To share a bit of my own story, I came from an upper-middle class family. I was lucky in that my parents were happy to pay for college, but we collectively limited my choices to schools offering at least partial scholarships. And I worked part-time throughout. When I graduated in the heat of the last recession, jobs were hard to come by. Many of my friends looked to graduate school for an added credential and a way to avoid unemployment or underemployment, as did I. My parents again offered financial help, but being a little older and wiser I was confident enough to decline it. I wanted to feel all the costs of delaying employment; I figured that was the only way to be sure that I was making the RIGHT choice and not just the convenient choice. And it changes your outlook completely. I knew I wanted to apply to law school, but assuming all the costs made me research schools and expected employment prospects much more diligently. I studied harder for the entrance exams, not only to get into a better school but also to qualify for financial aid at a better school. And when I received multiple acceptances, the scholarship packages as well as the employment prospects were heavy influencers. Now I’m a young, glad-to-be-employed lawyer with manageable student debts. And I still think that bearing all the costs made my decision process much, much better at every step.

If my own children think that college will be a benefit for their careers, I would plan on paying the costs of a public university for them. Anything beyond that I believe they should pay for themselves. The lessons are invaluable.

As a fairly recent graduate of a very expensive private university and graduate school, I am in full support of that statement. One thing that most parents overlook in planning for their children education is the fact that there are tons of options out there to finance the school than ever before: school choices, scholarships, grants, loans, part-time jobs. Yes, the student might end up being heavily indebted in the end, but the purpose of the schooling was to produce income, that should be enough to cover both Interest and Principal payments.
Personally, I received no money for education from my parents (short of some incidentals), but rather picked the school where I had better chances to get a scholarship and fought for it, worked over 30 hours a week at multiple part-time jobs, borrowed (I did not qualify for any government help, so I actually had to charge some of my tuition on the credit cards and revolve the balance for awhile) and chose the major that will allow me to make enough income to eventually repay the debt.

Setting money aside for a child removes all the incentives for the child to succeed both academically and financially. It also teaches the child absolutely nothing about the value of the dollar.

On the flip side, there are plenty government benefit programs available for parents saving for education (like 529 in US or RESP in Canada). While it is good to save as much on taxes as possible, this savings should be used by the child as a loan from parents, not free cash.

Speaking as a former University Financial Aid Advisor and Academic Advisor, funding your own college tuition now is much, much more difficult now. I can’t even begin to tell you how many kids (young adults) can not afford to attend college. Let’s say that your child is a good student and even gets a small academic scholarship, a state grant and a few other misc. grants or free sources of financing for filling out the FAFSA (Financial aid form for colleges). If you make an annual income that is considered low enough, your child can get some extra support. However, if your household makes more than $50,000 (approx.) and you will have one child in college, the only kind of aid that they may be eligible for is school loans (example: Stafford Loans). The government basis the students financial need on your (the parents) salary. Students, unless they have been out of school for more than one year, living away from home, will be considered a dependant. So the parents have to co-sign for the student’s loan at least for the first year anyway or the student will have to go to outside sources to try and borrow money which is difficult.

IN ADDITION, at least in Ohio, the most amount of money that an entering freshman can borrow, doesn’t cover the average college’s first year’s tuition (even at state schools). (students can borrow stafford loans at 7,500 first year, 8,500 as a sophomore and 10,500 as a junior and senior) And if a student needs to work full time and can’t go to college full time, the amount they are eligible to borrow is even less.

Ohio is supposed to be around average, if not a little below average when it comes to colleges and universities’ tuition. Here is an example, one year at OSU (main campus) tuition is $8,676 …room and board is an additional $7,581, if you are trying to go to OSU and are not a resident of Ohio, that jumps to $21,000. The average cost of an Ohio private college/university tuition is around $19,000 but some private colleges in Ohio are upwards of $30,000 a year. Most affordable colleges, at least in Ohio, are community colleges and only offer a two-year degree.

And many colleges are not set up to necessarily work around the working student’s schedule. My nephew just went to college and received no (financial) support from his parents and it took him five years to get through an associate’s degree because he had to work full-time and schedule classes around his work schedule and finance it himself.

