I don’t know when it happened, but apparently all parents are expected to pay for their child’s college education these days. Every financial services commercial on television assumes that this is my plan, and they all ask me the same question: how am I going to pay for it? Not “are you going to do it?’ but rather “how?” am I going to do it.
I want to be honest that I don’t know that I agree with this. This can be attributed to my natural contrarian streak, but I do feel that it is necessary that we examine personal finance mythology to see what works.
My oldest daughter is in private school, and it costs $115 per month to pay her tuition and fees. This is discounted by 50% because my wife is a teacher at the school. Her high school tuition will be approximately $10,000 per year (not discount eligible), more than my college education cost. So for two children, by the time they are both through high school, I will have spent approximately $115,000.
One saving grace is that we will save approximately $5,000 per year in childcare costs once my second (youngest) daughter goes to kindergarten in three years. Still, this leaves me with a giant mountain to climb, but one that is attainable.
Once our student loans are paid off next year, it will be time to enact a plan to save for both daughters’ high school tuition. Using our combined income of ~$85,000 per year (yes, we are better off than many, but live frugally and below our means), which will allow for almost $2,000 per month in free money after all bills are paid and supplies are purchased, we can implement a regular monthly savings plan.
Using an automatic savings transfer from your main account to a separate online bank is a great way to accomplish this. I recommend SmartyPig, which allows .
So let’s look at my goal of saving for each daughter’s high school by the time they reach 9th grade.
Oldest Daughter, age 6.5. For my oldest daughter, we will allow 8 years to reach the goal, putting her at 14 years of age. Remember, because we have already paid for her schooling thus far, we will need $16,000 to get us through 8th grade. It will take $40,000 to get through high school, putting us at $56,000 total. But, because we are already paying her tuition as we go, we only need to save $40,000.
8 years X 12 months = 96 months. $40,000 divided by 96 months is $416 per month – HOLY SHIT!
This basically means I need to save about $800 per month for 8 years just for them to go to high school. That will be almost half of our available monthly retirement savings. But, when our second (youngest) daughter starts kindergarten, she will come out of her child care, giving us an extra $300 per month. That means we will only need to dent our retirment savings by $500 per month for eight years.
Now this leaves us at our discussion point: I don’t feel like I was raised to covet private school. I went to public school my entire life. But the public schools in the city in which we live are no good, and we like the tight-knit community of our private school.
Saving for their college will definitely be a burden, assuming there are no job losses or financial catastrophes. And yes, I feel that this burden will mean that I will likely not be able to contribute even a penny to their college education. If they want $40,000 for high school, they better do a damn good job and get a college scholarship.
So what do you think? Should parents be expected to pay for college? Should the children of those who funded their own education do the same thing? Should we use the fruits of our hard work to make it easier on the generations after us?
These are tough financial questions that make personal finance so fun, yet so challenging.