Why I’ll Be Giving My Kids $20K for Their College Education

by Ashley Eneriz · 14 comments

Alexa wrote a great article last week, on Why Saving for My Kids’ College Education Is Not My Priority, and I thought she made excellent points. It’s my belief that as a whole, parents are bringing up their children to be self-entitled and have everything come easy to them.

I have many friends whose parents paid an outrageous amount of money for a private four-year university, only to have those same kids needing their parents’ financial help after they graduate, then buy houses and have children.

Even though I don’t want to just hand my child $100,000 and tell them to get a good education, I do want to make saving for their future college fund a priority. Here’s why I plan on giving my children $20,000 to put towards their college education.

Working My Way Through College

My parents never saved any money for my college. I don’t think for one second I was entitled to money by any means. Everything I wanted in life, I had to work for, and that was the same for my education too. I applied for several scholarships, jobs, and work-study jobs. Scholarships are very competitive, and when you have an average family income, or an average set of skills and intelligence, many donors don’t want to give you money. I was, however, blessed to win $1,500 in scholarship money from three different scholarship programs.

I also went to two community colleges my first year and did two years of work in one. This allowed me to graduate in three years with my BA instead of four, which helped saved a few thousand dollars.

I then went to a state college. Even though the tuition was relatively cheap ($4,000 a semester, not including all the other fees, like books and parking passes), I had a difficult time paying for it. I worked 30 hours at a local Starbucks, from 4am-8am most mornings, and then drove an hour to school (the closest university), and there I would stay until 9 pm in order to fit in the most classes I could. I repeated this schedule 4-5 days a week.

Even though I tried to be frugal by carpooling and making my free Starbucks drinks into meals, my $400 bi-weekly paycheck didn’t go that far. Because of this I wished my parents had saved just a little bit of money for me. The fight to finish college definitely taught me well, and enabled me to become more successful in my finances as an adult, but it was still hard and stressful.

At one point I was offered a $40,000 student loan, which was way more than I needed. And even though my mother actually strongly encouraged me to take it, thankfully, I didn’t. Because of this I didn’t have any student debt when I graduated.

If my parents had simply put away $50 a month every month from the time I was born until my 18th birthday, they would have easily saved around $10,800 (not including interest payments). That would have been such a blessing and made my life so much less stressful during my college years.

Giving My Kids $20k For Education

As parents, we all have something on our side that our kids don’t have. We have the power of time. Saving a little bit of money into an account or in bonds now, will easily grow into more money just because we have time on our side.

My savings goal for my children is to save $20,000 for each of them by the time they’re ready to go to college. If they choose to go to community college and state school, that should pay for all of it. If they choose to go to trade school, that should pay for all of it.

If they choose to get married and be stay-at-home moms (since I only have girls so far), that will be a great starting point for their new lives. And finally, if they choose to go to a private college, the funds will at least give them a head start, but they will have to pay for the rest. The $20,000 will be my gift to them after hopefully many years of financial education and helping them realize their passion and calling in life.

Of course, I’m a big follower of Dave Ramsey’s baby steps, so saving for your children’s college fund shouldn’t be the number one priority if you’re in debt. Instead, it should be a priority among many. Paying of debt, mortgage, and having a fully funded retirement definitely need to be given higher priority.

How hard is it to save an extra $50-100 a month for your kids? Maybe it means not spending too much money on birthday parties, presents or extra activities.

All of those are nice, but a college savings will be a much bigger blessing to them. We all want our children to be wise with their finances, and to start off on the right foot when they enter into adulthood. One of the ways to ensure this happens is through saving for their college fund as a part of equipping them for life’s journey.

Do you agree with my strategy? Are you saving for your children’s college fund? Why or why not?

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{ read the comments below or add one }

  • LuckyMom says:

    I am not sure where you think 20,000 dollars will cover community college times 2 years and then 2 more years of state school. Maybe if no room and board was included in that estimate. Very rural area, not an option for our household. I understand that you want your kids to put some skin in the game, but these cost are crippling, a thousand dollar scholarship is a drop in the bucket. I know that as a single mom I can’t possibly pay for everything, but while securing my retirement, I will try. A few years ago, I purchased a rental house when home values were low and I put away the monthly rent minus the mortgage into 529 accounts. I get the tax benefits of a landlord and the state tax right-off of the 529. I am also building equity and plan to sell the house if the market is good when the 529 money is gone and I need more for my kid’s tuition.

  • Mike says:

    I must be Asian…. We have 50K for each our kids now, should be around 80K each when they start 529, cash. Not wealthy at all, in the military for 13 years but their education and not screwing them with a ridiculous amount of debt after college has been one of our top priorities. Their job: get good grades, As. So yeah, that 2003 Ultima I drive looks like crap, has a nice oil leak some body damage and smells a little like worn shoe… but hey no car payment. That being said, yes the major along with he college they chose will reflect something that is tough, marketable and you can earn a living off of.

    • Clementine Isabella Sophie Florence Cecelia Marie Grace Emily Charlotte Smythe-Worthington says:

      Don’t think it’s an Asian thing. My husband and I saved enough for my kids to attend (Harvard, Yale and Princeton and Columbia) and when my sister passed away we paid for my niece’s expenses (doctor attending Harvard).
      It is very commendable that you gave up stuff for your kids and it seems like your priorities are straight!
      If we could not afford stuff (due to the fact our kids are close in age and at times we have been supporting 6 kids through college).

      I don’t want my kids to get jobs, I want them to do stuff like volunteer work which benefits them more than a job and to build skills since we travelled a lot my kids learn different languages and I think it is better to get involved in extra-curricular and grades.

