This article about retirement funds being tapped to pay for kids’ college tuition really surprised me. Apparently, a quarter of parents in this country are planning on using retirement funds to pay for their kids’ college tuitions.
This is bad on so many levels:
- They’ll be hit with tax penalties, so the amount of cash available will be less.
- It will hurt their kids’ potential to receive financial aid.
- The amount of money available for the parents to use during retirement will be much less!
You’ve heard this many times: You can’t take out a loan to cover your expenses during retirement — but your child can take out a loan for college. Or they can work. Or start out at a community college. Or do a million other things to help pay for school.
Because really, these kids may not have the resources to provide for their parents during their retirement.
It’s time we stopped this nonsense.
Parents, save for your own retirement first. If you have money left over after covering your living expenses, debts, and roughly 15 percent (or more, depending on your needs) toward your own retirement, then yes, please invest money for your children.
Don’t struggle to put your kids through college if your own financial house is a mess. College is not worth that.
And you know what else we need to address? Entitled kids. Oh yes, I’m going there.
I am of the firm belief that if a student does not at least partially pay for their own education, then it won’t be as valued. They won’t work as hard on their coursework. They will be more likely to miss a class just because they don’t feel like going. They won’t seek ways to lower their expenses. Because why? There’s no incentive for them to work harder or save money.
Lastly, when are we going to speak out against the insane tuition increases that are consistently higher than inflation? Let’s pick on my alma mater, Indiana University (Bloomington).
The in-state tuition for undergraduates for the fall 2010 term is $4,062.
For fall 2007 (the term after I graduated), the rate was $3,500. If I had enrolled before the summer of 2003 (instead of the fall of 2003), I could have paid a locked-in $2,895 per term.
And that’s just tuition — never mind rising fees, housing expenses or books.
Taking a look at Indiana’s main community college, Ivy Tech, the rate per credit hour for this term is $104.55. So, a student taking 12 credit hours would pay $1,255 and 17 hours would pay $1,777. MUCH more doable.
Is this whole situation outrageous to you, too?