Most of the students that I know have begun to or already have returned to college for the beginning of a new term. For many of those who have yet to send a child off to the financial vacuum that college is with its ever-increasing tuitions, wonder if you will ever be able to do it and for those who have sent them off, once again, you wonder whether you will be able to pay for it – and finance your retirement.
Over the next two days we will look at the costs of college, the impact on your retirement accounts and even take a look at the genteel notion of going at all.
The Blank Collar Generation
Sallie Mae recently published its 2010 review of how parents save for college. They introduce the survey, done by Gallup, in the following way: “Why go to college?,” they ask following up quickly with the emotions that tug at the strings of such an expensive decision. They write: “Is it the allure of better pay or a more desirable job? Is it the personal economic benefit of academic inquiry and the shared experience if discussion with students of differing viewpoints? Is it the chance,” they continue with one final emotion-wrenching query ” to achieve a personal dream or realize societal ambitions?”
Why go? Let’s begin with who you are. David Brooks, writing in the September 9th edition of the NYTimes Op-Ed suggested that we don’t really have a bead on who we are. Except to realize that we think the very best is still what we want, for ourselves and particularly for our children, and that at the same time, it might not be possible any longer.
Mr. Brooks writes that: “These office workers did not want their children regressing back to the working class, so you saw an explosion of communications majors and a shortage of high-skill technical workers. One of the perversities of this recession is that as the unemployment rate has risen, the job vacancy rate has risen, too. Manufacturing firms can’t find skilled machinists.” The last line suggests that what have believed all along, that if you send your child to college, they will, by simple default of owning a diploma, will be better off than you may have been.
There was a small bit of political backlash cleverly inserted into Mr. Brooks column when he offered an excerpt from Michelle Obama’s speech to a daycare in Zanesville, Ohio. Her suggestion to her audience was not intended towards her immediate listeners but to the current crop of students who are already attending college or planning on it. It was pointed out just how undereducated the area is as a whole and she was criticized mightily because she suggested students and potential students avoid corporate aspirations.
Instead, she hoped that more roles as teachers, nurses and social workers would be pursued, a projectable deficit that could find our nation ill-equipped for what she sees as a changing population and an evolving economy. But in keeping with our discussion about who you are and why you are considering college, take into account that these jobs are not as well-paying as those jobs in big business and as a result, seriously impact the return on your child’s educational costs.
Matching Tuition with Careers
I see this as a two-fold problem. One, You may, like Sallie Mae’s research suggest, be the sole provider of that tuition – about 37% of you are – or you might fall into one of the many other categories the company found exists when it comes to paying for higher education. But your costs, if your child sought those previously mentioned professions, does not end at graduation.
In fact, they are just beginning. That would be the second reason you should strongly considered your plan for what has become the second largest investment you might ever make. Consider what would happen if the average entry level income for these professions was less than half of the total amount financed for college. Why? Because if the income is insufficient enough to cover those repayment of those loans, pursue the initial stages of independence, and find a job at all, your costs will continue for years after as you help subsidize.
Few of us plan for these potential problems. But they can be costly. Recently GeekSugar asked their readers if their parents still pay their cellphone bills. Many commenters suggested that they hadn’t accepted such an arrangement, some took the offer or simply never cut the cord and others simply responded no but left the question of whether their parents help out in other ways open. Only one cried about her economic hardships after attending college.
Some parents take a hardline approach with soft edges. One such approach allows for a monthly stipend with a point where it ends. That doesn’t mean Gary Buffone, a psychologist and author of “Choking on the Silver Spoon: Keeping Your Kids Healthy, Wealthy and Wise in a Land of Plenty,’’ thinks its justified. He doesn’t think that unless there is a disability involved in the quest for independence, should a parent step into the role of “just helping out”.
Making Enablers
In a recent Boston.com story on the subject, Mr. Buffone says: “The permanent downside is that these kids who remain financially dependent on their parents become professional adolescents.’’ But what does that make us as parents? Enablers perhaps?
