Friday, 27 January 2012
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I am NOT Saving for my Child’s College Fund
…And I don’t feel guilty about it. Nope, not even a little bit. While it may sound harsh, it makes sense for our family. When I was pregnant with our first child, my husband and I went back and forth on how much we should save for her college fund. We decided to start a 529 college savings plan and put money into the account monthly. We did this for six months, and really felt like we were giving our daughter a great advantage in life.
Well, things changed for our family. Because of an unexpected illness, I had to leave my job when our daughter was five months old. I became a stay at home mom and our income dropped by 40%. We quickly had to reevaluate our spending and saving plans. We cut out a lot of our unnecessary spending and were still saving for her college fund and we were doing ok. We planned to have me return to work in nine months and our income would go back to what it once was.
Then, things changed for our family, again. We experienced all the benefits of me staying home to care for our daughter. And, I couldn’t imagine missing any more moments with our baby girl. We crunched the numbers again and had to make some tough decisions to make being a SAHM work for us for the next few years until our daughter started preschool. We cancelled cable, switched to cloth diapers, cooked from scratch, and made our own laundry soap, to name a few. Then we had to really question whether or not we should continue saving for college.
We did a lot of research and lost a lot of sleep. I found out that rough estimates of college tuition in 18 years for four years in an in-state college would be around $200,000. YEESH! I don’t even want to think about what it would cost if she went out of state or to an Ivy League school. When I really stopped to think about it, I realized that while we had only 18 years to save for her college expenses, she would have her entire working life to pay off her own college loans. If she even chose to go to continue her education.
My parents were not able to save money for me to go to college and they were very honest about it while I was growing up. I knew in high school that if I wanted to go to college, I had to do it myself. I worked hard, earned scholarships, chose to go to a school close to home (so I could save on rent), and worked while going to school. I was able to graduate in four years with ZERO student loan debt. I am still very proud of myself for achieving that! Not having money handed to me for school forced me to learn the value of money and taught me how to work for my own goals. That lesson has stuck with me and I am still so grateful for that experience.
So we stopped saving. After our bills are paid, all extra money goes into our emergency fund. Right now, saving for an emergency is more valuable to our family than saving for something our daughter might use in 18 years. After I return to work, we may start saving for her again. But if we don’t, I still won’t feel guilty. For me, teaching her to work diligently towards her own goals and be financially responsible are invaluable lessons that will benefit her throughout her life.
Are you saving for your child's college fund or not? Why?
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Comments (98)
I think lazy parents produce lazy kids.
If you treat your kids like they are a chore and too much of an expense they are certainly not going to like themselves enough to struggle to do well in school.
Being a serious student isn't just about "putting in the hours" it's trusting that you will overcome the difficulties and not giving up because of self-doubt.
It's also important to remember that higher education was invented for the wealthy by the wealthy.
Very few people would be able to do well in school and work at the same time, only rare individuals can. It wasn't originally designed to accommodate people who need to work.
That being said, I went to school almost entirely on student loans.
My parents paid for my insurance, a cell phone, and gave me the old car that was on it's way out and I wouldn't ask for more. They would have helped more if they could. But they wouldn't have needed to they should enjoy the fruits of their labors as well.
But perhaps the reason I think this way is because my parents respected me, and I respect them back.
I'm glad my parents have money to blow. I didn't have to worry about saving for college.
@dead_poetic009xx@xanga - Are you kidding me? IF you were a parent? So, you mean to say that you're here, trolling a board for mothers and your contribution is to call a mom who's sharing a personal decision she's made pathetic? I'm pretty sure someone's pathetic, but I don't think it's the OP.
so much hate from everyone for stating my opinion on what i thought in the matter....
i know the OP isn't going to change her life or her ways just because i said i thought it was selfish...you think by poking at me telling me i'm so wrong, pathetic, judgemental, and whatever else you all have said, is going to change my opinion or make me second guess what i thought or said....?
my parents refused to help me, but my grandparents do now. I take mail-based classes.
I've basically had college handed to me on a silver platter if I can do it with my illness.
I was in the army and earned the post 9/11 GI Bill.
IF I were a parent, I would send my kid to private schools and hope he/she earned a scholarship. I would be more focused on the younger years than the years after.
I don't think you're selfish or anything.
I'm pissed at my dad though because he claimed me on his taxes, which prevented me from getting financial help from the government. He said he'd pay for my school then lied. So I flipped him (in a mannerism) off and joined the army, which he was against. He hated me for it for awhile, but we've made up.
