As tuition costs continue to rise, you as a parent will need to make tough decisions about whether or not you’re willing or able to pay for your child’s college education.
While paying for their college tuition may be a dream of yours — and one that can definitely benefit their future and set them on the right foot to being debt free — you want to make sure you’re not compromising your own financial life in order to fund their education.
If you’re thinking of funding your child’s college education, here are 3 important questions to ask.
How Much Will it Cost?
Tuition costs seem to be climbing higher than ever. If you intend to fully pay for your children’s college, it’s key to start calculating how much it will cost. Currently the average cost of tuition in 2014-2015 is $9,139 for in-state public schools, $22,958 for out-of-state public schools, and $31,231 for private schools.
Keep in mind that is just an average, so there are some higher options as well. Given that cost, you are looking at around $40,000 for a public school education this year. Think of how inflation will affect the cost of tuition in the years to come and think seriously if you can afford to put your children through college.
The best way is to start saving now through a 529 education savings plan and set automatic contributions.
Can You Afford to Do This?
As a parent, you may wish the best for your kids and want to ensure their future is bright, successful, and most of all, debt free. It’s a natural thing to want, but you also have to put your situation into perspective.
It’s crucial that you look at your current retirement savings and contributions and ensure that you are securing your own future, before theirs. Why? Because you have less working years left than your children do. While student loans are a drag, your children will have many years to pay them back. Not only that, but there are many repayment options like public loan forgiveness, refinancing and more to help them pay back their student loans.
Your children can borrow money for school, but you can’t borrow money for retirement. If you aren’t on track to meet your retirement goals, don’t push your retirement contributions to the wayside to fund your children’s college education.
If you can’t currently afford to pay for your children’s college, come up with a plan. Will your children be responsible for their own college education through student loans and a job? Will you pay a portion of it, and encourage them to apply for scholarships and work part-time? Or consider something like asking for a raise, selling your things, or picking up extra gigs to help fund their education.
The most important part is coming up with a plan and preparing for it whatever way you can. But make sure you are setting up yourself for financial success as well as your children.
What are the Details?
Unfortunately, there is no one-size-fits-all budget for college tuition. In order to effectively plan and prepare, you will need to consider a myriad of details, which will help inform your budget.
Consider the following:
- Will your children be attending public or private school?
- Will the school be in-state or out-of-state?
- Will your children live on campus or off?
- What are their funding options aside from your contributions? (scholarships, federal loans, private loans, grants, employment)
- Tuition costs seem to rise nearly every year, with the cost of inflation
- What major are your children pursuing? Are you willing to fund some majors and not others?
- Will you cover all extra costs like books, materials, tutoring, etc.?
Answering the above questions can help you get a better picture of how much you really need to save and can help determine your plan of action. My parents did not pay for my college tuition and I chose to get both an undergraduate and graduate degree. I took on a lot of student loan debt — which has been tough — but it’s also been a huge learning experience.
Whether you decide to pay for your children’s education or not is up to you. It’s a highly personal decision and one that’s often informed by your personal financial situation.
Whatever your choice is, don’t compromise your own financial situation to help theirs — and if you can’t support them financially through college, find other ways you can help. If you can afford to pay for your children’s education, ensure that they understand what you expect of them in return.
Do you plan on paying for your children’s college education? Or are you preparing for your own retirement?
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