Does this have more to do with the economy, the difficulty in finding a job or when they do, they find the entry level pay inadequate? The author of the story, Bella English cites a more-common-than-not occurrence amongst recent graduates: “Caroline Armstrong isn’t thrilled about sending her daughter $500 each month — her ex-husband kicks in another $500 — but for now, it’s her reality. Her daughter Millicent, 23, graduated from Rollins College last year with a degree in art history. She has three jobs in Manhattan — none is high-paying — and is still unable to pay all her bills. She works full time at a custom perfume company in SoHo and on the side as a nanny; she also knits scarves and wraps that she sells by word of mouth. Her sixth-floor walkup has no living room, the bathroom has no sink. She splits the $2,000 rent with a roommate.”
That might be fine for Ms. Armstrong, but I’d be willing to wager she is in the minority who can afford it and regrets what it is turning her daughter into. And if this is the case with you, and your child is pursuing a career path that doesn’t jive with the end cost of the education they are paying for, should you plan for this in advance? The questions is, how?
Most of us still believe in our children, their hard work ethic and their ultimate potential. But if you need to support your child in those after-school years, ask yourself the following questions: “Have you talked about this with your child while they were still in school? Have you looked at their expenses and required them to budget better, rein in spending and otherwise act like any lender would to a borrower? Would your help be likely to happen if it were an actual loan, which, which by lending it to them is teaching them to spend more than they have? Are you entitled to monitor their credit use?”
For most kids, the first years away from the nest is their first experience with a life they couldn’t imagine. Bills are often shock. Lack of creature comforts are another. But none of these teaches your child a lesson when you swoop in with monetary help.
Your kids will launch if they really want to, with or without your help. They might move back in to gain their footing, which is comparably worse, but if they understand that nothing comes easy – not like it did when they were kids – they might learn a lesson you could never have taught them without them experiencing it first hand.
On the other hand, you will want to make sure they can be bailed out in an emergency. We will always want the best for our kids but they aren’t us and they won’t make the same mistakes you might have made, taken the same path you walked or even want to. About the only thing you can do is practice the same steady discipline you employed in saving enough money to help them along the way. You worked hard to get your money; let them as well.
If anything this economy has taught us, our love affair with money is not with the cash itself but what it can purchase – even if we use credit. We have to learn to hold on tight to what we have and explore every reason for spending. Even if that exploration leads you to ask: why are you subsidizing your grown kids?
Related posts:
- Retirement Planning and Paying for College: Should You do Both? Part Two
- College, Money and Retirement Planning: An Uneasy Financial Marriage
- Is College Debt Worth It?
- The Flip Side of Retirement Planning and Living Longer: Paying for College
- Student Debt, Your Retirement Plan and Tough Decisions made Young
Retirement Planning and Paying for College: Should You do Both? Part One
Most of the students that I know have begun to or already have returned to college for the beginning of a new term. For many of those who have yet to send a child off to the financial vacuum that college is with its ever-increasing tuitions, wonder if you will ever be able to do it and for those who have sent them off, once again, you wonder whether you will be able to pay for it – and finance your retirement.
Over the next two days we will look at the costs of college, the impact on your retirement accounts and even take a look at the genteel notion of going at all.
The Blank Collar Generation
Sallie Mae recently published its 2010 review of how parents save for college. They introduce the survey, done by Gallup, in the following way: “Why go to college?,” they ask following up quickly with the emotions that tug at the strings of such an expensive decision. They write: “Is it the allure of better pay or a more desirable job? Is it the personal economic benefit of academic inquiry and the shared experience if discussion with students of differing viewpoints? Is it the chance,” they continue with one final emotion-wrenching query ” to achieve a personal dream or realize societal ambitions?”
Why go? Let’s begin with who you are. David Brooks, writing in the September 9th edition of the NYTimes Op-Ed suggested that we don’t really have a bead on who we are. Except to realize that we think the very best is still what we want, for ourselves and particularly for our children, and that at the same time, it might not be possible any longer.
Mr. Brooks writes that: “These office workers did not want their children regressing back to the working class, so you saw an explosion of communications majors and a shortage of high-skill technical workers. One of the perversities of this recession is that as the unemployment rate has risen, the job vacancy rate has risen, too. Manufacturing firms can’t find skilled machinists.” The last line suggests that what have believed all along, that if you send your child to college, they will, by simple default of owning a diploma, will be better off than you may have been.
There was a small bit of political backlash cleverly inserted into Mr. Brooks column when he offered an excerpt from Michelle Obama’s speech to a daycare in Zanesville, Ohio. Her suggestion to her audience was not intended towards her immediate listeners but to the current crop of students who are already attending college or planning on it. It was pointed out just how undereducated the area is as a whole and she was criticized mightily because she suggested students and potential students avoid corporate aspirations.
