Should Parents Pay for College?
Yes and no. It’s okay to help foot the bill for your children’s education — as long as you’re paying yourself first.
By the time many people are finished with high school, they are happy to be done with sitting in a classroom all day long. However, it doesn’t take long for these young adults to realize that most jobs that pay well require more than just a high school diploma. Additional education —which could include going to trade school, getting a certification, or earning a college degree —can be a smart move.
There is typically a small group of students who — due to athletic, scholastic, musical, or some other skill — are able to attend college on scholarship. Way to go if you are in this group. It takes a lot of effort to achieve this.
For the rest of the college-bound crowd, college is going to cost money, maybe a lot. Is there anything parents can do to help out? Should parents pay for college?
The answer is no. Then the answer is yes. Then the answer is no again. And then yes.
NO, parents should not pay for college if they are not first saving for their own retirement. This is because every dollar set aside for college is money they won’t have for retirement. The median 40-year-old couple has $4,200 saved for retirement — not even close to enough. Adult children will appreciate it if their parents can stay financially independent in retirement and not need to ask them for financial help.
YES, parents should pay for college if they are on pace with their retirement savings — generally defined as saving 10-15% of their income. Then they can start saving for your child’s college.
NO, parents should not pay for college if it’s too far above their means. A financial advisor can help project how much parents will have saved up by the time theirchild attends college. It may not be enough to pay for a private college which can cost three or four times as much as an in-state public school. The private school option is off the table if parents can’t afford it.
YES, parents should pay for college if they use tax-advantaged college investment accounts that to increase the amount that will be available for their child. The most popular is the 529 Plan.
NO, parents should not pay for college unless their child will be pitching in, too. College is not an extension of childhood. It’s a good idea for students to work part-time during the school year and full-time during the summers. This money can go a long way toward covering expenses at college. So parents should not pay for things that adult children can work for themselves.
YES, parents should pay for college if they can get others to pay for it instead through scholarships. Parents can help their high schooler get in the habit of applying for scholarships in the hundreds. They won’t get all the scholarships, but the law of averages could yield free money for college.
There are some students who are so good at this that they end up with extra money beyond the cost of college. Parents and children who make an effort to chase scholarships report that the time spent vs. the dollars gained is worth it.
Families that don’t have a plan for college often find a graduate with $30,000 or much more in student loan debt and a parent who sabotaged their future retirement. That’s a big hole to deal with. College is a good deal, just make sure you take the best steps to pay for it.
Ready to start or increase your college savings plan? The Zions Bank Student Banking suite of products includes Anytime Checking, a Visa Debit Card and digital banking tools that make it easy for students to manage their money.
Please refer to the Deposit Account Agreement, Account Disclosure, Deposit Rate Sheet and Personal Account Schedule of Fees available in the Zions Bank Agreement Center, or visit a local Zions Bank branch to speak with a banker for more details.