Why Saving for My Kids’ College Education Is Not My Priority

by Alexa Mason · 24 comments

College tuition has steadily been increasing over the past several decades. In the last five years alone, it has skyrocketed by 28.9 percent.

While the four-year cost for an in-state university was around $42,000 in 2021, the price tag is projected to be around $350,000 in 18 years – which is just after the time my two kids will be college-aged.

As I take a deeper look into my financial plan, I’m torn. Should I be diligently saving for their education, or should I be investing my extra money into my own retirement account?

There Are No Loans for Retirement

I’m well aware (hopefully, you are, too) that there are no loans for retirement. But as someone who is very much anti-debt, the fact that my kids might have to take out several hundred thousand dollars worth of loans to get a degree is pretty mind numbing.

As a parent, the last thing you want is to send your children out into the world on the wrong foot. The reality, though, is that there are student loans available for college while there are no loans available for retirement. Compared with your child having to carry the burden of financially supporting you, them carrying a financial burden for their own education is much easier for them to mentally handle.

In my opinion, your priority should always be to save enough for your own retirement before stashing away money for your children’s college education.

Alternative Ways to Pay for School

Student loans are not a necessity. There are countless people who have worked their way through college while never taking on debt.

While this is usually the exception rather than the rule, it can be done. Here’s how:

Scholarships: By getting good grades in high school, students have a better chance of qualifying for college scholarships. There are thousands of scholarships available – and while filling them out can be time-consuming – the rewards are worth it.

Work study programs: Work study programs can help students pay for tuition, room, board, and other college costs. What makes work study programs so great is that they don’t affect financial aid eligibility.

Part-time jobs: While working and going to school might mean slightly lower grades and a longer time to graduate, the pros can far outweigh the cons – especially if the majority of the income is put toward tuition. Having to work for money also gives your kids a chance to understand the effort it takes to make a dollar and the value of money and hard work. If this teaches them to be more disciplined with spending, then their paycheck is worth far more than the dollars shown on the pay stub.

Community college: Community colleges can be a cost-effective way for students to get their first two years of schooling. It’ll also give the student more time to figure out exactly which field of studies to pursue.

In-state college: It costs more than triple to go to a private college. According to The College Board, the average cost of in-state tuition in 2021-2022 was $10,338, whereas private college was a whopping $38,185.

To Pay or Not to Pay?

I’d really hate for my kids to graduate with a ton of student debt. At the same time, I want my kids to learn the value of money and hard work. I believe that having to pay part of their way through school could teach them that. Not to mention, I also want to ensure I have enough saved up for my retirement.

In an ideal world, I’d love to pay the majority of the bill while guiding my kids to pay off the rest. Until then, I’ll take it day by day and do the best I can to save for both my retirement and their education.

How do you feel about saving for your kids’ college education? Is it a priority?

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{ read the comments below or add one }

  • Steveark says:

    We were very fortunate, all three of our millennial kids got free rides in spite of our millionaire status at the time. Back then state U cost about $13,500 a year. The same college is $30,000 a year now says a friend whose kid is starting this fall. That’s crazy inflation. And full free rides were easy to get for our kids, not now. That’s also changed. I think you are doing the smart thing.

    • David @ MoneyNing.com says:

      My oldest is six years away. I hope inflation doesn’t take the $30,000 and turn that into a $50,000 expense.

      It’s going to be an interesting seven to eight years of my life financially as we navigate having to put two kids through college. On the bright side, the day my youngest graduate will feel like me getting a huge raise!

  • Arminius Aurelius says:

    I attended the University of Miami 1961 – 1965 . In 1963 they raised the tuition from $ 900.00 a year to $ 1000.00 a year , Now the tuition cost per year is $ 57,194.00 . That does not include room and board which is an additional $ 16,910,00 . [ nor books , etc. ] According to USInflationcalculator.com , we have had 907 % inflation [ since 1965 ] , therefore which would equal $ 10,075.00 in tuition . Kids are being Ripped Off . Slavery was outlawed in the U.S. in 1865 but now we are ” indentured servants ” for the next 25 – 30 years + Arminius Aurelius

  • Brian says:

    I think you should have the ability to do both. I do value my own retirement over funding college for my children, but would not want my 3 kids to have huge debt hanging over their heads when they are just starting out. Depending on their career choice and ROI on their degree without help, they may find themselves deep in debt they can never recover from. Educating them as early as you can is so important.

    • David @ MoneyNing.com says:

      You nailed a very important point Brian. Teaching them early on about the financial consequences of spending decisions is so important. If they can learn how to manage their finances, it may be worth even more than the degree!

  • Emily says:

    We’ve made saving for our daughter’s education a priority. I’m not sure when we’ll think we have enough for her saved yet, but I’m thinking that once we think we have what we need in there we’ll move on.

    • David @ MoneyNing.com says:

      Good for you Emily. But make sure you take care of your retirement as well. If anything, there are yearly contribution limits to 401ks and IRAs so you are losing some benefit for every year that you don’t contribute.

