Why Paying for My Daughter’s College Is My Ultimate Life Goal

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college savings accountMy biggest financial goal is not to retire with a healthy savings account and a stable 401(k). I’m not worried about getting a six-figure salary or owning multiple properties. The way I measure financial success is: Can I pay for whatever college my daughter chooses to attend?

I was born in 1985, near the very beginning of Generation Y. While there are plenty of stereotypes floating around about me and my peers, I think every single Millennial will agree with one lesson ingrained in my mind: The only way to succeed in life is to graduate from college.

We are the generation of college debt. My generation is comfortable taking out loans as big as mortgages just to get a degree. We’re the boomerang kids, whose loan repayment schedules send them back to their parents’ basements when the entry-level salary just can’t keep up.

We’ve spent a lot of time stressing over college and money … and I, for one, can’t seem to stop.

Planning Ahead and Doing the Math

In a couple of weeks, my daughter will have her fifth birthday. She’ll get plenty of toys from family and friends, and she’ll get checks from a select few grandparents and great-aunts. I’m planning to put those checks straight in her college savings account. It might not be the most exciting use for the cash, but she’s still too young to miss it.

RELATED: How This Woman Paid $90,000 of Debt in 3 Years

When my daughter was a year old, I started a 529 and another, smaller college savings account. I’m in an extremely fortunate situation in that I receive child support payments from my daughter’s biological father, and I don’t need those payments to help pay my monthly bills. I decided that money would be best spent preparing for future educational expenses. Thus, $400 a month automatically goes into college savings.

It sounds reasonable. If I keep it going every month until her high school graduation, we’ll have roughly $86,000 saved for college. That’s an impressive sum. Until you realize that many private schools already cost more than $40,000 a year before room and board. College costs have been growing at more than 6% a year. The College Plan Savings Network estimates that, even with modest 5% growth, a private school education for four years will run upwards of $300,000 by the time my daughter heads off to college.

I’m a freelance writer, and we would need to hold back an additional $1,300 or more each month to have that amount saved before college starts. And this is just for one child, mind you. 

RELATED: How to Do Taxes If You’re Paying Tuition

  • Laura

    For what it’s worth, my parents were financially unable to really contribute to my college education.They took out loans for about 10% of tuition, I got scholarships for about 20% of tuition, and I took out loans for the balance. I went to the school of my choice (actually, I started at NYU, which is one of the most expensive in the country; I later transferred due to a shift in majors but ended up at an Ivy that wasn’t much cheaper), since my parents encouraged me to follow my dreams and that if I did that, I’d make the money back later. Sure enough, I graduated six years ago, made it my priority to pay off my students loans, and I’ve now done that and am in the process of buying a house (since I’ve saved more besides). Don’t fall into the trap that student loans are bad; on the contrary, I think they keep recent grads focused on the reality that they need to get and keep a job to pay the bills, rather than give up when it gets tough and go crying to Mommy and Daddy for help.

  • KarenNYC

    Not the best idea in terms of financial planning.  You can’t take a loan to support the retirement years!

    • Sassykatg

      I was just going to write the same thing.  I think it’s admirable for the OP to want to save as much for her daughter’s college as possible, however, will her daughter help her mother when she can’t afford to support herself during retirement?  To take that a step further, will her daughter support her mother in the manner in which the mom is used to?  It’s really ok to take care of your retirement FIRST, then save for the kids’ college.  And it’s most important to save for emergencies like hospital bills vs. putting them on credit cards.  I think the OP needs a better financial planner…  Try researching Dave Ramsey – he teaches people how to pay off debt, save for emergencies, build a retirement account and THEN save for the kids’ college all by using a simple budget & paying cash. 

      • mizzk2u

        I completely agree with you and KarenNYC.  There are not retirement loans and enough people struggling in their retirement years as it is trying to make ends meet.  Not that anyone should look at educational loans as their only means to paying for college but at least they are available as a choice.  Please save for your retirement it is best for you and your daughter down the road.

