contribute) and ditch the public grad school (as I ended up doing most of the school's work myself, seriously i'd tell the people in fin aid how to do their jobs, email the registrar on a regular basis bc they screwed up my transcript, and NOBODY did a sentence beyond their job description). And I paid MORE for the public grad school, about 60K for 3 years, versus the 40K for 4 years of undergrad.

I tell people NOT to go to my grad school. And when they do and call me ranting about their increased blood pressure because they decided to go there, I bite my tongue when all I really want to do is say "I TOLD YOU SO!"

@savvy999: there are days I wish I went that route....seriously

College financial aid looks at the parents' income, regardless of whether the parents are in the 'my kid will pay his own way' camp. So, if you have a good income but refuse to give Junior a dime toward his college expenses, Junior will qualify for zero in college loans. That's my understanding anyway.

@subtlefrog: the reason I didn't get a PhD was I calculated how old I would be when I finally finished, did a post doc, and got licensed. Really didn't feel like entering the adult world at 35. Maybe I'll go back later (after I pay off undergrad and my master's degree a little bit)

@MostlyHarmless: but then what fun would the interwebs be if we didn't have anecdote wars!

I wish it would have taken 3 semesters to do my masters, but there's no way in heck to cram 18 courses + one year of clinicals into that short amount of time.

@Gracegottcha: I disagree, more or less because your anecdotes are, like MostlyHarmless said, just anecdotes. Hardly evidence.

It comes down to one thing: work ethic. No amount of money is going to keep a person with bad work ethic from failing. Likewise, having to pay your way through college doesn't immediately make you smarter or better or more mature - it's your work ethic that matters, not who pays for college.

@HurtsSoGood: It kind of depends. In Virginia, our state universities may be cheaper, but they can be extremely hard to get into. Public doesn't mean "easier" and private doesn't mean "harder."

@ztoop: The PTA in my town had a financial adviser come in and talk about savings. Just like the article he said you can get a loan for school but not retirement.

As far as financial aid he said that schools think that students can spend 50% of the money in their name each year and parents can spent 6%. He then pointed out that savings in grandparents names are not factored in.

@sponica (now with MORE caffeine): Yeah, for my CS Masters, I only had to do 10. I did 11, but the norm by far is to do 9 in 3 semesters. I just squeezed in some summer research, and an extra course in there somewhere.

And just in time too, because I graduated just at the cusp of the recession. A semester late, and I would have been screwed.

@MostlyHarmless: you would have been me! which is why I'm on the computer far more than I should be. Can't wait til HR gets my work situation straightened out and I can actually START working.

@smartmuffin: Bashing? In my best Sgt Hulka voice:

Lighten up, Francis.

@Pinget: yes, but they use AGI. retirement savings are generally pre-tax & not calculated into income (there are exceptions for some types of accounts, like roth IRAs), so if you can 'hide' some of this income, it will help your kids get aid.

@Pinget: yeah. unless fin aid files a boatload of paperwork with Dept of Ed to have junior considered an independent student, but basically if you're working on your first degree and are under age 25, Dept of Ed considers you a dependent student

@Pinget:
Yep even if the parents are divorced and one parent refuses to pay towards college, their income/assests are still factored into the ability to pay calculations. I had a couple of friends who got screwed over by that.

@cc82: I was able to drop my dad's income from the calculations. i just didn't fill it out on the FASFA. I could factor it in if I wanted to but I didn't. My aid went waaaay up once the aid was based on my mom's income alone.

@sponica (now with MORE caffeine): No doubt, can really work out for some people. I have a sibling that went to an Ivy League, my family in no way was able to afford it, ROTC was the ticket for him.

Now that was in the 80s, when the world was relatively calm. These days, one has a pretty good chance of getting deployed, well, to a 3rd world hellhole. Repeatedly. The decision to enlist is a lot different now... but it's still an option.