  • Ellie says:

    My parents were extremely responsible with money and saving and taught their kids to be similarly responsible. Always pay credit cards in full, don’t spend what you don’t have, etc.

    They were able to pay for my very expensive university (about 200k all in) and send me into the world debt free. Not needing to work during the school year (I did work some part time jobs but just for extra spending money not necessities) allowed me to do well in school which got me great (and well paying) internships in the summers. Good grades and great internships (and a fantastic career center that comes with an pricey college) led to a full time job right out of college. I am under 30, make a 6 figure salary and bought a house a few years ago. This would have been much harder with 200k worth of debt hanging over me. It gives you freedom. You can take more risks with your career.

    Saving for college is a sacrifice, but it is a gift you give your kids that will make them more successful adults. To the commenters saying kids won’t appreciate the value of a dollar if things are handed to them, I say that you had 18 years to teach them that.

    I plan on doing the same for my kids – a full ride wherever they want to go provided they pursue a field of study with a good ROI (engineering, business, medicine, etc). And if they want to be a teacher or a major in theater or something, an in-state public school. Either way they will graduate with a clean slate. The rest will be up to them.

  • SG says:

    Over 10 years ago I got accepted in a co-op engineering program in Canada. That meant that after the first semester you alternate between working in the engineering field and taking courses. My parents paid for my first semester of school and dorm while my first co-op placement and a scholarship paid for my second and so on.

    I never asked my parents to pay for my education but they always asked if I needed money and were always ready to help me pay for school. I chose to pay on my own and through co-op placements, being frugal and scholarships, I graduated with $15k in debt. I paid the loan off in 10 months after graduation thanks to finding a full time job quickly and living with my parents.

    My wife was in a similar situation in college and her parents paid for only one of her semester when she didn’t have enough money for the entire semester’s tuition.

    I wouldn’t pay for my kids’ entire education but I would start saving up money in an RESP (529 account in the US I believe) as soon as they are born. My goal is to put aside small amounts that will not have a huge impact on my retirement and let the investments grow over 18 years. I think it will help them if they are in a pinch for money. As you mentioned, there are no loans for retirement and I don’t plan on working my entire life.

  • fredjohnson says:

    Max out retirement accounts, emergency savings account, have credit cards paid and THEN put some cash into a 529 Plan for their college. Also, I’m not sure where your getting your $38k cost today vs $300k cost in 18 yrs. If I use $38k as a base and increase it annually by 10%(which is 3 times the rate of inflation) I get $211,000 and not $300k. College costs are going up only 3.9% this year on average. If I remember, tuition increases have been around 4% annually for the last 25 years or so. So………your $300k sounds way too high. Using 4% increases, it’s only $80,000 and not $300,000.

    • Santana says:

      That’s exactly what I thought. $300k is definitely too high. The U.S. government would probably step in before that even happens since at the end of the day they are the ones guaranteeing those student loans.

  • Wendy says:

    I have mixed feelings on this. My parents made it clear to me that they expected me to go to school, and since they couldn’t help, I’d have to pay for it myself. They also -strongly- encourage me to go to a private religious school, not one of the most expensive, but not one of the cheapest, either. In any case I’d’ve had to live away from home as they lived in a very small community with the closest college of any kind over an hour’s drive away.

    I took a year off before college and worked 3 jobs to save up money, got odd bits of scholarships, Pell Grant, loans, worked all through school. Got sick one semester and lost one or two grants/loans and had to basically redo that year, since I couldn’t afford school without them. Learned about roommates who welsh on you… ended up with a masters in a science field and $30,000 in debt. Fell in love and went overseas where he lived.

    After my dad left when I was 9, and my mom remarried, and later died, everything was left to her 2nd husband (as I believe is normal – there wasn’t much, anyway). After 8 years fighting cancer, my dad died broke. Should I then think my parents didn’t do their job right?

    The real problem I see now, 20 some odd years later, is that I became accustomed to working crap jobs, and grabbing the first job I found, because I always desperately needed money for rent and food. And I continued doing that, up to now. And although it’s not exactly a hard habit to break, I haven’t followed any kind of career path that allows a future employer to see me as a valuable employee.