Personally, some of the greatest skills that I learned and that helped me in life (activities, internships, committees, etc.) I learned because I actually lived on campus. But not everyone needs to live on campus. Keep in mind though, percentage wise, college freshman have a much higher chance of completing their first year if they live on campus.

As someone mentioned before, if you are concerned with your child learning the value of money, have them pay you back some of it while in college and then the rest when they get out and start working in the “real world”.

Oh, by the way, I haven’t even mentioned expenses such as additional living expenses, lab fees, books, computer software, etc.

I don’t know about you, but if you can afford to put away a little through the years…do it. It won’t spoil your children to help give them an opportunity to succeed in life by helping them with their higher education…the spoiling comes in by giving in to children’s every whim all the time. (Wii, dirt bikes, nintendo, etc.) It may not be appreciated now, but 1 toy and a gift of a cheap savings bond for birthday’s and Christmas’ will go further to helping them with their future.

Here is a Web site that talks about the student aid forms : http://www.fafsa.ed.gov/

A couple of savings options to look into:
• 529 plans
• Coverdell Education Savings Account
P.S. “Experts say that someone born in 2003 and entering a public college or university in 2021 can expect to shell out $95,000 for an undergraduate degree. A private college may run upwards of $240,000.”

I read this at http://www.ehow.com/how_109539_save-childs-college.html

The deal is simple. They get a 4 year scholarship from my wife and I – we’ll figure out a way to pay for it they just have to get into the school. They’re on their own for any years after that.

If they get any grants, scholarships, or other funds that mean we don’t have to pay for it – they get a graduation gift of half what we didn’t have to pay. So if they get $10k in grants, we’ll give them $5k out of the 529 when they graduate (or use that to pay for graduate school if they want to avoid that 10% penalty)

Of course, I’m not about to tell them they’re getting that money until after they graduate, and as likely as not it will be set up in some sort of trust for them to pull interest but not invade the principle until they retire, just because I know how disasterous large monetary windfalls can be for kids when you try to teach them the value of a dollar. But I also know how nice it is to have an extra $200 a month when you’re just out of college.

I too managed with scholarships, grants, loans, and part-time jobs. I didn’t get all A’s but graduated in the top 15% of my class — and no employer EVER asked me what my college GPA was. Unless you are headed for graduate school, grades are not a big factor in future success. In fact, I’d recommend taking a bigger class load, settle for B’s and C’s, and graduate in 3 years.

I remember many of my classmates whose parents funded their college years fully. Most took 5 or even 6 years to graduate, and took their studies far less seriously than I did.

I don’t have kids so I can’t comment on what I would do, but my college experience was great and my maturity and degree of self-reliance would not have been there if mommy and daddy had paid for everything.

Her parents paid for every dime. EVERYTHING. She worked because she was bored, not because she needed to. She still managed to save up a few thousand dollars in the six months after I proposed to her (being a volunteer and working a low-paying campus job). She’s a frugal QUEEN.

I also agree with the point that by paying for your kids’ college, you enable them to take better advantage of compound interest. At 20, $40000 means a lot more money for them than it is for you at 50.

Also, Amberlynn’s point about retirement is a good one. There’s a lot of talk here about how compound returns favor the young — isn’t putting your kids in a position to start investing young, rather than dumping money into loan repayment, a better lesson to teach? Assuming you’re in a financial position to get them through school with low or no debt, of course.

That said, we just paid off my husband’s student loans last year (at age 31 for him) and mine are still there (age 27). Not an easy way to start out life. (If we could only be putting that money toward our retirement!) And the trend for the cost of college is toward ever higher costs, with higher interest rates on student loans, less federal student aid available (meaning much less scholarship money), and less overall state funding to schools themselves (less options for particular programs).

We’ve waffled on the idea of helping our son or not – but the benefits of compound interest for the young, along with the tax benefits of a 529 plan are just too good too ignore. Best of all, should one of us decide to go back to school, we can use the money for ourselves! It’s totally flexible WHO the money goes to. It *could* end up as money to fund education for fun during our retirement – should our little one not want to go to college.