      • Erica Roth

        I think if she raises her child well and guides her into a worthwhile education, she will be supported her whole life.

        My mom is supporting me through college and will likely help while I’m in medical school and in return I plan on sharing whatever percentage of my 100k-300k salary will ensure that she lives a good life without hesitating or even thinking about it. She raised me to be able to see the fact that we all need help at some point in her lives and she’s always sacrificed to support me unconditionally. I don’t see how any loving child wouldn’t do anything in their power to support a good parent.

  • JoMo

    I agree with KarenNYC, this is not exactly the best way to plan financially… As harsh as it sounds, your priority should be yourself first and your child second… There are many reasons for this. The first that comes to mind is… what if (shock) your daughter doesn’t even want to attend college? What if (shock again) you don’t have enough saved up to retire? How does your approach address either of those scenarios?… Secondly, the lessons you could teach your daughter by weighing the pros/cons of debt vs education would be much more profound than simply saying, “Go where ever you’d like to go for college!!” I am sure you would explain how fortunate she is, but honestly, what 18 year old kid will truly grasp what you’ve given them? And worst yet, what if she goes on to become a liberal arts major, practices her “passion” after graduation? You’ll have spend a pretty penny and the ROI on your investment (i.e. her education) would be dismal… Just a thought…

    • Sassykatg

      Exactly.

    • Liberal Arts Major

       For the record, I am one of the “Liberal Arts” who went on to follow her “passion”. And I have been gainfully employed in my field since I was 18 and been on my own since 20. I was realistic about my job field and determined to succeed. Granted, however, I studied communications, instead of women’s studies or another very narrow major.

    • JES

      My daughter is a junior in high school, so this topic hits a nerve. We swerved off the college savings road in 2008, so we have about 2 years worth of college savings. (if she goes away). We are considering many avenues.  A great school in our community where she can stay home and get her degree. Community College for the basic classes, then go away to finish her degree, Taking some time off before she goes to school, because she doesn’t know what she wants to study.  We have told her how much we have and then she can decide to take out reasonable loans if she decides to go away for 4 years. My parents paid for my college and this inability to easily pay for her college is difficult to accept, but after my health started to take a hit because of my stress level, I had to accept that the above alternatives are not the worst to consider. And the kicker is…she accepts these are her choices and doesn’t feel deprived at all.  

  • cultura

    It’s noble of you to want to give your kid the same opportunity you got, but college does NOT lead right to success anymore. I grew up in a small town, and many of my classmates who skipped college ended up being quite successful in more blue-collar-ish professions.
    I went to an overpriced liberal arts school, and while I am very grateful, took it seriously and then plunged into a career afterwards, many many of my fellow grads ended up doing little.  
    The education bubble is pretty well-established… this post sounds like it was written in 1985, not by someone born then.

  • LL

    As a parent, I can totally understand her need to want to give her children the best opportunities (I have two small children myself) but I think only focusing on a education plan for your kids, and not planning for your retirement is VERY risky . Elder care is a HUGE issue right now as more people are living longer. When your retirement funds can not cover costs, it falls to children to help out financially and that is a responsibility that really just should not be on their shoulders as often they are working, have families of their own, and are trying to get their own kids prepared for the world. Topple that with the emotional stress of having an ailing parent and the stress of that being put on your own children is a very heavy burden.  

    Being responsible with your savings now can mean a world of difference in the long run and often can be easily done. The sooner you start putting money away for retirement (even in small amounts) the more time it has to accrue and compound upon itself. Find yourself a good financial adviser to take care of yourself so your kids won’t have to someday. 

