Can we discuss a parenting topic that is sometimes a stress trigger for me? College savings for kids.
I would say the standard thinking in an average American family is that parents want to, and intend to, pay for their child’s college education. But for many (or most) families, having a fully funded college savings account when little Jimmy or Janey turns 18, isn’t realistic. (Raising my hand here.) And oh man. Those “college calculators” on savings sites and bank sites are so depressing. They basically tell you you’ll need a quarter of a million dollars to pay for child to go to a university. (In my family’s case, times that by 6. Yikes.) And if you’re like me, when you see that number, and feel like you can’t hit it, you just want to ignore it altogether.
For sure, a part of me wishes I could say we dutifully set aside $1500 each month per child, the moment they were born. But it’s not true, and frankly, it was never in the cards for us — we already had 5 kids as Ben Blair finished up his PhD (about 5 years ago). We were still paying for our own education while we should have started saving for our kids’ education. Hah! In fact, we didn’t make room in our financial life for college savings until our oldest was about 11 or 12. Obviously that is not ideal. But it is what it is. And we’re not the only ones. Life rarely works out the way anyone expects.
Then, even when we were finally in a position to start saving for college, I found I was feeling paralyzed about starting, knowing we were so late to the game. I had to consciously let go of my regret at not doing it perfectly from the beginning, and I just had to start. Just start.
On Wednesday night, I was invited to a dinner in the city hosted by ScholarShare. ScholarShare is California’s 529 college savings plan, and it’s managed by non-profit, TIAA-CREF. You know how a 401(k) plan is for retirement savings? Well, a 529 is similar, but intended for college savings, and they give you an important tax advantage — there is no income tax or capital gains tax on the earnings as long as it is used for education. Even though the topic can stress me out, I totally get how important it is, so I made sure to attend, and I’m glad I did.
At the dinner, I asked the head of ScholarsShare what are the top 3 pieces of advice she would give to people like me, who felt (or are feeling) like they didn’t do it right from the beginning, and have ignored saving for college for one reason or another. She said:
1) Don’t be intimidated. Don’t get overwhelmed by the calculators. Think of college expenses in chunks. Tuition. Dorm. Books. Semesters. Maybe you’ll start saving now and have enough saved for books. Or maybe you’ll save enough for housing — and you’ll pay for tuition some other way, perhaps a combination of scholarship and financial aid. Maybe you’ll save enough for tuition, and Grandma will help with housing — or your child will live with relatives nearby the college. You might not be able to save up the whole cost, because it’s massive! But perhaps you can save a year’s worth. Or a semester. It all helps.
2) Anything is better than nothing. Try $25 per month per kid. When you feel like that seems normal in your monthly expenses, say, maybe six months later, try increasing it to $50 per month per kid. And slowly go up from there, if and when your budget allows. If windfalls or bonuses come your way, you’ll have a ready spot to put the funds.
3) Let people help. There may be people in your life that want to help with this. Maybe grandparents or aunts or uncles or close family friends. But they don’t really know how to get started or get involved. You can make it happen. You set up the account and let people know it’s there and that they are more than welcome to contribute to it. It’s an awesome place to put gift money! In fact, after they’ve made a contribution, they can download a “Gift of Education Certificate” to place in a card or wrap with a bow. When grandparents or relatives don’t know what to send for a birthday or holiday gift, this is perfect.
At the beginning of the post, I mentioned this topic can be a stress trigger for me. If you’re the same, I can tell you, that one of the things that helped me let go of the regret at getting started saving so late, is that I paid my own way through college. My parents were hugely supportive, but simply didn’t have the funds. So, I earned some scholarships. I received some pell grants (that’s the student financial aid you don’t have to pay back). I kept a part time job during school. I worked summers. And I supplemented with student loans, graduating with about $10,000 in debt, which I quickly paid off.
Would it have been easier to have my college paid for? Sure. But I managed to figure it out, and if you can’t fully fund your own kids’ college, you’ll help them figure it out too. My current thoughts on paying for my kids’ college education is that yes, I’m planning on it and saving for it. But, if life surprises us and it’s not working out, we’ll figure out other options.
Bottom line: if this topic throws your guilt meter into high gear because you haven’t started a college savings fund for your child, let that guilt go. Being able to pay for your child’s college education is not a measure of how good a person or parent you are.
Your turn. Do you have a philosophy regarding paying for college or grad school for your kids? Do you feel responsible for paying for your child’s college education? Did you pay for your own way at university? Or contribute funds for your housing or food? I’m always curious about this sort of thing because families handle it a million different ways, and I feel like I learn so much from the comments and discussions. I remember hearing from my brother-in-law, that his father was willing to pay for any university he could get into. But for grad school (my brother-in-law is a lawyer) he was on his own. How did your parents handle it? And how do you plan to handle it?
Disclosure: This is a sponsored post, shared in partnership with One2One Network and ScholarShare. All thoughts and opinions are my own.