MPR's Martin Moylan reported this morning on Morning Edition that the current job and stock markets have put a double whammy of a squeeze on parents' abilities to save for college. Here's his lead:
You can get a good read on parents' college-savings efforts by looking at so-called 529 plans. They're a very popular vehicle for college savings. Money put into 529 plans grows tax free and about a third of parents use them.
Moylan goes on to report that while contributions to plans have seen reduction as of late, parents and grandparents continue to open accounts to fund their child's education. Read and listen to the entire story here. How has the current economy affected your ability to save for your child's education? Have you employed any new strategies? Don't have kids? How has it affected your ability to save for retirement, or just to save in general?
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Eliza Hartley
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Comments: 15
It has not affected it at all. My youngest may want to go to graduate school in another year or so and I will have plenty of money to finance that even if she gets no aid.
The secret is no debt and live cheaply. My expenses per year are minimal so I can save most of my income. When your hobbies are coaching youth sports, reading, walking and TV you don't spend much.
I guess I have a different way of thinking about college. To me, it's the student's responsibility to see that he/she gets grades good enough and is active enough in school that he/she will get some kind of scholarship(s). As you know, I shared some resources about going to college for free here: College for free?
Parents might have to help getting student loans, but ultimately it should be the student's responsibility to pay for college. If that means taking a few classes at community college while working, so be it.
To me, there are far too many kids going to college who shouldn't be. If one's ambition doesn't go beyond working in the mall or in an entry level job in an office, college really is not required. And we are not encouraging young people to work as craftsmen anymore, which is a tragedy for our country.
My daughter (bless her) worked her tail off in public school and was one B in an advanced math course from all A's. She wanted to go to a private liberal arts college (expensive) and was accepted. She did work/study (worked for the school) for four years. The last year she managed the student center and was president of the club sports organization on campus.
I saw to it that she did not have to spend any of her money nor take out loans. If she was willing to work as hard as she did and graduate cum laude (brag, brag) then I was willing to work hard to support her so that she could start adult life without a mountain of debt. I have never regretted it for a moment. I could not have invested the money in any better way.
Sounds like we have some differing opinions. Larry, where did your daughter go to school? Marilyn, how would you define "craftsmen"?
Oh, and thanks for commenting, guys!
Davidson College (near Charlotte, NC.
I guess my opinion comes from seeing so many young people who think the world, the government and their parents owe them a college education. (And then they barely graduate because they're more interested in partying.) Those young people will never appreciate anything unless they work for it.
Sounds like Larry's daughter was different, and I'm not surprised. People raise kids who are like themselves. :)
Have you ever heard of anyone today wanting to be a cabinet maker, for instance, Eliza?
Okay, I thought that was what you meant, but I didn't want to make any assumptions. You have a very valid point. And what a nice compliment you paid Larry! :)
I agree with Marilyn on several points, one being that too many teens think the world owes them a college education and a lot who go, shouldn't. If one does study and work hard and gets his/her own loans the chances are they'll be successful. I witnessed too many party flunk out "on daddy's money". My husband and I both had to go it solo. It is still possible for those willing to work hard, like Larry's daughter!
And yes we absolutely need tradesmen and farmers!
Like Marilyn, i paid my own way through school. For my kids, I have promised them just enough money for tuition, room, and board up to a limit. To that end I started saving college fund for each of my three kids as soon as they were born. Now I have equivalent of $40K+ for each child (youngest is 16 now). I recommend Coverdell ($2,000 per child per year - rather than 529). 529s have performed poorly in the last year or so. My Coverdell plan is located inside CDs that pay 7.2% (which I got 10 years ago), and are totally tax free. The only catch is that my kid has to go to college, and if he does not, the money goes to his younger brother. Kids must provide for car, pocket money, insurance, gas, and "fun expenses." And get good grade. If they chhose to get married or co-habitate, the money stops immediately. It's their own choice.
I applaud your plan Jeff! : )
I can no longer save for my kids' college. We are going to eat through what I previously saved, and rely on loans and work study to cover the difference.
Guys, great discussion. Also wanted to link to a couple of relevant posts we've done earlier on MinnEcon about college and savings:
Is College worth the money?Putting off education to pay the bills
Also, check out this story from MPR. It's got folks from our Public Insight Network talking about the challenges of paying. I was surprised to find out that some colleges will boost their financial aid package if they know your family income has taken a hit in this recession.
As someone with only four years to go before the first kid hits college, the cost of higher ed is on my list of regular worries.
Thanks, Paul! Those are some great resources. I'm glad we've been able to keep this discussion going--it's definitely weighing heavily on a lot of minds given today's economic climate.