  • Lindsey Pecot

    Getting a good education and ultimately a degree is obviously the desired outcome of attending college.  HOWEVER, there is so much more to be learned, socially and financially by letting your child begin to support themselves through these years. I came from a poor family and was fortunate enough to qualify for a state program based on high school GPA, curriculum and ACT score. With a few scholarships, my tuition, books, supplies and fees were covered.  I juggled two jobs while going to school full time (state programs only paid for 4 yrs) to pay my rent and utilities.  I learned time and money management, and I feel that those skills are invaluable today.Now, at 30, my husband and I do have small savings accounts for our two boys (1 and 4), but our plan to assist with college, if necessary is to have our house paid off while our oldest is in high school. Our retirement funds are right where they need to be.  If the boys need to borrow money for college, they will do so by getting student loans, which will only help then build credit.  If they keep their grades up and graduate, we will be in a good financial situation to help them pay their loans.  Sure its nice to be able to provide for your kids, but isn’t it better to teach them how to provide for themselves?

    • Lalani A

      I totally agree. While I stress about not saving nearly enough for kids college, my husband and I maximize our retirement- if not for future old aga at least for present tax benefits. After researching for years we concluded that we will have two Roth IRA accounts(in our names) dedicated to kids’ college funds. We could always take out the earnings tax-free if used for educational purposes. It will not be much. But at least a good start for the first year in college.

  • http://sjmarathon2012.tumblr.com/ WhitneyF

    I was lucky to never have any student loans and am grateful for my parents’ support.  However, I think she’s forgetting a crucial factor here- her daughter’s future earning power. 

    She may only be 5 now, but making sure she excels in math and the sciences is a great way to provide her with a solid background for a lucrative career. 

    Student loans aren’t crippling if you are working as a successful engineer, doctor, or banker. The problem with student loans is when students do not spend their time in college developing the skills needed to be a working professional.

  • Usiyire

    I really do admire your dedication to your daughter.  As many have already written, this may not be sound financial planning, but to each her own right?  But I do want to challenge the concept you presented in your article.  Such as college being the single crowning achieve in a young adult and the rest of their lives seems to pivot on if they are able to go to the college of their dreams.  The matter of fact is, it doesn’t.  You can go to Ivy League or city college, you career trajectory is not dependent on it.  Your very first job may look at where you have gone for school and GPA but after that, no one really cares.  As she ages, the less and less bragging right she has to the college she attended.  I have routinely met individuals with successful careers that have gone to less glamorous schools.  More so than worrying about where she can go to school, I am sure you’ll get many times the return of investment when you raised her to be a self motivated individual that can succeed in any environment, even without the ivy league diploma to back her up.  Please do more research in this area before you devote 18 years of your life trying to save up for something that may not be the most important thing for your daughter.

  • AtlGator

    I appreciate that you don’t want your daughter to worry about financing a college education, but a much better lesson would be to teach HER the importance of saving, budgeting and working hard for your goals. My parents couldn’t pay for me to go to college, so I took out loans and am now working to pay back all my debts. I am GLAD that they didn’t pay my bill, because I learned quite a bit about finance and life from that rough experience. What I wish my parents had done instead of paying my way is teach me how to save, budget, plan and spend wisely. Yes, a college degree is very important for many careers, but just giving your daughter money to attend college will be causing her to miss out on some very important lessons, and I bet she will be right here on this website trying to learn those lessons well after you’ve paid her way.

  • laurapaola

    While wanting to pay for your daughters way through college is admirable, you need to take care of yourself!

    I have friends who went to the same college as I did and have 3 times the amount of school debt because they took out private loans to finance extravagant lifestyles.  I also have friends whose education was entirely paid for by their parents and guess what, they are still taking money from their parents!

    In each situation I think the problem could have been solved by teaching financial responsibility.  I have a much longer credit history because of my school loans and the struggling through college-and-part-time-jobs period of my life gave me a crash course in financial management.  Something my own parents have had a hard time with.  

    I for one am happy to say that I have not had any financial help from my parents since college, I know that I can stand on my own two feet (even with all that student loan baggage).  Meanwhile I have a dear friend (same age) in graduate school that has her mother fill out her fafsa, do her taxes and pay her credit card bill.  While she takes out loans for graduate school.  I cant imagine that will end well for her.   