    And now I see my brothers kids being raised completely different. Not only do they live at home and have their school completely paid (although they do work – a little – after school), they even have new cars, with all gas and insurance paid. My parents answer to “Can I have a car?” was always “sure, anytime you can afford it,” with the result I’ve never owned a car in my life. I think my brother wants his kids not to go through the hardships we went through, but I’m not sure if he hasn’t swung too far the other way

    On the other hand, I wasn’t raised to see money as the be all and end all. We travel abroad once or twice a year, we are careful but not extremely careful with our money when at home, own our flat and half of another (his parents legacy), have investment and retirement accounts. I feel blessed, if I may say that, and wouldn’t trade my life for the world. So… parents, if you can’t or won’t pay for your kids college, it’s not the end of life as we (or they) know it. I’d say it really does young people no harm to work through these problems themselves. Give them good advice about careers they might consider, and encourage them to take their lives into their own hands and think carefully about what they want out of life. It’s not all about the money…

  • Alexis Senger says:

    I graduated in 1990. My parents didn’t believe in providing funds for college. I worked and ultimately got a scholarship that paid for tuition and many expenses. However, college costs more now and I would like my daughter to not have to worry about costs like I did. I thought about costs/budgeting all day long. It’s a matter of degree – you want your children to grow professionally during college. Many internships are unpaid – those are often good jobs for a resume. Professional parents (with degrees) want their children to have a good start in life – leaving it up to the kids with loans – I see it all the time. BTW, community college (high school with cigarettes) is not the same as four year.


    When I went to college (late 1960s & then in mid 1980s), the financial aid forms always expected the parents to contribute more of their assets than from the students. So encourage your kids to save money in their name, not yours… Nothing says that you can’t make a gift of a few hundred dollars a year to their funds, during their middle & high school years…

  • AS says:

    I teach my 7 year old daughter how to save and spend money with her allowance and her involvement with the Young Americans Bank which has numerous programs. But let’s be honest, you’re not “teaching” your kid how to manage money by not helping them with college (assuming you are a professional/middle class family – if you are poor, granted that’s another matter). Blowing off college plans/expenses is a feel good thing we tell ourselves so we don’t feel bad about ourselves. We all are capable of doing more than one thing at once – e.g., saving for retirement and college. The power of compound growth will help you more than you think – but one has to think about it when you’re young and when the kids are very young. But these two decisions will guide every other decision you make. Every day. If my daughter had to work through school (like I did) or had tremendous debt, I personally would not feel that I had accomplished what I had hoped to as a parent. Her job is to learn and to get into a good university, my job is to let her know that money won’t be the last thing she thinks about as she goes to sleep in college (as it was for me). She can learn about money but managing extras but not decisions than will change the very course of her life.

  • Clementine Isabella says:

    My husband and I make about a million per year and had plenty saved for each kid to attend college and have everything their. Not paying for your kids education may tell your kids you don’t value it, I would happily put their education before my retirement,

    My kids all have triple majors and multiple degrees or just one (PhD), I want to teach my kids to help others so they can volunteer instead of getting jobs and I don’t want them to have sleepless nights. And I want the best universities in the World for them.

    My kids got offered full rides to Ivy’s for academic/music/sports scholarships but we did not take it because it should benefit someone else.

  • Arminius Aurelius says:

    My last year at the University of Miami 1964 – 1965 , the tuition was $ 1000.00 a year [ not counting room , food and books .] Now 58 years later the tuition is over $ 53,000.00 a year. According to the USInflationcalcukator.com , $ 1000.00 should now be $ 9406.00 , that is 840 % inflation . The colleges / universities are ripping our kids off. Slavery was outlawed in 1865 but now our young have become indentured servants , a new form of slavery . It will take them 15 to 20 years to pay it off . [ plus interest ]

  • Aldo says:

    You are right. Your own retirement is more important than paying for your kid’s tuition. They can manage that on their own.

    • David @ MoneyNing.com says:

      I say most people with decent jobs should just spend less and try to do both! But that’s just me…

  • Michelle says:

    Love this! I definitely do not think a child’s college education needs to be saved for over retirement. Like you said, you can take out student loans, but there are no loans for retirement. There are plenty of ways to attend college for an affordable price too!

    • David @ MoneyNing.com says:

      I actually love the community college idea, but it does take a very disciplined young adult to be able to accomplish it.

      On the other hand, maybe by taking this sink or swim attitude, you are giving the kids an opportunity to learn to sink or swim too!

  • RL says:

    I think that retirement is more important than kids’ college. I was lucky enough to get a full-tuition scholarship to college, yet still had to take out several tens of thousands in loans for living arrangements. Having to budget, think about money/value, and all the other bits of financial maturity that come from grown-up concerns helped me plan for my future.

    On the other side, I’ve seen my friends and/or their younger relations who had everything handed to them fail to achieve financial maturity because they never had to think about how their rent/food/tuition bills were being paid. In some cases, these coddled folks made poor decisions later in life and/or never really got their careers off the ground. My hypothesis is that these issues could have been avoided if they had learned the value of money earlier in life.

    • David @ MoneyNing.com says:

      That’s true RL, but I wonder if using student loans instead of the bank of mom and dad to pay for everything would have made a difference in how they view money.

      I know people who got out of school with tons of debt, and it’s not until much later in life (usually when they start seeing others buy homes they couldn’t afford) that they realize how ridiculous their spending was in school.

      I believe the key is to teach kids about the value of money and how it affects their future freedom. At the very least, they won’t be blaming anyone else but themselves if they don’t watch after their spending.

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