Some financial experts say paying for your kid’s college is a bad move and can wipe out your chance for retirement which will only fall back on your children, and they have some tips to help with college without debt.
While it’s a noble move to pay for your kid’s college to help them get a head start with their lives, taking on their debt is not a wise move, say experts, as it could leave you short on your retirement, which is bad for them.
US households are taking on more student loan debt than ever, reaching a total of $1.57 trillion in 2022, with the average loan debt per student at $37,113. There are currently 43.4 million borrowers holding student loan debt, The Street reported.
Some financial experts say at a certain point in your life, your priorities should shift to funding your retirement, which is ultimately in your child’s best interest by preventing them from having to support you during your golden years and may even leave them with some money when you pass on.
So what should caring parents do? Here are a few tips from the experts…
Experts recommend that parents focus less on paying for their child’s college and more on helping their children navigate ways to get tuition assistance, grants, and other means of covering the costs while avoiding loans or reducing their amount as much as possible.
The first tip right out of the gate is to realize this truth: Not every kid is cut out for college. Out of high school, many kids aren’t clear on their direction, what interests them, and naturally, interests change.
One way to begin college is by taking courses for the first two years at a local community college where courses may be free or certainly lower cost. That way your child can determine if college is right for them and get focused on a direction before taking on the expense of tuition at a major university.
This can potentially avoid switching a college major, which can be an expensive move. Lastly, attending a community college or even a university that is close to home prevents extra housing costs and other expenses.
Work-study jobs are a type of financial aid provided via the Free Application for Federal Student Aid (FAFSA) at your chosen school, WithFrank.org reports. It helps fund your education, is needs-based, and is contingent on your school’s availability. It is an option you’ll find on the application, Student Loan Hero reports. It can be a little more flexible than a part-time job and in fact is limited between 10-20 hours per week of work, which in reality, is closer to 10 than 20.
Parents are advised to take the money they would put into a college fund and invest it in tax-advantaged accounts like 529 plans for education expenses and IRAs and 401Ks for retirement savings. The growth in these plans is not taxed and is tax-free proceeds in many cases. The point is, you have a fund to dip into if you need to help with some college costs.