Should Kids Pay for College?

Even if I can afford to pay for the cost of my kids’ college education, should I pay for all of it? No. Having them pay for at least part of education expenses better prepares them for later life.

As my kids grow, I know that they should go to college. We promise to do whatever it takes to make sure they get as much quality education as possible. Unemployment statistics clearly show that the job market is heavily skewed in favor of those with a diploma. College is important in the long run both in terms of happiness and future income.

An article in the Denver Post’s Ask Amy column focused on a young woman’s disappointment that her family couldn’t afford to send her to her dream college. She attends a state college that costs more than $26,000 a year. Her mother is sad that she can’t do more, even though she had saved money since her daughter’s birth to send her to school without getting crushed under a mountain of debt.

Amy responded, "Your daughter needs to learn a lesson tougher than any course she will take in college; that she is responsible for her own success and happiness, now and beyond.”

As Wall Street Journal columnist Sue Shellenbarger wrote, "Do student loans teach responsibility or foster a lifelong over-reliance on debt? Are parents who pay their kid's way through college modeling self-sufficiency or martyrdom? Does requiring a student to get a job during the academic year instill work ethic or workaholism?”

Eileen Gallo, a psychotherapist, along with her husband, Jon Gallo, co-authored two books that address this question. At a workshop, one of the attendees raised the issue of students graduating from college or graduate school owing thousands of dollars in loans. Should parents pay for their children's college education or tell them to get student loans?

"In a vacuum, the issues surrounding how parents choose to finance their children's education would seem to be entirely financial in nature,” Ms. Gallo responds. “In reality, the choices are modeling values, and sending important messages to college-age children.”

As parents of three adult children, the Gallos have strong feelings in this area. But those feelings evolved, from originally believing parents should pay 100% of their children's undergraduate college expenses to having the kids pay some of it.

"The problem isn't giving children money for college, it's failing to involve them in the money process. College-age children who are involved in the economics of their education and pay part – even a small percentage – of their college expenses are less likely to develop a sense of entitlement, and (more likely to) learn valuable life lessons that help them cope with adult life,” she says.

I can’t agree more. I worked multiple jobs in college to pay my expenses because my parents could not afford to support me. I suspect they also thought balancing work, school and personal schedules was part of growing up, and that I would place a higher value on my education because I paid most of my own way.

Many families have no alternative but to rely on student loans, part-time college jobs and student and parental savings. What about those who can afford to pay for college? Does paying the bill really produce entitled children?

Eileen Gallo’s advice is to meet periodically with your adult child to establish a clear understanding – preferably in writing – of the economic arrangement. Some of the issues that you should cover include:

  • Do the parents require a minimum grade point average?

  • What is the student’s financial contribution to his education and how shall the student earn money? The Gallos strongly recommend that the student work part-time, but no longer than 15 hours per week and full-time in the summer.

Be aware of the lessons and values that parental decisions send to the college-age child. What message are you sending?

Jonathan K. DeYoe, AIF and CPWA is the CEO of DeYoe Wealth Management in Berkeley, Calif.  Follow Jonathan on Twitter at @DeYoeWealth.

Jonathan DeYoe, CA Insurance License #0C21749, is a registered principal with and securities and advisory services offered through LPL Financial, a Registered Investment Advisor - Member FINRA/SIPC.

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