Why we aren’t saving for our children’s college educations

For a few years, I got to skip Dave Ramsey's Baby Step 5. Save for our children's college education? That was an easy one…since we didn't have children, that answer was NO!

But now we have two kids (soon to be three), which means our days of delaying that decision are over. And since our oldest child is ten, we've already missed out on a decade of compounding.

Most personal finance experts, including Dave Ramsey and Suze Orman, recommend saving for your children's college education only when your own financial house is in order. If you still have student loans, credit card debt, or anemic retirement savings, it's much better to get yourself out of that hole.

But we can't really use that argument against saving for our children's education, either. Our only debt is a reasonable mortgage that should be paid off in 12 years. And our retirement savings are good. We don't have tons of spare cash, but we could save something, but I am not sure I want to.

The Not-Gonna-Pay-It Argument

Do parents have the responsibility to pay for their child's education if they can?

I have asked myself that question many times. My husband and I have discussed our responsibility for our children's educational costs many times as well. But first, let's answer a few more questions.

1. How important is a college education?

Well, according to the Bureau of Labor Statistics's earnings and unemployment rates by educational attainment chart, a college education isimportant. There is an 8.3 percent unemployment rate for high school graduates compared to 4.5 percent of graduates with Bachelor's degrees. And, no surprise, a Bachelor's degree pays off in salary too ($1,066 in median weekly wages vs. $652 for high school graduates).

Still, I remain unconvinced that college is a necessity. But it could be my background. Although I love education, both my husband and I come from families that are largely made up of people who found jobs that didn't require degrees, or they own their own businesses. My husband and I did go to college, but we both started out in vocational/technical fields. To familiarize myself with what GRS has already been published on this subject, I read several articles on paying for college in the archives (along with all the comments). Readers are divided, it seems, between feeling that liberal arts degrees are an extravagance that some can't afford and feeling that the degree was their ticket to a job, not to mention the connections, critical-thinking, writing, and other skills that my husband and I did not receive in our very specific educational pursuits.

I would like to think it's possible to learn many of these things by being a life-long learner. I love teaching, so I am not saying that teachers have no value. However, could a voracious reader with an interest in learning and intense curiosity find ways to make up for a lack of a college education — at a much lower cost? Assuming a degree isn't required, of course…

2. Is college the right thing for my children?

My husband and I made the decision (this was an easy one) to place a value on education, but not a specific route. Because we don't want them to feel like they have to go to college, we want them to know their options. They know that we went to college, but they can look at relatives who didn't and still have managed to be successful. Owning their own business is one option. Getting into one of the trades is another. A two-year degree, or four-year degree, is certainly not off the table, either.

Whichever option they choose, we plan on supporting them in every non-financial way possible.

3. If the child pays for his own education, would he spend his own money more carefully than he would spend ours?

The answer to that question, for most students anyway, is probably yes. But I think that responsible students wouldn't waste their parents' money, either. Anecdotally, I have heard stories of kids who partied through college with their parents' money, and those who were responsible. I have heard of those who partied through college without their parents' money and those who worked a full-time job or two to make it through.

4. Our parents didn't pay for our college educations, and it worked out okay for us.

My husband and I both worked hard to get through school without the financial assistance of our parents. In some strange way, I know that was a character-building experience, and I want to pass that on to my children. However, college is much more expensive than it used to be. Do I really want to saddle my kids with astronomical student loan debt in the name of character-building?

Of course not. But I am hoping that we can give them high levels of support that will help them make the best possible decision.

How We Can Help Our Kids

Even though we won't be paying for our children's tuition, we can help in other ways.

• We will continue to strengthen our own financial position, which indirectly helps them.
• We will allow the child to live at home, rent-free, while they are going to college — if they want to…
• I would consider finding a full-time teaching position at a community college that would allow my children to attend for free.
• As an investment, we would consider buying a house in a college town where they attend. I know two parents who purchased rental property in college towns and rented it out to students. While I am not sure if these parents charged their children rent, we would allow our child to live rent-free in the house. It's another way we could help them…and hopefully, the other student rents' would cash-flow the property.
• Give them their inheritance early. My grandfather's belief was that his kids were much more likely to need their inheritance while they were raising their own families, instead of using it when he passed away, presumably at an old age. He started distributing his assets, just a little at a time, when my parents still had young children. My mom has done the same thing. And we plan to just keep the family thing rolling and periodically give our children — when they're adults, of course — smallish amounts of money to use as they please.

Since we're still getting to know our kids (and they're still learning English), our plan may need to change. But for now, we'll continue saving as much as we can, and talk to our kids about life after high school.