When it comes to post-high school education, there’s one question that seems to trigger a heated debate more than others: who should pay for college — parents or students?
While several factors will go into how you decide to divvy up the costs, ultimately, it comes down to what works best for your family. Here are some things to think about.
The case for having students pay
If you plan on having your child pay for some of their college expenses, you might be wondering why this decision is valuable for them—especially if you have enough money to cover the entire cost.
According to an article in Money magazine, about half of students from families earning more than $106,000 a year contribute to their college costs with money earned from work or through loans. There is some evidence that requiring students to help pay for things like tuition, fees, and living expenses will keep them vested in college. It also helps set a good foundation for a lifetime of healthy financial habits.
In addition to the money lessons they will learn, having your child carry some (or all) of the burden can take the pressure off of you.
At some point, you will want to retire. If your plan is to pull money out of your retirement account or use savings that have been earmarked for retirement, you may need to work longer to make up for the money you've spent on tuition.
And if you’re part of the 55% of Americans who have less than $10,000 saved for retirement, you may find yourself unable to cover even a year’s worth of expenses after you plan to retire.
Remember, you can't borrow money for your retirement.
Keep in mind that your child will have many working years to pay back their loans, while your working years are limited. If they take out a reasonable loan amount, they should be able to repay their debt within 10-20 years.
Plus, knowing they're on the hook for some of their own college costs may motivate your child to apply for more scholarships.
The case for having parents pay
It’s easy to get caught up in the emotions of wanting to provide your child with the best possible college experience, especially if you spent years paying off your own student loans.
In fact, the fear of seeing your child up to their eyeballs in student loan debt might be one of the main reasons you want to foot the entire bill.
If you’ve set yourself up to be able to pay for the majority of your teen’s education, it’s your call on how much, if any, you want to require them to contribute.
But if you plan to pay for some of their education, make sure you’re clear on what you can afford, and stick with that number so you don't end up jeopardizing your own financial future.
If you’re still on the fence about committing to this significant financial responsibility, consider the following questions:
- Are you financially healthy? In other words, can you pay for college and not sacrifice your retirement?
- How many kids do you have? If you have more than one child, do you have the ability to fund multiple bills?
- Is your child ready? Do you feel they are prepared for the responsibility that comes with being a college student? If you have doubts, you may want to reconsider the amount you are willing to cover.
A hybrid approach
The good news is, deciding who should pay for college doesn't have to be an all-or-nothing decision. There are ways to share the financial burden without feeling like you have to choose between your retirement and your child's future.
When trying to figure out how much your child should contribute, some experts recommend limiting their total borrowing (all four years) to their expected first year's salary after college graduation.
The bottom line is this: what’s right for one family may be very different for another, so it's important to do your research and run the numbers carefully. And if you’re not sure where to start, try using our NitroScore calculator.