One of the most interesting experiences I had when I was teaching high school band was seeing how kids and parents handled the daunting reality of upcoming college costs.
I spent a lot of time trying to lobby to kids about the benefits of living at home to save money or attending a community college for the first two years. I'm not sure that I made too much progress there, because it always seemed like the kids (and parents) were set on a larger, more expensive university.
Honestly, I can't say that I blame them.
High schools can be a conveyor belt to student loan debt
One of the unfortunate realities of our public school systems is that you really aren't considered “successful” unless you get to one of the brand name colleges after high school. Anything else seemed to be a bit of a failure, at least in my limited experience.
These kids work really hard (alright…some kids work really hard) just to be rewarded with mortgage level debt before they've even made a dime on their own.
I've mentioned this on the site multiple times before, but I routinely saw kids pushed towards college without consideration for the unbelievable rising education costs we are seeing now.
It's actually really scary. We are about to see multiple generations within the same families that hold student loan debt. Let that sink in for a bit.
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What the heck are parents supposed to do?
This is where things get a little tricky. I think the traditional idea is that parents need to provide a college education for their kids. While that sounds awesome, I'm not sure it's realistic anymore.
Before I go on, I have to acknowledge that every situation is different. Some parents have the means to pay for college up front and will, some don't think it's their responsibility, etc.
All of that is fine, and what people choose to do with their kids is up to them. I don't even have kids, but I'm already worried about this for myself and other millennials.
Here are the main options for millennial parents as I see them:
1. Parents save up via a 529 plan, Roth IRA, etc. and pay for college in full
This would be awesome, and is probably what my wife and I would like to do. I *think* that my business will provide an income over coming years that will allow me to make this happen.
It's still freakishly daunting though, considering that the amount of $100,000+ student loan borrowers I talk to through M$M doesn't seem to be getting smaller. College costs are only going up as well.
2. Parents save as much as they can, and the kids cover the rest
Truth be told, this seems like the option that will happen across the majority of families that send their kids to college. This was the situation for me personally, and I'm ultra appreciative that my parents did this for me.
Unfortunately, I don't specifically use my degree anymore, but at least I made a career out of talking about it. 🙂
As much as student loans suck, they did give me an intrinsic motivation to actually do well in college. I had pretty terrible grades in high school, and an awesome GPA in college.
Just shows what being financially motivated can do I guess.
3. Kids cover the entire cost of college
After talking to a lot of M$M readers, this seems to be a pretty popular sentiment among younger parents. The reasonings can be pretty wide-ranging, but they are all valid.
The strongest argument that I see for this option is that a child's college education shouldn't keep parents from having the ability to retire.
That seems like something that a parent would never want to struggle with, but as long as we are seeing college costs continue to be at the edge of unrealistic I don't see a way around it.
Related: Why is college so expensive?
Young people also have the asset of time on their side much more so than parents, so maybe it isn't too much to ask them to cover the bill?
4. Parents guide their kid towards a college alternative
I've been VERY vocal about public schools doing a crap job of pushing trades and entrepreneurship to young adults.
Don't get me wrong, there is obviously nothing wrong with being college educated. But, there are so many other options for gainful employment that have nothing to do with four years of accruing student loan debt.
I personally believe that we've seen the pendulum swing towards college degrees a little too far, and as more students that have parents with student loans enter the workforce we'll see a swing back towards trades and entrepreneurship.
There isn't an easy answer (unless you have a lot of money)
And even still, it's probably a really tough call. I think the best thing we can do is pick a path, stick with it, and hope for the best at this point.
Like I mentioned earlier in this post, I'm going to try as hard as I can to pay in full for college, but also teach my kids that it isn't the only way to be successful.