So, for us, whether or not we’ll pay for any of our kids college is still undecided – but saving for education is certain. Our current income is very meager – so we started the college fund with only $100, and are steadfastly adding $25/month – the minimum allowed in the 529 plan we chose. For our son, at the very least we’ll teach him about wise money management, and encourage him to develop whatever skills he can to be competitive for scholarships.

See my posts on our choices:
http://yellowsgreen.blogspot.com/2006/05/529-plans.html
http://yellowsgreen.blogspot.com/2006/06/ocsp-529-plan.html

[...] This young woman is making money from her hobby. She’s also helping her parents to know whether they should provide financial support for college. (My guess: seeing how industrious this girl is, they’ll be happy to help with what they can.) [...]

I’m actually pretty grateful it worked out that way, simply because it forced me to do common-sense things like using a budget that has helped me teach me the value of saving and financial planning. I’m able to make monthly loan payments (more than the minimum typically) as well as stay cash-flow positive at all times, paying credit cards off every month, etc.

I’m married now, and kids are still a-ways off, but I don’t think we’ll sock away too much money on our kids’ education. My wife and I live in Indiana, so our kids have two really great state schools in Purdue and Indiana to attend (though we’d obviously prefer if they attended Purdue).

What we had talked about doing was take any gifts around the time of the kids’ birth and invest that into a interest-yielding account instead of buying brand-new baby clothes or insanely expensive bassinets that they’ll use for just a couple of months anyway. Will that be enough to pay for four years at Purdue? Probably not, but it might pay for one year of it.

That’s still an appreciable debt, one that may be a huge burden on a recent grad trying to start a new life and accrue wealth, but it’s a far cry from $100k or more in debt.

Leaving college with almost zero debt was a huge, huge thing for me. I can’t imagine anyone wanting to saddle their kids with five figures of debt just as they’re entering the work world, especially since undergraduate degrees mean a lot less on the job market. Lots of debt may also impact their ability to go to grad school or a professional school, which these days can be one of the best roads to a stable, fulfilling career.

That said, I was lucky enough to live in a state with an excellent public university and to make it through pretty much on my own based on merit based scholarships, and I think I’m better off for it….

On the other hand, my wife’s family didn’t pay a dime. Taking on close to $700/mo. of student loan payments was a serious burder for her/us in those early post-college years.

Now, as a parent myself, I’m more inclined to follow my parents’ lead than hers. However, I’ve chosen to do so in an account that I have some degree of control over (529).

One caveat though, if it ever comes down to funding college or our retirement plans, I will choose retirement every time. There are alternatives for education funding. There’s no such thing as financial aid for retirement.

Also, keep in mind that non-loan financial aid is likely much harder to come by than when you were in school. If your household income is above about $50K, the gov’t thinks you should be able to pull your own weight (meaning forget about grants and subsidized loans).

So in short, whether or not you should finance your childs education really depends on what kind of student they are and what you expect out of them. Or something like that.

So, I didn’t have a college fund, per se– but the money was there when and if I needed it. And if I didn’t go to college, it was there for a house, or a car, or whatever I would need to get myself started on my own.

Can you afford to set aside a couple thousand dollars a year for your kids for a few years? It will make an enormous difference if you do this now. The money will have a chance to grow. The sooner you start the better.

If you really want to teach your kids a lesson about the value of money, have them reimburse your for whatever your cost-basis is once they come of age. (In other words, if you invest $10,000 and it grows to $50,000, give them $5 for every dollar they pay you.) Or something.

But please consider the advantages of starting to save now. Compound returns favor the young.

Something else: Who says you have to tell your kids that you’re saving for them? Just do it. If they deserve the money when they’re older, give it to them. If not, don’t.

(I think it’s reasonable to plan for a paid-for in-state education at a reasonable college–if Jr. just has to go to an out-of-state college, that can be on their dime.)

I have no problem with parents paying for kids schooling, it just shouldn’t be at the expense of their own financial security.