As a child you knew that after Independence Day school was going to come faster than you wished.  As a parent, you are probably ecstatic for your kids to get back into a full routine.  Back to school season makes for a great time to talk about ways in which you can help save for your child’s education.  With college educational costs soaring and tutoring in high school becoming more prevalent, we have to take advantage of everything we can.  In this two-part series I’ll discuss ways we can advantageously save for a child or grandchild’s education, but first I would like to offer some alternative thoughts on paying for a child’s college education.

The alternative is to simply not pay for your child’s education!  Unfortunately, most people haven’t saved enough for retirement.  Adding $50,000-$100,000 in debt in your later working years for your child could be a retirement killer.  I always tell people that your child can get a loan for their education, but you can’t get a loan for your retirement.  Worse than having your child living in your basement, is living in theirs during old age!

I wish we all had the magic that my wife’s parents had.  Her parents told her there is no choice about going to college, but she will pay for it herself.  They told her she could have all their money after they die.  It was an expectation that she would get a higher education, and she never for a second thought it was an option to not go.

That might be either too harsh or unachievable for some but there is something to be said when a child has to take ownership of their own education.  Stories of kids going just to go, then dropping out and leaving their parents saddled with debt are plentiful.  Knowing they’ll have to pay for it will certainly change their approach, and most people perform at a much higher level when there is skin in the game.

There’s one big problem to this, as I see it.  When I was in college, the debt I came out with was less than my starting salary.  If I went to my alma mater today, my school debt would be nearly three times my starting salary!  Due to the insanely high costs that come with college today, it is very important to run a cost and benefit analysis of receiving that education.  It’s starting to not make sense for some occupations, especially if the student doesn’t have a clear idea of how they’ll utilize it.

If your child doesn’t have a specialized degree they are interested in, then maybe vocational school or a job without a degree is the right path to start out after high school.  Too many kids today end up in professions that didn’t require the degree they earned, or worse, hate the job and wonder why they chose it.  Education is far too expensive now to make these errors.

It’s my opinion that the best way to approach the issue is to help, but not completely pay for your child’s secondary education.  Communicate early on the amount you are willing to put forth and set requirements they need to meet in order to receive assistance.  This will set clear expectations, give them skin in the game, and they are far more likely to focus and work towards a goal they are passionate about.

Another option is to surprise them half way through their college years or after they receive their degree, that you are reimbursing some or all of their student loans.  That way they went to school for the right reasons and put the work in thinking it was all on them.

I understand this is a tough subject and there are more nuances to every situation.  My kids haven’t reached high school, and perhaps my own thoughts will quickly change in the situation.  Next week we will dissect the main points of different ways to save for College and K-12 education.