Is Paying For Kids' College a Good Idea?
Most parents usually have already saved for their children. If you have one or more little kids, one of your concerns must be about their future education. You both will try so that your kids will have best education.
We have a three-year-old daughter and one on the way. So a few weeks ago, I set up a 529 account for our second child (our first already has one). In case you don’t know, a 529 is a tax-advantaged way to save for school expenses. Savingforcollege.com has an excellent website all about them. Anyway, I established the account but doing so got me thinking again about whether paying for your kids’ college education is a good idea. Here’s my thinking:
- Child graduates (hopefully) with little or no school debt.
- Child doesn’t have to work during school.
- Earnings are free of a federal tax (i.e. it’s cheaper) and we get a state tax deduction today
- Child has little or no direct financial interest in making wise us of the opportunity
- Value of the education has less meaning for child
My wife is strongly in favor of funding college to the best of our ability. She feels not having a potentially large debt hanging over your head when you first start out is what’s most important. I agree with that, but I also tend to think anyone is not going to value something as much if it is simply given to them rather than them earning it. Now obviously the child will be earning the degree, but I’m talking about the paying for it. I just think it’s less valuable to them if they didn’t pay for it. On the third hand, I ‘paid’ for college with a combination of working and loans. Since what I really did every semester was sign a boring loan document piling on more debt instead of writing an actual check, I didn’t feel like I was paying for college at all.
At any rate, we’re saving for both of their educations using a 529. I guess the goal should be to raise them to value the opportunity and send them off into the world debt-free. And that’s what we’ll try to do.