Recently, Trent argued that parents should consider not contributing to their child's post-secondary education. While there are a couple of fair points in his argument, for the most part I feel it ignores several key issues that come with paying for one's education.
Parents can't check a box saying "I will not contribute to my child's education." Any student hoping to receive financial aid of ANY stripe, including loans, will have to fill out the FAFSA (and at certain schools, the PROFILE). Both of these forms require parents to report their assets and income to arrive at the Expected Family Contribution (unless the student has served in the military). Even if the parent doesn't plan on giving the child a dime, any aid package the student receives will assume that financially able parents will contribute some portion of their income and assets toward the education. This can leave an "independent" student on the hook for tens of thousands of dollars even at lower-cost state schools.
Students who still try to finance their own education face drawbacks. Generally speaking, outside scholarships reduce the school's own grant/scholarship provisions dollar-for-dollar, BEFORE reducing the loan part of the package. Is it possible to earn enough in outside scholarships to cover nearly all college costs? Yes. Do you know many students who have done so? That's what I thought.
Students who try to work their way through school also face difficulties. Any student eligible for need-based financial aid who works at non-work study jobs starts losing 50 cents of every after-tax dollar in aid once other income exceeds $2,490.
What this adds up to is several "independent" students on the hook for lots and lots of debt.
Some parents may argue that this is just how it is, and their children need to experience the pain of paying for all their education to value it.
Most students do not need to cover the entire cost of their education to be invested in the experience. When I went to Small Liberal Arts U. for my undergraduate education, I covered a good portion of my college costs from scholarships, work-study, and my own loan applications. However, my parents still chipped in for a PLUS-type loan that was the equivalent of nearly one year's tuition, along with covering some semester billing shortfalls. Did the fact that one-quarter of my college costs didn't come out of my own theoretical pocket reduce my investment in my education? Not at all. I don't mean to brag, but this is relevant: Having some portion of my costs covered by my parents allowed me to work fewer hours, which left me more time to study and get involved in many extracurriculars. Because of this, I ended up being listed in Who's Who Among Students. I suppose I might have still have managed to do so even with more hours at a job, but I doubt it.
In contrast, while I'm immensely proud of getting a master's degree from Big 10 U., the fact that I paid for all of it out of my own savings, work-study, and lots of loans doesn't make the accomplishment any more meaningful to me. I spent a lot more time being worried about money than being proud that I was paying my own way.
Students who graduate with a lot of debt find it hard to move ahead to the hallmarks of adulthood. If a student graduates with $20,000 in student loan debt and finds a job earning approximately the average liberal arts salary of $35,000, current Stafford loan rates and terms (6.8%, 10-year repayment) make for a monthly payment of $230.16 over a monthly salary of $2,917, which is almost exactly the 8% hallmark of "burdensome debt". That kind of payment can cut into building an emergency fund, not to mention retirement savings or home downpayment savings. This might forestall children having a firm financial footing when their parents enter retirement and might need extra assistance.
These arguments can be debated back and forth. However, it really comes down to one issue:
If parents value education, they need to conform their actions to their words. I don't think anyone advocating that parents provide assistance to their children would say that mediocre students should be pushed into college if they don't want to be there. But parents who expect solid academic performance and understanding out of their children during the primary and secondary school years tend to produce children who will achieve the same way in college. And those expectations are more effective when the parents provide at least some financial show of support, such as 529 savings.
Not every set of parents will be able to afford to send their child to college without risking their own retirement. Not every child will desire to attend college. But those families have alternatives (simplified financial aid needs tests, trade school/apprenticeship tracks). For families with suitably secure parents and suitably motivated children, however, I can't find many compelling reasons for the parents to withhold the aid that society expects them to provide.
Parents can't check a box saying "I will not contribute to my child's education." Any student hoping to receive financial aid of ANY stripe, including loans, will have to fill out the FAFSA (and at certain schools, the PROFILE). Both of these forms require parents to report their assets and income to arrive at the Expected Family Contribution (unless the student has served in the military). Even if the parent doesn't plan on giving the child a dime, any aid package the student receives will assume that financially able parents will contribute some portion of their income and assets toward the education. This can leave an "independent" student on the hook for tens of thousands of dollars even at lower-cost state schools.
Students who still try to finance their own education face drawbacks. Generally speaking, outside scholarships reduce the school's own grant/scholarship provisions dollar-for-dollar, BEFORE reducing the loan part of the package. Is it possible to earn enough in outside scholarships to cover nearly all college costs? Yes. Do you know many students who have done so? That's what I thought.
Students who try to work their way through school also face difficulties. Any student eligible for need-based financial aid who works at non-work study jobs starts losing 50 cents of every after-tax dollar in aid once other income exceeds $2,490.
What this adds up to is several "independent" students on the hook for lots and lots of debt.
Some parents may argue that this is just how it is, and their children need to experience the pain of paying for all their education to value it.
Most students do not need to cover the entire cost of their education to be invested in the experience. When I went to Small Liberal Arts U. for my undergraduate education, I covered a good portion of my college costs from scholarships, work-study, and my own loan applications. However, my parents still chipped in for a PLUS-type loan that was the equivalent of nearly one year's tuition, along with covering some semester billing shortfalls. Did the fact that one-quarter of my college costs didn't come out of my own theoretical pocket reduce my investment in my education? Not at all. I don't mean to brag, but this is relevant: Having some portion of my costs covered by my parents allowed me to work fewer hours, which left me more time to study and get involved in many extracurriculars. Because of this, I ended up being listed in Who's Who Among Students. I suppose I might have still have managed to do so even with more hours at a job, but I doubt it.
In contrast, while I'm immensely proud of getting a master's degree from Big 10 U., the fact that I paid for all of it out of my own savings, work-study, and lots of loans doesn't make the accomplishment any more meaningful to me. I spent a lot more time being worried about money than being proud that I was paying my own way.
Students who graduate with a lot of debt find it hard to move ahead to the hallmarks of adulthood. If a student graduates with $20,000 in student loan debt and finds a job earning approximately the average liberal arts salary of $35,000, current Stafford loan rates and terms (6.8%, 10-year repayment) make for a monthly payment of $230.16 over a monthly salary of $2,917, which is almost exactly the 8% hallmark of "burdensome debt". That kind of payment can cut into building an emergency fund, not to mention retirement savings or home downpayment savings. This might forestall children having a firm financial footing when their parents enter retirement and might need extra assistance.
These arguments can be debated back and forth. However, it really comes down to one issue:
If parents value education, they need to conform their actions to their words. I don't think anyone advocating that parents provide assistance to their children would say that mediocre students should be pushed into college if they don't want to be there. But parents who expect solid academic performance and understanding out of their children during the primary and secondary school years tend to produce children who will achieve the same way in college. And those expectations are more effective when the parents provide at least some financial show of support, such as 529 savings.
Not every set of parents will be able to afford to send their child to college without risking their own retirement. Not every child will desire to attend college. But those families have alternatives (simplified financial aid needs tests, trade school/apprenticeship tracks). For families with suitably secure parents and suitably motivated children, however, I can't find many compelling reasons for the parents to withhold the aid that society expects them to provide.
Labels: aid resources