      I saved up 250k per kid and with my niece we just paid 2 years of college (she was on her 2nd degree by then).
      My kids get a full rides to their chosen Ivy League colleges but we thought it should benefit someone in need.
      3 of my kids are doing multiple degrees and 2 are just getting a PhD (psychology and mathematics and political science).
      And I think you’re a good parent for not wanting your kids to have debt, best of luck to your kids!

  • Maria P says:

    I am from another country, where I got free undergrad education, which is one of the fully-paid spots in a universitiy – sort of like winning a full scholarship. It’s competitive to get this, but not uncommon. My parents paid my housing and gave me a fixed amount of money to live on – not very large but enough to eat and buy metro ticket to get from dorm to university, because excelling in school was my job, and that’s what I had to do most of my time. In junior-senior years, when we figured out a school thing a lot of my classmates and me had some extra jobs to pay for extras beyond food. Even though it was in a different culture, where paying for your kids’ college is expected of parents (also because there aren’t normally student loans – you work or your parents work extra), I had a great head-start from not having debt when I went to grad school in the US.
    We (my sister and I) understood that our parents work hard to earn these money and they are not falling from the sky, so we didn’t just waste them, and tried to earn extra where we could. I also received every scholarship I qualified for. Besides, we weren’t given things just because, we had to work for them (not necessarily earn the money, but get good grades in school to have a good foot in the door for college), but it was always good to know that we had a solid base and backup in our family, that if our hard work didn’t pay off or if troubles became too big, our family was there for us not to figure out our problems for us, but support and help financially or otherwise.
    I am planning to save some for my kids’ education, and teach them to get scholarships, and encourage them to contribute to their college fund or at least help them with what’s necessary, like tuition and food, but if they want extras they would have to work for it themselves. To me, a solid base and certainty that my kids are not on their own is important. they are required to work to be successful, but if things fall through, they have no reason to despair, because we are working hard to cover at least the basics.

  • Marcia@Frugal Healthy Simple says:

    I’m torn about this. I think it’s a cultural thing.

    On one hand, I paid my way through college. But I was poor and got scholarships and loans.

    My kids aren’t poor. College has gone way up since then ($47k per year tuition only at my alma mater), and they aren’t going to get crap for aid. (For fun, I filled out a FAFSA, even though my oldest is only in 3rd grade).

    I see that many immigrants, thinking specifically Asian cultures (but also others) – the parents actually do pay for college, and sometimes a car, and sometimes a down payment on a house. Because their kids success is very important to them.

    But the kids HAVE to work hard and do well, and not in a “gee, that would be a fun major” kind of way, but a “pick something that you can live on, be practical” kind of way. Which, when you think about it, isn’t very popular with Americans. I still see many people say you should get an education because it makes you a better person, and it shouldn’t be as a means to get a job. Eh…

    Anyway, the flip side of this is that the kids support the parents. Sometimes many generations to a household, sometimes separate households. My good friend and her sister (my friend moved here at 16 from China with her family), both send the parents a few hundred dollars every month.

    Hind sight is 20/20. You never know if by paying for your kid’s college, if you’ll be the lucky one with the kid who goes on to get a PhD, or MD, or whatever and is financially independent at 22. Or if you’ll end up providing economic outpatient care to a young adult who can’t get a decent job.

    Or you could NOT choose to pay for college (assuming you have a choice here), and have the kid who hustles and gets scholarships and succeeds anyway. Or you could have the kid who does well but graduates $80k in debt working a $25k a year job.

  • Operation Retirement says:

    Great post – I’m also looking at the price of public school as my savings goal for both my kids. With college cost growth outpacing inflation, it’s still an intimidating goal! I can understand the notion of having kids pay for college themselves as a lesson in financial independence, but I’m hoping we can instill those lessons in
    other ways and give them a little breathing room when it comes to paying for their education. After all, actually having a college education is also a great step to ensure financial independence.

  • Mrs. Frugalwoods says:

    I really like the idea of giving your kids a fixed amount of money. As you outlined, this way, they can choose how they allocate the funds. I think that many private colleges are outrageously overpriced and that often, kids are lulled into thinking they need to go to an expensive, prestigious school in order to get a job. But, there are plenty of inexpensive options that are just as good! I also went to a state school and emerged with no debt. Having this dollar amount in mind upfront is a great way to think about the overall cost of a college education.

  • Emily @ Simple Cheap Mom says:

    We have a young daughter and we have been contributing to a registered education savings account for her (it’s a Canadian thing). Our parents helped us with our education and it gave us such an amazing head start and I’d like to do the same for our daughter.

  • lana says:

    #1 Child got a full ride. So we paid for books, gas, maintenance on the car, parking and for a couple of years half rent. Graduated on time Magna. On to graduate school full ride again.

    #2 Child got a scholarship that pays half. So we pay half of the remainder and for the extras as above.

    All of it comes out of our regular paycheck because they are going to a local university. It has been cheaper than community college.

    No debt. We’re still saving at least 30% a year.

    • Ashley says:

      That is awesome, Lana! And how freeing for both you and your kids not to have any debts chained to you years down the road. Loved hearing your story!

  • Steve says:

    Sounds so simpler. Unfortunately, some don’t have the extra money to save each month. You quote Dave Ramsey. I hope you don’t follow his investment advice. He is clueless when it comes to that. Same as Suze Orman. They are good with mundane things like save on eating out, lattes, etc., pay offcredit card debt, while getting filthy rich off folks who know nothing about money. Their investment advice will kill you though.

    • Mike says:

      You must sell whole life insurance.

    • Dear Steve, says:

      Interesting. So you followed all of both Dave and Suze’s investment advice and they both “killed” your investments?! You poor thing — that means that two times in your life your investments were “killed”! You must not have any money left! Please, share your story with us so we can understand exactly what pieces of their advice are”clueless” so we do not make the same mistakes you did.

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