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Our Children And College… The Pride And The Shame

In the past 6 months or so, it seems that I have had an inordinate amount of meetings with clients who are suffocating under staggering amounts of student loans taken out for their children. The conversations range from lowering the loan rates to alternative ways to fund the loans, to unfortunately, the parents postponing their plans for retirement to keep working to pay the loans. While I've help many parents divert their legal responsibility to these loans, we love our children and in the clouds of love, tend to make some mistakes we find have to be paid for... without much help from our kids. Not unlike taking out another mortgage just years before retiring, parents are finding themselves strapped with the obligation of paying for their kids' education while the kids take it so lightly they feel it's actually Mom and Dad's obligation, not theirs. The below article, in part, was written by me some time ago, and it seems it's time to bring it to light again. Mom and Dad, read it carefully- it could be the difference between retiring or working until the day you pass away.

Oh, those college years conjure up thoughts of parties, spring break, new relationships, learning to live on our own and oh yes: getting a good education! The experience to all of us varied, but the one thing in common was the experience of being away from Mom and Dad and being off on your own. For many, was the first time we were responsible for ourselves: being to class on time, doing our homework without anyone to remind us, and being responsible for our own actions? For most, it was a life-changing experience.

Since the economy in recent years has been less than helpful and parents are still sending kids to college (imagine that!), it seems that I have been speaking with more parents than usual calling and coming in to see me with regard to figuring out how to pay for their children's college experience. It is daunting, to say the least, and as a parent who went through it I can admit firsthand that it is nothing less than stressful and challenging. The four years seems like an eternity when you are writing out the checks, and it seems that there is one expense after another in addition to tuition and board. If we had no expenses up to their 18th year it would have been easy, but unfortunately, statistics show it takes approximately $250,000 to raise a child up to their 18th birthday. So much for cheap thrills!

Let's first talk about the PRIDE. We raise our children to be the best human beings they can be. We teach them, mentor them, and give it our all to create our model citizens. We encourage them to say please and thank you, and to open doors for those around us. Taxi driver, PTA mother or father, class parent, afterschool activities... you know the drill. Sometimes we are out of the house after dark, helping them to be all that they can be. Then comes time to start picking colleges, and most of our darlings have an idea what school they would like to go to. With community schools, state schools, out of state schools, Ivy League schools not to mention occupation and vocation schools, the choice is huge. What I have come to find is that those little darlings usually think big, and want to go to the big name schools. Mind you this is just a general statement, not about your beloveds, so don't call me up and holler at me!

So, you research, visit and whittle down the wish list, and fill out the forms. You apply for grants, aid, FAFSA, SAR and CSS Profile (if you understand the preceding alphabet soup, you're right in the thick of it now) and eventually the calculations are done to determine your personal cost of attendance. You seek out scholarships, state and perhaps military aid programs, and Dad even looks into the tax aspects of what he can deduct. After all of the above, you finally reach the bottom line: the Expected Family Contribution, or the EFC. This is what you are responsible to pay out of pocket for your child to become all that they can be to go forth and conquer the future. Now, we get to the SHAME part: it's a shame that as a parent, you end up postponing your retirement, remortgaging your house and put your life on hold financially for many years past your expectations. You say it's our parental obligation. Maybe, I say.

In an ideal world, you would have started saving from the day they were born, and you would have had more than enough to send them to school. Unfortunately, the world is less than perfect, and life gets in the way of saving on a regular basis. When it comes time to apply for the loans, are they in your name, or your child's? Who is taking the responsibility for the repayment? Most importantly, does your child recognize the ramifications of being on the hook for tens or hundreds of thousand of dollars, and that it may take 10-20 years to pay off the loans? While that "cool school" sounds great, do they understand it will take them many more years to pay for the experience than the experience itself? Most importantly, is the child going to college for his or her education, or for the experience? If it's the latter, send them on a fun vacation and save yourselves a lot of money.

I am not against education: by now you know I am all for it. But, just going to college does not guarantee financial success later in life. Many folks I know are very financially secure with a limited formal education. All that I suggest is that you talk with your child and find out why they want to further their education, and to what end. You both may find a local or vocation school, or an early job may be the best education of all-and you won't have to pay for it for 20 years or so... remember, it's called college planning. Don't forget to plan who's going to pay for their experience.

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