My mom had intentions of saving for me and my brother's college educations, but life got in the way. Divorce, low-paying jobs and a not-so-financially supportive father have made it difficult for my mom to keep up with everything. By the time I applied for college (four years after my brother), there was no money left in my savings account to pay for it. Luckily, my brother received a lot of money from our grandparents to pay off 1/3 of his loans and savings bonds cover most of what's left for him. I didn't get that extra money from my grandparents though, my education costs 4x as much as my brother's and due to internships and extracurricular activities, I haven't had any actual jobs to pay my way through college.
Stupid me applied to a school we can't afford, and I'm enrolled in that school. Luckily, I got a great financial aid package but the student and parent loans are still hefty. Both my mother and I will have to start paying back the loans when I graduate in two years. We worry about it, a lot but I plan to work as many jobs as it will take to pay for my college education myself. My education is my responsibility, the financial stress should not weigh heavy on my mother's shoulders. I will pay her back every cent that she has taken out in loans.
Let me tell this story from the perspective of the kid whose parents didn't save for college. I got A's and B's all throughout high school. I scored a 1450 on my SAT's and applied to several colleges, all of which I was accepted too. Including Stanford and Pepperdine.
Then they asked for my parent's financial information, which was given without hesitation. Because my dad happened to work enough over time that particular year, he got bumped up a tax bracket, and combined with my mom's income, made too much money for me to qualify for need's based scholarships and grants.
When your child goes to apply for financial aid, a form is filled out. Its called the FAFSA. At the very end of the process, you get what's called an EFC, or expected family contribution. Its how much they expect your family to pay per year for your college eduction. Because of the schools I applied to, their EFC was $35,000. They had $1,500 saved up. Needless to say, my entire future was screwed up because I didn't have the money to pay for school.
And those merit based scholarships? They still look at your EFC because it looks better to give it to the kid from the projects than to give it to the middle class white kid whose parents made just enough money to disqualify you for needs based scholarships.
And those student loans? They want your parents to cosign. If your parents don't have decent credit, you will get turned down. My parents had a mortgage, two car payments, and one credit card. I was turned down for loans by every bank I applied to. And even if you DO get a loan, you still have to eventually pay that off. Do you really want to saddle your child with $200,000+ in debt right out the gate, just as they are starting their lives?
A college education is essential in this economy, not having one puts you at a serious disadvantage, even for jobs that don't "require" a degree because the dozens of other applicants WITH a degree are going to get called before you. And who knows what its going to be like 20 years from now when your child is out there trying to make ends meet.
I get wanting to teach your child responsibility. You do that by not getting them a car on their 16 birthday, not by jeopardizing their future before they are even able to walk. I get that you are struggling right now, and I applaud you for taking the financial hit to be a SAHM. Not many women could do that, even if they wanted to.
But saying you are PROUD to not save up for your child's future? Because you want to teach them a LESSON? Wow.
my parents are not paying for my college, i have many loans, but i have a trust fund, so i guess that's the same thing, i can use it if i can't get a job when i graduate and whatnot. i have so many loans and am not paying anything until i get out, except for when i have a job in the summer and make payments.
it stresses me out to even think of it, but i guess knowing that i can't drop out because i will be screwed is a good motivator.
i think it would be a good idea to at least have a savings account for your kid though.
"I found out that rough estimates of college tuition in 18 years for four years in an in-state college would be around $200,000."
Your estimates are horribly, horribly wrong. Even if they were somehow correct, inflation of salaries would increase significantly so instead of making $30,000 a year now, you'd be making like $90,000 a year. Kids can be taught the value or working and paying for college without you screwing them over with unnecessary extra debt just because you don't feel like working now to be able to save extra money. You might think you're being "noble" by choosing to live in poverty because you don't want to work, but it's your kids that you're really hurting - and I guarantee that when they're mid-20's working their ass off and doing their best to pay down their student loans if they find this post, they WILL resent you for intentionally making their life more difficult.
@Grtt@xanga - "I really don't think I'll ever understand why people feel the need to tell other people how to be a good parent ...especially when the person doing the telling doesn't even have kids."
You're forgetting though that every person alive had parents (duh). Therefore they know what their parents did that was good and what their parents did that was bad and when they see someone doing something that was good, they have every right to say so, and when they see someone doing something bad, they have every right to say so. But if we want to follow your logic, then we should have a selection of different sets of laws - one set of laws applied to only parents that were created by parents, one set of laws for child-free people created by child-free people, one set of laws for drug users created by drug users, etc. The notion that just because someone hasn't made the same choices as you makes them incompetent only shows your inability to think things through properly.
