Should parents help pay for college?
For a lot of people who visit my college blog this is going to seem like a no brainer. There are, however, parents who are determined to foist the whole cost of college onto their kids.
I can certainly understand why a mom or dad, who makes little money, couldn’t help. But you can find this mentality even among affluent parents who can contribute to a child’s education.
Marketplace on American Public Radio ran a piece exploring this issue over the weekend, which included an interview with me. I’m pasting in part of the piece below:
Marketplace radio piece
Marketplace asked listeners to weigh in on whether or not parents should save for their kids’ college education. Here are some of the reasons people give for not saving.
My kids will value their education more if they pay for it.
Many parents who said this had to pay their own way through school. They believe they got more out of college because they had to work for it.
One parent told me about a professor she had in college. This professor claimed he could guess which students in his class were paying for college themselves—and which ones were there on Mom and Dad’s dime—based on their attendance and effort.
One problem with this rationale is that college is far more expensive today than it was when many parents were going to school. Kids who pay their own way are likely to take on some serious debt.
Lynn O’Shaughnessy, of The College Solution Blog, points out that financial aid awards are based on what parents earn. So even if you want your kid to go it alone, the people who dole out financial aid won’t see it that way. O’Shaughnessy suggests having your son or daughter cover part of the cost—maybe books and extra expenses—but not the whole bill.
My kid will get less financial aid.
This is one of the big financial aid myths out there. The federal formula most schools use to calculate aid ignores any education savings up to a certain level. For a 55-year-old parent, that amount is $60,200. That means anything you’ve saved up to $60,200 won’t count against you at all. (Retirement money doesn’t count either.)
But even you save more than that, don’t worry. Let’s say you manage to rack up $100,000 in savings by the time your child is ready to go to college. O’Shaughnessy says the total amount you would be expected to contribute is just $2,656 above what you would have owed if you had no savings. “So obviously someone who saved $100,000 is going to be so much better off than someone who didn’t save a penny,” she said.
Here’s where you can read the rest of the Marketplace piece on parents saving for college.