If you are a parent, chances are you’ve considered whether you should be saving for college education. Many parents worry about helping their children avoid education debt while saving for their own retirement. With four teenagers at home, this is a huge concern for me. It would be worthwhile to visit with your financial advisor about whether you are on track for your own retirement before you start saving for your children. I have seen many parents so concerned about their kids leaving school without debt that they are willing to sacrifice retirement to make it happen. I don’t love this plan. What I always tell these parents is, “You can borrow money for school, but you cannot borrow money for retirement.”
I have visited with parents who would like to pay for their child’s college education. They have even offered to pay for very expensive advanced degrees, even doctorates. Children find ways to spend whatever a parent is willing to offer, even if it leaves the parent in a perilous situation with their own retirement.
One of my recommendations is to set limits on the amount you plan to spend on your child’s college education. If your child picks an inexpensive school, they can make these dollars stretch. Open and honest communication between parents and children is vital to this plan. One of the most important steps in college planning is applying for the FAFSA (Free Application for Federal Student Aid). Even if you don't think that you will qualify, please apply. I spent my first year of college paying for one class at a time out of pocket because I didn't know to apply for federal aid. As of 2018, nearly $2.3 billion of Federal Aid was unclaimed. Another underutilized funding route is the use of scholarships. I am curious how many other people go to school and do not apply for scholarships. I never applied for a scholarships. I did not know what was available or that I had a chance of qualifying. Thousands of dollars in scholarship money goes unclaimed every year in this country.
I recently bought my kids a book from Amazon.com titled, “The Ultimate Scholarship Book 2020.” This gem outlines thousands of scholarships that are available throughout the United States. The book separates the scholarships by state, interests/hobbies, heritage, major, and other various categories for easy reference. I have tasked my older children with searching this book to look for scholarship opportunities. A majority of the scholarships are for people in college or are starting to apply for school. There are also scholarships for kids that are in high school and even a few available for kids that are in elementary and middle school. One of the best things kids can do is spend time learning how to write good essays and get letters of recommendation. The Scholarship Book outlines how to do this. Obtaining these skills and applying for scholarships can offset the pressure for parents trying to help their child avoid education debt.
One of my favorite scholarships is the “Stuck at Prom“ scholarship. Competing couples make their Prom wardrobes entirely out of Duck tape. Whoever gets the most votes online wins a scholarship. The creative results are impressive. There’s a scholarship for kids working part time during high school offered through Burger King.
The North Central Washington Community Foundation is a fantastic resource for kids in the North Central Washington area. In 2018 they gave away 151 scholarships totaling $576,272. For those that have excess financial resources, this could be a great way to help future generations avoid the burden of college education debt.
I should warn you that if you are not planning to pay for your child’s education, you should let them know before their senior year of high school. If they are expecting you to pay for college, then find out at the last minute that that is not the case, they will be disappointed. In our house, we have been very transparent. Our kids do not expect us to fund their college education. I support their dreams for advanced education and illustrious careers. I wish them every success in the world. I have no doubt they will go on to do great things. And I hope they will be grateful for whatever help we are able to give them. I will enjoy watching what they do from the comfort of my retirement.
Tell your kids I’m sorry for the bad news.