@BimmerPhile@xanga - I'm not forgetting that I once was a child with parents. However, being a child and raising a child are drastically different in a multitude of ways, perspective being only one. How many children do you know that view discipline as 'good'? Perhaps they may when they get older, but not necessarily. Some people clearly never come out of the spoiled brat stage. Surf the web, see for yourself; you'll find this readily apparent. I can point you in the direction of quite a few Xanga users if you need clear examples.
I'm genuinely not sure why you've decided to bring the law into the conversation, as my statement -- which is more of a ponder than any sort of logically-constructed argument -- went nowhere near that direction. Far as I know, it's not criminal to not provide a college savings for your child. What's 'best' (completely subjective) and what's legal (not nearly as subjective in view of gathered evidence) are far from similar or comparable. The notion that just because you don't get to have authority in what's best for people raising children being comparable to elected officials deciding what constitutes criminal behaviour only shows your inability to stick to the topic of conversation or desire to argue with strangers on the Internet.
This is probably the biggest stretch I've seen from you towards one of my comments, and some have been quite ...flexible.
If I had the money to save up some for their college expenses, why would I not?
My parents were very poor when I was growing up, and they weren't able to do that though for me. I in no way feel like I have been deprived of anything because I know if they could have saved for it, then they would have. Now that they have more money, they generously help me out every now and then by paying my rent for the month.
I hope your daughter is smart and gets some scholarships. Also, she may have to settle for some school that she doesn't want to go to because it's is something she can afford(like I did), but she'll get over it.
not sure how hefty the debts are in america, but in australia it feels pretty good.
I can be admitted to any university i'd like so long as i meet the score for the particular course at that uni. My fees are covered by the government and I am able to pay back the government so long as I earn more than a certain sum of money to be able to pay small amounts back to them. There's no pressure to pay the government back as soon as possible or anything. That way, my parents don't have to be stressed out about uni fees and I'm not forced to undertake two jobs or something while studying full time to pay my fees off.
@thatkyliegirlx@xanga - Yeah it's so ridiculous that some parents want to give their children some help when they need it.
I don't see the big issue. Paying for their education isn't paying for their whole life. If I ever have kids I will try to say up something for them so they can have that little bit of help when it comes time for them to get out into the real world.
@dead_poetic009xx@xanga - if you were a parent, maybe you would understand the INCREDIBLE sacrifices this person has already gone through. Giving up her career to care for her child? She's going to spend tons of money on presents, doctor bills, gas to drive kid around, etc. for 18 years already. People have to learn to take care of themselves when they become adults. Her daughter will be an adult when/if she goes to college, and so she should pay for her own education.
Additionally, a college education really does not help that much in today's job market anymore. A degree does not guarantee a job.I understand and even sympathize that sometimes you can't always invest in everything you'd like to if your income isn't sufficient, but you're looking at the cost of college in terms of the money you're making right now. It seems huge, but that's why you start early, because investment in a 529 plan spreads your money out into funds that are designed to grow over time. Even if you just put the money in the bank, in a savings account that pays even a small interest rate, the effect of a compound interest rate over 18 years is *significant*.
If you invest in a Money Market Savings account, you're usually looking at about 6% interest, compounded quarterly. So if you invest $50 a month from birth until your child reaches the age of 18, you'll have invested $10,800, but the growth from interest means you'll have actually saved $19449.75 total.
In a 529 plan, the money starts out with an aggressive growth plan and becomes more conservative as time goes on. Over 18 years, the plan might have growth equivalent to an interest rate two to three times that of a savings account, which means that investing the same amount of money as before ($10,800), your investment will grow to between $38,110.09 at 12% effective interest, and $79,381.06 at 18% effective interest. Essentially, the more money you invest early, the larger it's going to grow by the time your child might need it. And the nice thing about a 529 plan is that even if your child doesn't use all of it, or even any of it, the money will stay there, in their name, growing continually until, for example, they have kids of their own who want to go to college. Essentially, if they don't touch a dime of the money, and it continues to accrue interest over the next 20 years until their kids go to college, it will have grown to over $500,000!
You just might not want to so easily dismiss early investment in your child's education. If you can find even a few dollars of wiggle room in your budget each month, I would strongly encourage investment in a 529 plan. Someday, your child will thank you!