@cc82: One of my old friends, one of the smartest people I have ever known, was accepted to a very expensive, very prestigious university. She wanted to be a doctor, and this was one of the best places to go for the medical field. Her parents didn't pay a dime, and after the scholarships dried up her second year, she had to work for a whole year in order to go back to college. And she couldn't even get any loans because her parents made enough money to disqualify her from loans

@mac-phisto: My parents bought bonds for that exact reason, and I was listed as the co-owner so it worked out fine for paying for college. The bit I now I have leftover is sitting there gaining interest and is my "absolute emergency" fund.

@Pinget: I always loved how the FAFSA thought my parents could drop about 33% of their income towards my education. That's a bit difficult when you have two other kids and a mortgage.

@savvy999: depends on the service branch. my aunts step sister in law did AF ROTC, and sits @ a computer in the pentagon, designing robots to blow up other robots or something like that. AF paid for 2 or 3 degrees, not going to waste that investment on the front lines.

@ztoop: my dad's 401K was held against me though in my fin aid application. maybe not on the FASFA but on the CSS/Profile.

@pecan 3.14159265: Word. @Gracegottcha: As long as we're going anecdotal: I never saw any evidence of work ethic-method of college tuition payment correlation among college friends. Everyone I knew was paying for their education a different way and everyone had a different work ethic. What you'd like to see is that people learn the value of a dollar, blah blah blah by paying for their own education. When it comes to something intangible but expensive like an education I don't think you'll find that correlation. I borrowed heavily for my degree so I wouldn't have to work 40 hours a week while trying to learn Greek, and miss all the fun of college. I'm paying for it now, when I have a salary (from a job I got because of my BA) and no other commitments like keeping up my grades and learning how to shotgun beers.

If you just give your 16-year-old a car, instead of him saving up for a beater by flipping burgers all summer, then maybe he'll learn the value of working and financial responsibility. Teenagers and cars, yes. Teenagers and SLACs, no.

My parents told me-- "Son, you have $$$ amount of money for all 4 years (yes, 4, not 5 or 6) and whatever is left over after you are done, you CAN KEEP for whatever you want."

That led me to pick an in-state school for the lower fees and cheaper travel during holidays.

And man, I was the most frugal student too.

After 4 years and a quality degree from a state school, I had a nice boatload of cash to get my life started with.

(Yes, I was lucky to start with, but I think my parents threw out the carrot that mattered... not just an open check book for beer and pizza, semester after semester).

@Etoiles: I'm in the same place, but you really do have to remember that your earnings and your spouse's will go up over time and it gets easier. I just want to say, "Chin up." @sponica (now with MORE caffeine): I can't stand the people on that bandwagon. Education can be so many things, and shopping around was not on my mind when picking colleges. Whenever I get static I want to scream "I wanted to go exactly where I went, it was perfect for me, and it cost a bundle. So what?!"

@Gracegottcha: Encouraging kids to find their own food and shelter once they are able to walk also builds character.

@HurtsSoGood: Going to easy school and getting good grades is hardly reason for self-congratulation, especially since grades are completely irrelevant except in applying for a competitive graduate schools.

@morlo: Uphill, both ways, in winter. With no shoes. In the woods, foraging for berries. No shelter except the carcass of a Tauntaun.

@Gracegottcha: I completely agree with Grace... I could only go to college because I had a full tuition academic scholarship to a private college and I took out loans for housing. I worked hard and also had the time of my life. Yes, I had to work two jobs - one waitressing, one tutoring - but I still had time to have fun and study, and even got to take a semester abroad. My husband paid his way through state school and worked construction, and he also did well. We're both still paying off our loans 10 years later but they're manageable, and we were fortunate to get good jobs and our degrees have definitely been an asset.

I want to be there to help my children when they go to college but I think the value of having them support themselves and work hard to get there is considerable. And anecdotally - it was the kids at my college with their parents' credit cards that had the hardest time staying focused on their studies.