  • Elle

    Its interesting to see this post because I’ve often wondered how I would handle my own kids education.  Personally, I think I would give my kids no money for college, regardless of how much I’d saved.  I would have them figure out the cost of college, complete the fafsa, apply for scholarships, apply for loans and have them get a part time job.  Then at their graduation I would give them a lump sum to be used however they deemed necessary. 

    I would hope that after having to figure out their finances for 4 years entirely on their own they would understand how to manage their own money.  They would have an idea of what it means to work for something and have to struggle.  I am not saying that I wouldn’t help them in a sticky situation, as a parent I would help in emergency situations. I just cant see the benefit of them having their college entirely funded from the get-go.

  • Mclincoln1

    When my father passed away he left me enough money in a savings account to pay for two years at my local university if I lived at home.  So I lived at home, and spent all that money as well as all the money I made from my part time job on everything besides school…After 2 semesters, I was out of money, out of school because my grades were so bad, and owed $500 in credit card debt from my very first card.  I went to work for minimum wage for two months before I decided I never wanted to work for minimum wage again.  I went to a smaller, less expensive school (community college) and worked on campus everyday.  I took full-time work and went to school part time.  I gained career experience and paid for my education without taking out a single loan.  It may have taken me longer, but there is no way I would have ever applied myself as much using loans or money from my family.  Eight years after graduating from high school I finally got my bachelors degree.  That combined with two degrees earned at community college and eight years of work experience made it easy to move up quickly.  The traditional route would have seen me with one bachelors degree and four years of experience at the same point in time.

  • Krystal

    My mom couldn’t afford for me to go to college at an in-state or private college. I got scholarships and grants and took out loans for the rest. Because it was me paying for my own college education I didn’t feel that I had to pick whichever college was cheaper or my mom’s first choice and I don’t regrete having to take the loans to put myself through school. I choose an expensive liberal college but I have many friends from high school that went to state schools or community college and we make roughly the same amount in jobs. My expensive education didn’t automatically grant me a higher paying or better job. Paying for your daughter’s college education is very noble but only if you can afford it without putting your retirement and medical expenses at risk. Your daughter won’t hold it against you if you can’t pay for her education – if my mom had taken the risks you are to pay for my college education I would feel guilty about taking the money for college. Save what you can for her education but don’t neglect your other responsibilities such as medical bills and retirement savings in the process.

  • Junebug Ash

    I appreciate the desire to want to pay for her education.  I was an orphan and, therefore, was forced to take loans or not go at all.  However, my focus for my daughter is my financial freedom 1st, my retirement 2nd and then her education.  If I’m financially sound many institutes allow a monthly payment plan for the semester which lasts the first half of the semester.  With a combination of savings and being financially sound, I should still be able to pay for her education.  I would caution her to pick a reasonable school.  There is no reason she or I should suffer financially for many years just for a college which is overpriced when research is showing it doesn’t lead to making anymore money.  I’m hoping for a balance of dreams and practicality.   

  • Anon

    I had to take out loans and scholarships and work a nearly full time job. I graduated with respectable grades, two internships under my belt, the study abroad experience of a lifetime and the opportunity to network and travel to places I didn’t know existed. In addition, I knew how to budget, find an apartment, understand my lease and make cheap but healthy and delicious meals. My independence is worth far more to me than a completely funded education. I have always been a saver and, even when it was tough, I paid my rent and bills on time. I also developed a work history that gave me confidence and helped me understand the basics of the working world. 

    Give your kid that gift. Also, this is harsh but are you going to expect her to shoulder the burden of your care when you age? Her father’s care? Likely when she’s in the middle of raising her family? So much for choices-her career and her family will both have to absorb that responsibility. 