Instead, she hoped that more roles as teachers, nurses and social workers would be pursued, a projectable deficit that could find our nation ill-equipped for what she sees as a changing population and an evolving economy. But in keeping with our discussion about who you are and why you are considering college, take into account that these jobs are not as well-paying as those jobs in big business and as a result, seriously impact the return on your child’s educational costs.
Matching Tuition with Careers
In fact, they are just beginning. That would be the second reason you should strongly considered your plan for what has become the second largest investment you might ever make. Consider what would happen if the average entry level income for these professions was less than half of the total amount financed for college. Why? Because if the income is insufficient enough to cover those repayment of those loans, pursue the initial stages of independence, and find a job at all, your costs will continue for years after as you help subsidize.
Few of us plan for these potential problems. But they can be costly. Recently GeekSugar asked their readers if their parents still pay their cellphone bills. Many commenters suggested that they hadn’t accepted such an arrangement, some took the offer or simply never cut the cord and others simply responded no but left the question of whether their parents help out in other ways open. Only one cried about her economic hardships after attending college.
Some parents take a hardline approach with soft edges. One such approach allows for a monthly stipend with a point where it ends. That doesn’t mean Gary Buffone, a psychologist and author of “Choking on the Silver Spoon: Keeping Your Kids Healthy, Wealthy and Wise in a Land of Plenty,’’ thinks its justified. He doesn’t think that unless there is a disability involved in the quest for independence, should a parent step into the role of “just helping out”.
Making Enablers
In a recent Boston.com story on the subject, Mr. Buffone says: “The permanent downside is that these kids who remain financially dependent on their parents become professional adolescents.’’ But what does that make us as parents? Enablers perhaps?
Does this have more to do with the economy, the difficulty in finding a job or when they do, they find the entry level pay inadequate? The author of the story, Bella English cites a more-common-than-not occurrence amongst recent graduates: “Caroline Armstrong isn’t thrilled about sending her daughter $500 each month — her ex-husband kicks in another $500 — but for now, it’s her reality. Her daughter Millicent, 23, graduated from Rollins College last year with a degree in art history. She has three jobs in Manhattan — none is high-paying — and is still unable to pay all her bills. She works full time at a custom perfume company in SoHo and on the side as a nanny; she also knits scarves and wraps that she sells by word of mouth. Her sixth-floor walkup has no living room, the bathroom has no sink. She splits the $2,000 rent with a roommate.”
That might be fine for Ms. Armstrong, but I’d be willing to wager she is in the minority who can afford it and regrets what it is turning her daughter into. And if this is the case with you, and your child is pursuing a career path that doesn’t jive with the end cost of the education they are paying for, should you plan for this in advance? The questions is, how?
Most of us still believe in our children, their hard work ethic and their ultimate potential. But if you need to support your child in those after-school years, ask yourself the following questions: “Have you talked about this with your child while they were still in school? Have you looked at their expenses and required them to budget better, rein in spending and otherwise act like any lender would to a borrower? Would your help be likely to happen if it were an actual loan, which, which by lending it to them is teaching them to spend more than they have? Are you entitled to monitor their credit use?”
For most kids, the first years away from the nest is their first experience with a life they couldn’t imagine. Bills are often shock. Lack of creature comforts are another. But none of these teaches your child a lesson when you swoop in with monetary help.
Your kids will launch if they really want to, with or without your help. They might move back in to gain their footing, which is comparably worse, but if they understand that nothing comes easy – not like it did when they were kids – they might learn a lesson you could never have taught them without them experiencing it first hand.
On the other hand, you will want to make sure they can be bailed out in an emergency. We will always want the best for our kids but they aren’t us and they won’t make the same mistakes you might have made, taken the same path you walked or even want to. About the only thing you can do is practice the same steady discipline you employed in saving enough money to help them along the way. You worked hard to get your money; let them as well.
If anything this economy has taught us, our love affair with money is not with the cash itself but what it can purchase – even if we use credit. We have to learn to hold on tight to what we have and explore every reason for spending. Even if that exploration leads you to ask: why are you subsidizing your grown kids?
Related posts: