Who’s Paying For College? Part Two: The Case for Paying for Your Child’s College Costs

Paying for College

Parents, no doubt that if you had Bill Gates’s money you wouldn’t think twice about paying for your child’s college costs. You might not even mind if your child announces that she wants to double major in philosophy and the history of dance. If you aren’t one of the roughly 1,800 billionaires in the world, however, paying for your child’s college could be difficult. If you read the previous article in this series, we gave you three major reasons not to foot the considerable bill for your child’s higher education, including things like not draining your retirement fund, not taking on a large amount of debt, and teaching your child financial responsibility. Are there reasons why you should potentially pay for your child’s college? Of course there are! Let’s look at them now:

Paying for College Encourages Your Child to Go to College

Let’s face it, your child doesn’t want to be on the hook for $24,000 – $47,800 a year any more than you do! If your child is faced with such a big bill, even with the help of student loans, it can be extremely intimidating, especially for someone who has only ever made $11.50 an hour as a cashier. Faced with such a big financial burden, your child may decide against going to college at all, figuring that he could do better by jumping right into the workforce. That would probably be a big mistake! Projections from the U.S. Department of Labor show that the average four-year college graduate can expect to earn roughly $4,500 a month, while someone with only a high school diploma will only an enjoy an average monthly paycheck of $2,700. Over a 40-year working career, that difference adds up to over $880,000!

You Can Protect Your Child from Handicapping Student Debt

Unless your child is one of the lucky few who receives a full athletic or educational scholarship, she will almost certainly have to take out student loans to cover the cost of college if you don’t step in. While paying for college can help teach your child about financial responsibility, this “financial lesson” could also turn into a lead weight that drags her down after college. The Institute for College Access & Success found that almost 70 percent of college graduates walk away with student debt along with their diplomas, with an average debt of $28,950 per borrower. According to MarketWatch, this high level of debt “may be preventing Americans from making the kinds of big purchases that drive economic growth, like house and cars, and reaching other milestones, such as having the ability to save for retirement or move out of mom and dad’s basement.” You may think encouraging your child to pay for college is a good lesson in responsibility…until she ends up back on your doorstep after graduation!

College Debt Could Affect Your Child’s Employment Choices

Student loan payments often come due within six months of when your child graduates college. This puts a lot of pressure on your child to find a job quickly. In this type of environment, your child may take the first offer that comes through rather than aiming for the job (and the salary) that he really wants. Your child’s first job can be critically important, as it puts him on the path of a career and sets the baseline of his salary. So often, promotions or new job salaries are negotiated as a percentage of a person’s current salary, so if your child starts out at a low base salary, he may never be able to catch up to his peers who had the breathing room to hold out longer and find a higher paying position and/or a job that speaks to their passion!

If this article has convinced you that you absolutely must pay for your child’s college costs no matter what (even if you can’t afford it), don’t start liquidating your retirement account just yet! There is a middle ground between refusing to pay a dime for your child’s college costs and selling your home to make sure your child graduates debt-free. Check out the last article in our series to find out why compromising on college costs may be the smartest path for your family. We also encourage you to read all about saving for college in our Investment and Saving article archive.

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