@dead_poetic009xx@xanga - No. We have so much hate for you because you called her pathetic. You could of simply said " I disagree, I think everyone should save money for their kids" You should think about what you have to say before you say it and bash someone for what they do with their money and the future of their kids. She is in no way harming her kids by not setting up a fund for them. Just because YOUR parents paid for half of your college career doesn't mean we all need our parents money. It must be real nice to have parents that can afford to pay for half of their college, way to go.
@TrekkieECH@xanga - That is an excellent plan for saving that I intend to use later even though right now interest rates are fairly low so it would probably not compound as much in the early years. However, I would like to point out using an example from my life (since I obviously do not know anything about the poster's other than that the family income has dropped by nearly half) that even fifty dollars a month can be hard to come by. In my family that represents how much I spend on about a week's worth of food. After I set aside money for other savings categories there is not that much money left.
You have actually been one of the nicest commentors in recommending that someone sets aside just fifty dollars a month, but after reading several of the same comments, I thought I would point out that if someone has already cut their budget several times, it still might be hard to come across that type of money even in loose change.
Back to the OP, my MIL and I were actually talking about college savings and we realized that instead of spending money on several presents for Christmas and birthdays, she decided that she would just get one small gift and start depositing money into a 529 or other savings plan. I know some in some familes, it can be considered a bit tactless, but if you have close relatives that are calling you around birthday and Christmas time asking what the kids need or want, that might be something to tell them.
I'd highly recommend at least saving something for your child. You don't have to be able to pay for the entire education but if you can give her something to help out, I think that would make a huge difference. She would thank you later I have no doubt.
Good for you for being a SAHM. My mom was also one and it was always such a blessing to have her around.
My parents saved up for me a little. It barely covered 1 semester at state school. Those "plans" aren't worth it. I'm looking at nearly $120,000 in debt after I graduate from law school. That $2,000 was nothing.
The same thing is happening with my boyfriend, except he went to private school, which costs $50,000 a year plus his graduate school tuition at the same private institution. The only reason he stayed at the private institution is because if he went elsewhere he wasn't guaranteed a spot in his program.
We're both from families that value education, but I've seen first hand saving money barely helps. I don't know if I'll save up for my children or not when I decide to have one.
I'm big on education, but I'm also big on making memories for them as were my parents. You'll be able to pay back your student loans, but you won't ever be able to have your childhood back.
I absolutely will do all that I can to make sure that I help my kids. No, I am not a parent yet, but I know that is is VERY important to me to do so. Of course, I may struggle financially but even a little bit will add up over time. I am not going to tell my kids that they have a savings though. I want them to work hard for scholarships and to take it seriously and then when they graduate they will see that money and it can either help them with school or whatever else. As long as they earn it and appreciate it.
My parents helped me pay for part of mine and I know I will pay it forward. I had two scholarships that paid for a good portion of my degree and I took it very seriously even though I knew I had help.
My parents paid for my education, for which I'm very grateful. I know many people who have a lot of student loans to pay off. It's a huge burden that hampers some of the choices they make in life e.g. should they pursue higher degree, or immediately get a job to start paying off those loans.
That being said, the writer of this entry is not opposed to the idea of putting away money for her kid's college fund. She's just saying that, since money is tight right now, she and her husband are more focused on meeting immediate expenses rather than a possible future expense. She's also saying that *should they have the ability to do so* she may start trying to save for a kid again in the future. That is not being a bad parent, that is being a fiscally responsible adult.
My plan is honestly to save money for my future child's degree, but to have the child take out loans anyways because paying those loans helps them gain credit. I will pay off thier student loans after they have the degree, but help out with things that aren't covered with the loans (Car, gas money, etc.)
@Grtt@xanga - No, you claim that someone who doesn't have kids cannot comment on actually raising kids - thus, using your logic, anyone who doesn't belong to a particular subset of the population shouldn't be allowed to have an input on the laws governing that subset / make laws governing that subset. According to your logic, someone who doesn't smoke has no justification giving input on the lives of smokers, someone who isn't a woman has no justification giving input on the lives of women, etc.
It's not my fault that you're not capable of taking a step back and looking at your thought process when applied to other things, thus proving that it's a poor idea.
And if you're not bright enough to realize that adults are fully capable of looking back on their childhood and deciding what actions their parents did were good and which were bad, then I deeply fear for your children / future children, because how are you going to raise them if YOU aren't bright enough (by your own argument) to know good parenting from bad parenting? Again, step back and apply your "logic" to more than one instance. If it starts looking ridiculous, chances are it is.