    You can pay for school with a reasonable amount of debt. Just do research.  By the way, sometimes, private schools give more in aid and sometimes state schools are better for certain career paths. 

  • Alexis Greenwood

    I am generally in agreement with others who have commented that “this might not be the wisest life goal”. Education is the most important thing we can give our children. I think many of us could agree on that point. But we live in a rapidly changing world; to assume that a US college education is going to be valuable in 15-20 years, regardless of the price tag, is a very unsafe assumption. Further, I cannot stress enough how important it is to take responsibility for oneself. The other comments have already said it, so I won’t go on about that. But long-term care and your retirement should terrify you a lot more than your child’s college education. If you pay for their college education and saddle them with debt when you’re in retirement, they’re going to be in thpretty much the same spot.

  • http://www.facebook.com/breakon1 Sharon Gilman

    Wow, for you to think that getting a college degree is the blueprint for success in the future is ancient thinking. You just admitted in one breath that we grew up in a generation where parents told us to be successful we had to go to college, but look around you!! There are millions of people who have degrees and no jobs! Including myself! Why not teach her about money? Teach her how to save, how to invest. Teach her something else BESIDES getting a job and earning a paycheck.

  • GenY

    I applaud the author for sharing her story candidly.  These types of contributions allow us to continue to support an honest conversation about money.  However, while I am not a parent myself, I am a college graduate and current graduate student.  My parents contributed to my college education, but there were definite limits to their assistance.  Their ability to be honest with me and help me devise a plan to afford my education allowed me to create real financial goals for myself in the long run.  I am only concerned that the author’s wish to allow her daughter to attend any university no matter the price tag will allow her daughter to live in a financial fantasy world.  As an adult, for instance, he should be aware of the kind of house she can afford to buy, not just the kind of house she wants.  This is a major life skill that I have seen many parents rob their kids of, unfortunately.  I hate to see one of my co-gen-Y-ers repeat the same mistake.

  • Catherine

    That’s an admirable goal. I was born in 1988 and this January I became a mother. My mom was a 16-year-old high school dropout, a single mother who went on to own her own business. Because of this I have always been acutely aware that education isn’t as much a measure of future success as is determination. Although I would love to be able to offer my daughter the opportunity to pursue education without worrying about going into debt, I don’t want to feed her the line that a college degree will always equal meaningful employment. Indeed I’ve seen many of my friends graduate only to end up working at pet stores and T Mobile kiosks. My daughter will not be a disappointment to me if she decides not to take the academic path.

    http://www.csmonitor.com/Business/2013/0128/Have-degree-driving-cab-Nearly-half-of-college-grads-are-overqualified

  • west_panther

    My parents did not have money for my education… and I knew that growing up. I worked my butt off getting straight A’s, participating in sports and student government– In return, I got a full ride to a great public university (graduated debt free). Although it is a great ambition to pay for your child’s education- as a child- I would rather be saddled with my own debt (education) than worry about taking care of my parents during retirement (which I will be doing). The best thing a parent can do is ensure that they take care of their futures first! Like another poster said- you can’t take out a loan for your retirement!

  • Gsimms22

    I have lots of friends that are successful business owners that never went to college.

    A college degree is not a guarantee of success.

    If you do go to college, you need to obtain a degree that will lead you to a employment that will allow you to repay the loans and have enough income for a decent life.

    Whichever path you choose, you must find a set of skills that other do not have, but are willing to pay you for.

    The more diversified the shill set, the more employable you are.

    If you choose to follow your dream, that’s fantastic, but realize life is not a dream, it is reality. Don’t cry when your degree in sociology will only earn you $30,000 a year and that won’t pay off your loan and support yourself.

    Be wise or be otherwise.

  • Guest

    I will always appreciate my parents (especially my mom) for helping me with college. She helped me the best she could and I left school with only 30k in debt. A relatively small sum compared to the 100k+ it would have cost for me to complete school. I’ve been out of college for 2 years now and will have paid all of my debt off in the coming months. 

