Worried about paying for college? Nonsense!
Posted on August 28th, 2008 – 1:06 PMBy Kara McGuire
Finally, a study that confirms why I’m not concerned about paying for college:
Daycare now costs more than tuition at a public university in 44 states, including Minnesota, according to the The National Association of Childcare Resource and Referral Agencies. Here’s a study the group conducted on the high cost of child care that pegged MN as second in the nation for least affordable child care (although if quality and cost go hand-in-hand, this is a good thing in a way).
For example, the average cost of full-time preschool care in MN is $8,832. For infants it’s $11,796. So that’s where the mortgage payment for our bigger, nicer home is going.
If you can keep your lifestyle the same as your earnings rise and your kids grow, you can save that day care money, or at least some of it, once the kid enters grade school (assuming you don’t send them to private school or pay a lot for after-care programs).
I’m hoping we can manage to save at least half of our kid’s day care tab each year to pay for a combo of college and retirement.
The American Payroll Association sent me a press release with these day care stats to convince people to consider using a dependent care account to save up to 35% off child care costs in 2009.
According to the association, flexible spending accounts, where you put money aside from your paycheck tax-free for child and elder care are a free benefit offered by 80% of American companies
You have use all of the funds in a given year or you lose them. No “rolling over.” But chances are you’ll whip through the typical $5,000 limit in no time. I know our family did in Spring.
8 Responses to "Worried about paying for college? Nonsense!"
I wonder how much daycare in MN is subsidized by the government? That might be a pretty large factor in the cost. I knew a single mother that would take her two kids to state funded daycare so she could go get her hair and nails done, go shopping, and clean her apartment.
I’m still having a hard time understanding why it is expected that it is the parent’s responsibility to pay for college? Want to see higher education tuition cost drop dramatically - remove the parental teat and government grants.
Good point SDF about a parent’s role for paying. I definitely am going to require my kids to pay for part of their education because I believe they should feel some ownership and understand what the price tag means to their current and future finances.
How about others? Is paying for college a parental responsibility?
I was lucky enough to have mine paid for*, so I would like to do the same for my kids if I can. Both my husband and I were very lucky not to start out our marriage with a ton of student loan debt. Although I am going to have stipulations such as I will only pay for a state school so if they want to go private they have to make up the difference. They will also have to live on campus at least one year. I’m not sure if I’m willing to take on any debt myself to pay either, so it will also depend on what we have saved and our overall financial situation at the time. My oldest is only 2.5 though, so I haven’t worked out the details yet! We’ve started saving a little, but will start putting away more when the kids are in school and out of daycare.
*My father died when I was 5 and my mom was smart enough to invest the social security payments my brother and I received, which paid for college and then some, had this not happened, I would have been on my own for college.
I don’t think paying for college is a parental responsibility, however I think it is a nice thing to do for your children. My parents paid for my school and coming out of college debt free is a great gift. Personally, I had a budget on how much money my parents would give me. After that, anything else needed to be paid for through scholarships, loans, or working. I feel this is a good balance and we intend to do the same for our children.
We are on Heather’s path and will have a “scholarship” equal to in-state at UM (16K+ this year!). Even this amount takes a staggering amount of savings given the fact that saving for college has a short horizon (if you start at age 5 - only 13 years) and college inflation - about 7%. We’re assuming ZERO growth in our 529’s - meaning we’ll be very fortunate to average 7% over the next 13 years.
“Is paying for college a parental responsibility?”
It is not my ‘responsibility’, per se. I view it as a gift - a way for me to ensure my child has a good education to help her succeed in life.
Solution: don’t get married and have kids. It’s too expensive.
Personally, I’m incredibly grateful that my parents (and grandparents and indirectly great-grandparents) paid for my undergrad. The burden that some of my friends face from student loans far outweighs any learnings they might have had about personal responsibility. If you’re going to be a dedicated student, it doesn’t matter who’s paying. If you’re not, it still doesn’t matter.
That said, I had zero expectation of help for grad school, and both my brother and I are paying for that ourselves. Our society expects college degrees today for the equivalent of jobs that needed a HS diploma 30 years ago. The kids that do have help will likely have an advantage, and if I have kids I’d want to give that to them.
