August is the month when, as the kids go back to school or move into their dorms and you've been hit with all the paperwork that goes with student loans, financial aid and academic grants. At the end of the day, very few students get a full-ride to any school, and someone has to pay for something.
One thing I've noticed is that, as parents talk to me about financial planning, they treat paying for college as a requirement, not an option. As a financial planner, I have to ask every family I work with what steps they've taken to provide an education for their children. I get the feeling that a lot of people haven't really thought about college planning, but because they don't want to sound negative, they say they are committed to paying for their children's college.
So, we give them a number and they agree to a certain amount, but I never see people get excited about this act of delayed gratification for a more stress-free life going forward. What I don't ask - but maybe I should - is do you want to help your kids with college? I think many parents would say they'd rather take a vacation or buy a new car, if they're honest, or even retire early. They may say that sounds awful, but there's no one right way to approach college for your kids.
Parents have the right to choose how they spend their money on their children.
Some spend more money on a house so the kids can attend better public schools, and then they help pay for a portion of college. Some pay for private elementary and high schools in the hope of scholarships to elite universities. Some parents don't see a big enough difference between elite schools and more affordable institutions. These parents tend to think the success of their children depends on the children themselves rather than the school, and going to college (or not) is on them.
We also see those parents who value education over everything else, usually for one of two reasons: either these parents never attended college and they want to make absolutely certain that their children will get what they didn't have; or, the parents are in education and academe, and attending college is simply the expected norm.
Whatever your philosophy when it comes to college costs, it's important to understand your why. This conversation needs to happen in a financial planning context, and there are options for whatever path you're choosing. Give us the why behind what you want to do, and we'll work out a plan to help you make it happen.
My parents' philosophy was that, after paying for private secondary school, I would figure college out, but of course 25 years ago, things were a little different. Many professions were still viable options without college degrees, and back then, college usually cost along the lines of a new car instead of a hefty mortgage. These days, it's a different financial commitment.
What happened in your past that's impacted your attitude toward paying for college? Think about it, talk it over with your spouse, and then communicate that to your children. Some parents out there simply want to educate their kids through world travel. And none of these options make you a bad parent. But you'll have a better financial relationship with your children if you explain your why.