    While I realize it is not what others would consider the “best” financial choice for some families, it worked for us and it was the best thing to do at the time. 

    If it wasn’t for my mom, I would not be making the salary I am now. College taught me to be financially savvy in a way my parents weren’t. I’ll be debt free in a couple months and will have enough to make a big down payment on a house or rental property. I feel that for my age, I’ve planned well for retirement thus far and have diverse investments (not retirement related). I am currently helping my mom with her bills and have already devoted funds for her retirement. 

    Now I realize all kids don’t go back to help out their parents but that’s always what I wanted to do. 

  • Leslie Gilbertson

    Excellent! My daughter has scholarships and grants to cover tuition fees at a very expensive school – so we just have to come up with the rest, mostly loans to get her thru. It can be done.

  • Jodi

    The several sweeping generalizations made in only the first two paragraphs were off-putting enough to keep me from continuing. 

  • Judy

    You’d be better off spending your time planting the message in your daughter’s head that cost is a factor when looking at schools and narrowing her search to schools you can reasonably afford.  Also, research shows that kids who have a personal investment in their education – either contributing from money earned before they go to college or during – are more committed to their studies.  You may remember feeling somewhat disappointed that you didn’t go to your first choice of schools, but the fact that you graduated with no debt and didn’t bankrupt your parents should more than make up for that momentary disappointment.

  • LindsayCross

    Hi all! I really do appreciate everyone’s advice. I’d like to just say, so that no one worries about me, while I did mean that a huge measure of financial success for me is about paying for my daughter’s college, I am not forgoing any and all retirement savings to do so.

    As I think all moms know, absolutely nothing about a household’s finances can be all or nothing. There’s too much going on. My husband and I have been contributing to 401k’s since our 20′s and have some small private investments as well. 

    I realize that if I can’t take care of myself in my later years, I won’t be able to do much to help my daughter. I don’t want to be in that position. 

  • J Runeson

    You are a wonderfully dedicated mom Lindsay, and I applaud your resolution to do this for your daughter. I also hope you’ve looked at keeping your family’s financial situation secure if something should happen to you or your spouse. There are some good articles at Lifewizewomen.com if you’d like some inspiration in this regard from some other mothers in your situation. Take care!

  • Grad

    Here’s another possibility (one that will hopefully still be available when your daughter is in high school). Besides making sure she gets an excellent education in math and science, find some resources to prepare her for the PSAT, which is usually taken in 10th grade. (This could mean as little as grabbing a couple Kaplan and Barron’s books or, probably by the time she is in high school, doing it all online!) If she scores highly enough to qualify as a National Merit Semifinalist (not even finalist or scholarship winner) many schools will offer full scholarship + stipend packages. AZ State and Marshall are two such schools (pretty decent state schools). Other schools might not give full rides but they will offer her a lot of money. The National Merit money itself is not much even if she did come out a scholarship winner, but it opens a LOT of doors to scholarships offered by good but not necessarily top tier colleges.

  • dijeremiad

    We look back at our struggles and hope to avoid them for our children. I wonder if our children will later have a primary goal of saving for their retirement so that they are not a financial burden for their children; because that is what we will be to them if we save first for their college and then for our own retirements.

  • RecentGrad

    My parents saved a bit more than tuition, room and board at our in-state university, plus some extra spending money for myself and for my two siblings. All of us ended up at private colleges where we received merit scholarships that brought the cost to about the same as in-state. While this took a lot of schools off the list (mostly ones that don’t provide merit aid, because we didn’t qualify for need-based aid), I went to a really excellent private school and graduated debt-free. The “dream school” is a frivolous concept, particularly if it’s possible to get an equally great education on another campus with a similar feel. Frankly, now that I’ve graduated, I’m hit less hard when I don’t get exactly what I want out of my career moves because I’ve learned there’s always another way to get where I want to be.